updated 12/6/2005 6:48:44 PM ET 2005-12-06T23:48:44

An energy consultant warned Tuesday that "sudden extremely cold weather" could cause power outages in New England this winter.

The warning from Cambridge Energy Research Associates is based on forecasts of electricity demand, or load, made by the region's grid monitoring agency and the possibility that New England power generators may not be able to secure enough natural gas to run their plants.

"In the event of really cold weather, gas supplies to power generators could be curtailed if the available gas is redirected to meet residential heating load or if higher prices bid gas away from power generation uses," CERA said in a news release.

Daily U.S. natural-gas output is about 4 percent below normal as a result of hurricane-related damage in the Gulf of Mexico and prices are more than double year-ago levels on fears that demand could outstrip supply this winter.

In the "most extreme outage scenarios," the Independent System Operator-New England forecast that the region could be 3 percent to 7 percent short of the gas-fired electricity it would need, according to CERA.

Shiv Mani, CERA's director for eastern North America energy, said one such scenario would be temperatures "below 10 degrees for at least a week and subzero temperatures for a few days," though he could not put a probability on such an event.

About 40 percent of New England's electricity is generated by natural gas, according to CERA.

Houston-based energy analyst Dan Lippe said the CERA warning should be taken with a grain of salt since it is based on worst-case-scenario modeling. Moreover, Lippe noted that natural gas production in the Gulf of Mexico continues to improve and the federal government has already stepped in to address the potential New England shortfall.

On Friday, the Federal Energy Regulatory Commission agreed to a special winter plan submitted by ISO-New England that would give it greater flexibility to head off any problems.

For example, there will be financial incentives for industrial users who agree to voluntary service curtailments during periods of high demand as well as incentives for generators who maintain an emergency reserve of natural gas.

In 2004, prices for natural gas and electricity spiraled out of control after a cold snap. The problem was exacerbated by the fact that some power generators had been making huge profits by selling their natural gas reserves, leaving them empty-handed when electricity demand soared.

"The new ISO rules have been designed in a way so generators that burn gas have less of an incentive to sell it into the market," Mani said. He added: "Because we have these new rules in place, we have a little bit of a comfort margin."

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