New England electricity prices are among the highest in the nation, second only to the non-contiguous Pacific states. Part of the reason is infrastructure capacity constraints, a lack of generation capacity on high-demand days as well as a greater desire to move towards renewable sources rather than balancing the region’s energy mix with what is reliable and cost efficient.
And who suffers the most with higher prices? Lower income people, particularly families as energy is a larger part of their budget. Even the American Council for an Energy-Efficient Economy and the Energy Efficiency for All Coalition confirmed that “low-income, households, multifamily and renting households spend a much larger percentage of their income on energy bills than the average family” – a problem experienced by our neighbors throughout communities in the United States.
However, cost is not the only problem. It’s also reliability. Hospitals, for example, can’t just close their doors or send people home because of a black-out, instead, they turn to expensive backup generators and businesses in the New England region spend a disproportionate amount of their budgets on energy compared to others across the country.
So who provides oversight?
Established in 1997 by the federal government, ISO New England Inc. is an independent, non-profit Regional Transmission Organization serving the New England area. It oversees the operation of the bulk electric power system, transmission lines, and what is generated by member utilities.
ISO handles high-voltage interstate transmission systems under federal jurisdiction, as opposed to low-voltage systems bringing power directly to homes and businesses, which are the responsibility of local utilities under state jurisdiction.
At the beginning of 2016, ISO gave a presentation outlining concerns about the state of the New England grid – especially during times of extreme cold. They noted the ongoing shift to natural gas for electricity generation as coal, oil, and nuclear plants are retired. Citing that it brings ‘both benefits and challenges” to the reliability of the grid. Their solution – better energy infrastructure. Especially since the region will lose large amounts of baseload electricity that can power millions of households.
Currently, there are serious pipeline capacity constraints that require additional and updated energy infrastructure, mostly to transport natural gas, which not only heats homes directly, but also generates electricity. One advantage of natural gas power plants is the relative ease of finding places to put them. They are also less expensive to build and operate than other types of power plants.
The bias against non-renewable energy sources, such as natural gas, creates a serious problem for stabilizing prices in the region. While providing additional electricity, renewable sources can’t meet production demands during cold spells plagued by long cloudy days or those with sleet and snow. Significant limitations on battery storage persist with renewables that limit its ability to dispatch electricity to where it’s needed. Even in ideal conditions this means you can’t readily store the generated electricity and use it and send it to where the grid needs it the most to deal with load demand. That’s not an issue, however, with natural gas. In fact, current technology makes natural gas the best candidate for sudden shifts in demand.
A major limiting factor is pipeline capacity for natural gas coming from nearby states. Inadequate pipeline capacity also exacerbates the spread between winter and summer prices, because winter’s higher demand can’t be met by more natural gas energy output. With adequate pipelines, New England’s wholesale price for electricity could be comparable to that of other regions.
And while many in New England are focused on decreasing emission by adding more renewables to the mix, the last 13 years have seen a significant drop in power plant emissions, resulting in improved regional air quality due to increased use of natural gas. Ironically those who advocate for greater emissions reductions but oppose natural gas and pipelines are actually harming their cause. During the winter, more oil and coal based electric generation must be brought online is necessary to replace natural gas demand that is unable to flow through inadequate pipelines systems and renewables that can’t generate power during harsh winter weather and storms.
When there is a shortage of capacity on the grid, electricity must be purchased on the wholesale spot-market that is subject to supply and demand forces. Unlike customer’s bills, which usually only change every six months to a year, wholesale electricity prices can adjust in five minutes. Leaving residents of New England vulnerable to supply and demand, as well as the type of electric generation available. Consumers and ratepayers well remember this problem during the Polar Vortex in 2014 when prices on the spot market in New England reach $135 per million BTUs (British Thermal Units) or roughly 10 times higher than spot market prices in mid-December 2016.
So how can we avoid squeezing low income families, households and businesses? Understanding the energy mix and how it effects people throughout our communities. Energy providers naturally find the most cost effective solutions because that’s how they compete. But our policymakers need to hear from you- the ratepayer – that we need to expand and improve our natural gas infrastructure to avoid these completely preventable price shocks with more reliable and affordable energy.