Energy crisis hits home

For those of you who’ve regularly read the Energy Brief over the course of the last year, the recent news of rising electricity rates will come as no surprise. Still, the sticker shock is so significant it’s hard to pick just a few headlines to share.

Several New Hampshire utilities have recently asked state regulators to approve significant increases in the ‘energy’ component of their rates, driving the average electric bill for some NH residents this winter as much as 50 percent higher a month. Meanwhile, in Massachusetts, rates are expected to hit record levels.

nh v national average pricesFINAL

Data from the Energy Information Administration shows NH energy prices are much higher in most categories than the U.S. average. Numbers as of June, 2014.

These increases will shrink homeowners’ disposable income, add to local businesses operating costs and strain local government budgets. Consumer advocates and opinion makers are already asking officials to do something to soften the blow, both this winter and in winters to come.

New England’s increased demand for natural gas must be addressed, but if the focus is only on pipelines and the supply of natural gas, the region’s overall problem will not be corrected. Overreliance on natural gas has left New England more susceptible to price volatility on the energy market at the same time that a number of non-gas fired power plants have announced retirement. While adding more pipelines can help minimize the price spikes, it does nothing to reduce our dependence on natural gas in the long term, and does not get us to our clean energy goals.

Our high electricity and home heating prices have made energy a political issue across New England. People are looking to elected officials to help with the problem, but they remain in a tough position. With opposition to pipelines, transmission lines, wind turbines and more, finding balance between local interests and the region’s energy needs will continue to be a challenge.

Prior issues of the Energy Brief

Electric rates set to spike this winter
(Boston Globe)

“Energy industry officials have been warning for several years that New England’s growing dependence on natural gas could result in price spikes if steps such as the expansion of the pipeline system are not taken. About two-thirds of the electricity used in Massachusetts is made with natural gas, up from about 40 percent just six years ago.”

Unitil Predicts Higher Electricity Costs This Winter

(Concord Monitor)

If approved, the company’s energy charge will nearly double, increasing to 15.5 cents per kilowatt-hour from the current 8.4 cents. The new rate would take effect Dec. 1.

Liberty Utilities requests a 46% rate hike
(New Hampshire Union Leader)

“An average residential customer using 665 kilowatt hours a month would see his bill rise by $51.57 a month, from $110.48 to $162.05.”

Electricity Prices Soar
(Commonwealth Magazine)

“The sharply higher rates are coming at a time when several of the region’s coal power plants are shutting down and the New England governors are debating where replacement electricity will come from.”

Consumer advocate seeks relief on Liberty rate hike
(NHPR)

“New Hampshire’s Consumer Advocate has asked regulators to soften the blow of a big rate hike expected for as many as 42,000 New Hampshire electricity customers.”

Help for New England’s energy demands
(WCVB)

“State and federal authorities responsible for choosing a plan must balance all competing public interests — and preferably on an expedited time table.”

Everywhere but Northeast, fewer homes choose natural gas as heating fuel
(EIA: Today in Energy)

“(Nationally) electricity has been gaining market share at the expense of natural gas. The Northeast is the exception, as both natural gas and electricity have been increasing while distillate fuel oil and kerosene have declined.”

Abundant natural gas won’t reduce greenhouse gas emissions enough
(Huffington Post)

“Their modeling found that having a high supply of natural gas does little to reduce greenhouse gas emissions in the future, largely because the use of gas slowed the transition to renewables.”

Maine Voices: With Maine at clean-energy tipping point, next governor will play key role
(Portland Press Herald)

“In the long term, the state must also find more environmentally friendly and cost-effective heating and electricity solutions.”

Deval Patrick’s renewable revolution
(Boston Business Review)

“It was Patrick, as the state’s chief executive, who set the tone that spurred a steady stream of new laws and regulations that dramatically reshaped the state’s energy policy.

 

 

 

 

 

 

 

 

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Options for the Future

new england electricity prices NE first half 2014

New England’s residential retail electricity rates rose faster in the first half of 2014 than anywhere else in the country because of the increased cost of wholesale power. Source: EIA

Here in New England, we’re hearing about a lot of proposed energy projects, from wind farms and natural gas pipelines to hydro and solar arrays. The debate circling around these proposals is rooted in the region’s continued search for solutions to the volatile equation of declining sources of power and sharply rising prices.   It’s no wonder officials say we’re in the midst of an energy crisis.

Forging a path towards lower costs and greater energy reliability has been hampered by debate over individual projects and disagreement over how to shape forward-looking energy policy. But there is good news. In the absence of consensus, market solutions are in fact developing.

The latest project announced last week would upgrade natural gas pipelines into the region to relieve the cold weather bottlenecks that have added billions of dollars to the wholesale cost of energy and severely threatened reliability. Elsewhere, smaller scale projects continue to explore wind and solar technologies while hydropower is positioned to answer the region’s call for significant amounts of clean energy. New England can also be proud of the strides being made in energy efficiency (though they still are not enough to offset the declining sources of power).

