In an op-ed penned for The Republican, CEA President David Holt discusses the dramatic change needed for energy consumers in the region and why opposition to projects like Northern Pass Transmission, Portland-Montreal Pipe Line and Cape Wind will discourage future energy projects.
There’s no easy way to say this: New England’s energy future is dim. Limited pipeline capacity, federal and state regulations, and a change in the mix of electricity and heating generation are just a few of the things that exacerbated the price spikes from this winter’s polar vortex. Temperate spring weather will provide some respite from sky-high bills. However, high electricity prices may be a new norm for New England.
Experts cited limited natural gas pipeline capacity and increased demand as the primary causes for this winter’s price spikes. As the U.S. Department of Energy (DOE) concluded, a strong cold snap in January caused an increase in natural gas demand for heating, a surge that “taxed the region’s natural gas pipeline capacity, causing a run-up in regional natural gas prices.” Wholesale prices for natural gas supplies for Boston averaged $22.53 per million British thermal units (Btu) from January 1 to February 18 – a record high price that exceeded by 50% last year’s record of highest prices since 2004.
Higher utility bills aren’t too surprising in Nor’easter season. But New Englanders may be frustrated to learn that families across the Midwest and Mid-Atlantic spent much less to survive the polar vortex. Illinois residents, including Chicagoans who suffered through the worst winter on record, paid an average of $8.32 per million Btu this February while Massachusetts families paid $14.57 per million Btu – or 75% more – to heat their homes. In Pennsylvania, where production from the nation’s largest natural-gas field has led to an historic depression on natural gas prices, residential prices were 25% cheaper than the Bay State.
So, we should build more pipelines, right? Yes, expanding the region’s energy infrastructure is part of the immediate solution. The boom in oil and natural gas production in new areas, such as Pennsylvania, requires that we match that new production with new, efficient ways to send energy to consumers. Regulators across the region are evaluating ways to encourage pipeline expansion in order to militate against future price spikes and ensure New England consumer also benefit from our nation’s low cost natural gas.
However, new energy infrastructure isn’t in itself enough to protect consumers. In order to make New England truly competitive, the region will need to address head-on how it generates its electricity. A dramatic shift from coal-fired power to natural-gas has already contributed to natural gas price spikes. The Wall Street Journal recently reported that in 2000 “only 15% of the electricity used in Connecticut, Massachusetts, Vermont, New Hampshire, Rhode Island and Maine came from natural gas. That has increased to nearly 50% as coal and fuel-oil plants have been phased out to meet tighter clean-air regulations.”
Unfortunately, this problem will only get worse in the future. The DOE predicts that the New England region will retire more than 1,369MW of generation between 2013 and 2016. This figure includes the forthcoming retirement of the Vermont Yankee nuclear plant, which supplies four percent of -electricity for the entire region, and announced retirements for coal-fired plants such as Dominion’s 750-MW Salem Harbor facility. The same report estimates that 1,193MW of capacity will be added in the same period, half of it from natural gas.
Retirements of coal-fired and nuclear plants will have real consequences for New England consumers. Over-reliance on one fuel source for electricity generation leaves consumers more susceptible to price spikes. Furthermore, the retirement of baseload sources of coal-fired and nuclear power will create challenges for grid operators and could threaten the reliability of the grid.
Federal, regional and state policymakers will need to confront today and tomorrow’s energy challenges with rational, balanced solutions. Consumers and residents will also need to better understand their roles in advancing a sound energy future. We should all adopt smarter consumption behaviors, particularly in winter and summer when demand peaks. We should also strive to support a responsible build-out of our nation’s energy development and infrastructure. “Not-in-my-backyard” opposition to projects like Northern Pass Transmission, Portland-Montreal Pipe Line and Cape Wind will discourage future projects, leaving New England out in the cold.