New England is facing an energy crisis that will drive up consumers’ electricity bills, and the states need to come together for a solution, said regional energy officials at a conference held Monday in Manchester.
“The lights did not go out this past winter,” said Rhode Island Office of Energy Resources’s Nicholas Ucci at the forum hosted by the New England Council business association. “That doesn’t mean that they can’t.”
During the three-hour forum at Saint Anselm College, state officials from New Hampshire, Massachusetts, Maine and Rhode Island outlined the region’s energy challenges, including a lack of gas pipeline capacity, and they discussed a plan of action: a multistate initiative financed by ratepayers to build new energy infrastructure.
In December, New England governors launched an energy initiative, with the help of the New England States Committee on Electricity, a nonprofit that represents the six states.
The group plans to seek two separate projects to bring energy to New England: one to construct a new natural gas pipeline and another to build transmission lines to carry low-carbon power most likely from Canada, which will help many of the New England states meet their clean energy standards.
“The problems impact us all, and the solutions we believe are necessary can’t be achieved by any one single state,” Ucci said.
The states plan to help finance the projects by putting a tariff on the region’s ratepayers that would show up in electricity bills. That move would need ultimate approval from the Federal Energy Regulatory Commission.
During Monday’s panel discussion, several of the state’s energy representatives outlined the proposal that they said is necessary because the market hasn’t put forward any solutions.
“We can’t allow New England to be an economy that operates nine months of the year,” said Patrick Woodcock, director of the Maine Governor’s Energy Office.
The initiative’s goal is to diversify the region’s fuel supply, stabilize the energy economy and above all, benefit ratepayers, said Robert Scott, commissioner of New Hampshire’s Public Utilities Commission. “The overriding criteria will be cost-effectiveness,” he said after his presentation.
The cost among New England’s ratepayers would likely be divided by their market exposure, he said. New Hampshire’s is about 9.6 percent of the base. And the costs could be recovered in about 15 years, an official estimated.
But the plan is still in the early stages. By this fall, the states plan to release a draft request for proposals that would be subject to public comment and input.
Earlier this month, the initiative came under fire by the Conservation Law Foundation. The group said the process has been largely hidden from public view and conducted with heavy influence from those who stand to profit. That topic was not brought up at Monday’s forum.
But many of the presenters said the process to get the new infrastructure projects would be a long one and likely subject to lawsuits. Ultimately, all of the states would need to approve the selected projects and each one would have to pass through local siting processes.
The need for this kind of project, presenters said, arises from the energy problems confronting New England.
They largely stem from a growing regional dependency on natural gas that has displaced many other fuels such as oil and coal, said the forum’s keynote speaker, Gordon van Welie, president and CEO of ISO-New England, the regional grid operator. Between 2000 and 2013, the use of natural gas for electric energy production in New England grew from 15 to 46 percent, but the region’s limited gas pipeline hasn’t kept up with the demand.
At the same time, alternative power sources are going offline, van Welie said. Several nongas power generating plants, such as Vermont Yankee nuclear plant and Salem Harbor Power Station, face retirement, which will result in the loss of roughly 3,000 megawatts of energy to the New England grid.
And by 2020, roughly 8,300 megawatts of nongas-powered generation is at risk for retirement, van Welie said. That could create a gap in power capacity, he said, and many of the generation projects that are planned to fill that energy void are gas-generated. “It’s going to really be a tricky situation for New England for next three to four years,” van Welie said.
The combined pressure is driving up the region’s natural gas prices to some of the highest in the country, van Welie said. It leaves ratepayers footing higher electricity bills, especially during the winter months when natural gas demand for both home heating and power generation is at a peak.
During this past winter, the region’s energy market costs exceeded $5 billion, compared with $5.2 billion for all of 2012, Ucci said.
The most frustrating part, van Welie said, is that the region is just a couple hundred miles away from what is arguably the cheapest gas market in the world: the Marcellus Shale running from West Virginia and Tennessee into Pennsylvania and New York.
“We are heading into a space over the next three to four years where the demand on gas pipelines is continuing to build and we are losing nongas energy for the system,” Gordon said “It’s gotten to the point now it has become quite critical we do something.”