Energy is a booming business across the country. Cities elsewhere in America are experiencing a renaissance thanks to, among other things, the “shale gas revolution.” Hopefully New England, already at an economic disadvantage due to high energy costs, will soon catch up.

Vermont Yankee scales back power output, but not staff
(Brattleboro Reformer)

Steep increase in electricity rates predicted
(Portsmouth Herald)

Energy Company Lays Out Pipeline Plans, Law Foundation Explains Approval Process
(WAMC)

Salem power plant proposal gets lifeline from FERC despite rivals’ opposition
(Boston Business Journal)

Group slams federal energy regulators over alleged market manipulation
(New Haven Register)

Spectra, Northeast Utilities partner on $3 billion project to bring more natural gas to New England
(Bangor Daily News)

Utilities plan $3 billion natural gas pipeline
(New Hampshire Union Leader)

Powered by the sun – via panels many miles away
(Portland Press Herald)

Energy: What Americans really want
(Boston Globe)

Efficiency, Renewables Cut Away At Growth In New England Electricity Use
(Hartford Courant)

Boom in Energy Spurs Industry in the Rust Belt
(New York Times)

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We Have to Diversify a Little

 

Minot Farm

For more than 200 years, the Minot family has lived and worked on a 450-acre farm just north of the White Mountains National Forest. Its rolling hills and freshly mowed fields are dotted with cows. The large red barn, white farmhouse, and swift brook running through the heart of the farm are quintessential rural New England.

Willie Minot

Willie Minot

“The land is very important to us,” said farm owner William Minot. “It’s the reason we do this. It’s been here all my life, for several generations, and it’s our goal to keep it that way as long as we can.”

Minot and his family grow crops and hay, run a dairy farm and produce maple syrup. Much of this work is done beneath or within view of high-powered electrical transmissions lines that have stood on the farm for decades. Minot said these lines have had little impact on his family business. To him, they are just another part of the landscape.

“Never had a bit of a problem with them,” said Minot. “I could look through those lines and I wouldn’t even see them. They’ve always been there. I kind of like to have the electricity work, so I figure we need to move a little juice through here.”

We visited the Minot Farm earlier this year to get Minot’s take on the power lines. In this video, you’ll see the scenic Minot Farm and hear about the power line’s benefits, including electricity for families and businesses like his. The video also shows that transmission lines, like those proposed by Northern Pass, can exist in harmony with the surrounding landscape.

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The Chilly Reality

The need for new sources of energy is becoming more obvious as we head into the colder months. Federal regulators have approved emergency measures to make sure the lights stay on this winter while the natural gas industry appealed to New England’s governors to stay committed to the pipeline expansion that many say is needed to ensure electric reliability.

Fewer sourceretirementss of power and a lack of infrastructure are prompting the region’s grid operator to predict many “precarious” winters ahead.

Yet, despite all this, protestors grabbed a few headlines this week in both Massachusetts and Vermont, drawing attention to how contentious the debate over energy development can be; elsewhere, there are more moderate calls to hold back.

Experts indicate that New England does not have the luxury to wait. Without new energy development, the region will only continue to see high prices for power, cold-weather back up plans, and overall uncertainty about our energy future.

 

FERC OK’s 2014/2015 Winter Reliability Program
(ISO Newswire)

ANGA to New England Governors: Build Pipelines
(ANGA.us)

ISO New England adjusts to changing electricity market
(Masslive.com)

Efficiency, Renewables Cut Away At Growth In New England Electricity Use
(Hartford Courant)

Bristol DA drops charges, says protesters were right
(Boston Globe)

Protesters go to home of head of Vermont Gas
(Burlington Free Press)

Letter to the editor: State has alternatives to gas pipeline
(Portland Press Herald)

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Consider the Source

residential electricity prices

New England pays some of the highest electricity prices in the nation and the gap between our region and elsewhere in the country is only growing. Source: EIA

Whether it’s lower electricity bills, a cleaner environment, or better grid reliability, there are plenty of good reasons to support new energy development. But what happens when there is conflict over the best route to a more secure energy future? Projects can be delayed or withdrawn along with the benefits they stand to provide.

As we’ve said before – every new energy project faces a share of opposition and each one should be rightly vetted in the public permitting process. But there are emerging questions about select groups that seem to be making a business out of opposing energy market reforms and development. These efforts ignore the pressing challenges facing our region.

New England has an immediate need for new sources of clean and affordable power. As the public and policy makers consider the many projects proposed to fill that need, they should also evaluate both the merits and the potential impact of opposition to those projects.

Residential electricity prices are rising
(EIA Today in Energy)

NH report lays out energy efficiency recommendations
(New Hampshire Union Leader)

Maine positioned to battle climate change
(Portsmouth Herald)

EPA rejects power plant opponents’ appeal
(Salem News)

Conservation Law Foundation’s old support for gas gets new scrutiny
(Boston Business Journal)

Our electricity grid is bending; without change, it will break
(Bangor Daily News)

Mass. faces new energy challenges
(Worcester Telegram & Gazette)

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Investing in the Future

When it comes to energy, there is one thing on which most people agree– New England, and the nation for that matter, need more reliable and diverse sources of power. Whether it’s natural gas, nuclear, hydropower or other renewables, new discoveries and technologies have the potential to relieve our energy needs. The path there won’t be quick or easy. Opposition to individual projects and a lack of agreement among those who drive energy policy are all challenges that must be overcome anywhere projects are debated.

infrastructure investment

This chart, compiled by the Energy Information Administration, shows where infrastructure investment dollars have been spent over the last 15 years.

Our ability to add more sources of energy also relies on infrastructure. Renewable energy can’t reach the grid without transmission lines to carry it there. Natural gas can’t be a viable alternative to traditional fossil fuels if there isn’t a pipeline to get it to a power plant. Even increased output from existing generation relies on upgrades to transmission lines.

We may be at the dawn of a new energy era in America – and the need for new development is urgent. Reaching our goal of a secure and reliable energy grid will require significant coordination between the states and more investment in infrastructure and technology.

Our View: Stalled gas pipeline shows need for energy diversity
(Portland Press Herald)

New England relying more on natural gas along with hydroelectric imports from Canada
(EIA.gov)

Stop worrying, and love nuclear power: Officials
(CNBC)

Plans in motion to beat energy crisis
(Portsmouth Herald)

George Coppenrath: New England pols create energy woes
(Providence Journal)

Texas company cancels Alabama wind farm project
(Montgomery Advertiser)

Beating Our Enemies By Energy Independence
(Forbes)

This chart about power lines says a lot about how the US electricity system is changing
(VOX)

New England governors’ energy effort on hold
(AP via Concord Monitor)

Tackling New England’s Energy Challenges
(New Hampshire Institute of Politics and Political Library)

‘Major investment cycle’ and rapidly changing U.S. energy markets pose fresh challenges for FERC
(E&E Publishing)

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An Industry in Transition

States’ renewable energy standards, a focus on energy efficiency, lower costs for renewable energy sources, and a natural gas boom have all greatly changed New England’s energy market in the past decade. The good news is these changes have led to lower greenhouse gas emissions, including a 20 percent reduction in CO2 emissions throughout New England.

The bad news is that New England’s energy market and the sources of our power have fallen out of balance. The region relies too much on one fuel source – natural gas – to generate power and there’s not enough natural gas supply to meet our needs.

The New England grid operator, ISO New England, has been talking about this growing problem for the past few years, and again recently voiced concern when President and CEO, Gordon Van Welie, spoke to a group of power industry representatives. The presentation, called “Reliability and Economic Challenges Resulting from an Electric Power Industry in Transition,” outlined the region’s changing energy landscape, including the effects on energy customers.

Van Welie noted that technological advances are bringing down the cost of renewable power sources and increasing their position in the energy market. Low natural gas prices are also prompting development of natural gas-fired plants in New England. More affordable renewable and natural gas sources mean the region is moving away from costlier fuels, such as oil and coal. As a result, New England relies on natural gas for 46 percent of its electricity today.

Yet as last winter showed, New England can’t always count on natural gas and the grid was forced to return to traditional fossil fuels to keep the lights on. As you can see from the chart below, most of the region’s natural gas-fired plants sat idle on one of the coldest days of the year because the supply of natural gas was constrained, and the market price of energy that day skyrocketed to record rates.

Van Welie advised the group of energy experts that changing the way the market functions and creating new rules and incentives for generators could help solve the problem, but most people in the energy industry agree those are only temporary fixes. For New England to ensure reliability and prevent spikes in electricity prices, new non-natural gas sources of power must be added to the regional grid.

1Van Welie Pipeline Obligations 01-28-14 Graph

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Imagine Where We’d Be Today

 

New England has long been a leader in innovation, industry and technology. Imagine where we’d be today if we’d solely listened to those who said ‘no.’ Yet, as we approach another New England winter, maybe a little earlier than we’d like, one major proposal to solve the region’s energy crisis has hit a roadblock.

The Governor of Massachusetts has expressed reservations about an historic plan to solicit more energy via gas pipelines and electric transmission. The failure to find ways to expand and diversify New England’s energy supply had an economic impact last winter, is still having an economic impact in the region today, and will likely continue to have an effect this winter.  The region’s lack of infrastructure development also has near term environmental consequences and further delays the benefits cleaner energy projects can bring.

Regardless of their position on energy issues, people generally agree that a thorough permitting process is necessary for energy projects and realize the importance of compromise with these proposals.

gas by manufacturers

As you can see from this chart, New England’s manufacturers pay the most in the nation for natural gas.

gas by region

That added cost is disproportionately placed on small businesses (Table 2), which lack the ability to buy in bulk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Letter: Wrong view of Northern Pass
Concord Monitor

Fall 2014: Polar Vortex visits Northeast; South at risk for tropical hit
Accuweather.com

Bold plan to expand New England gas pipeline capacity on hold
Portland Press Herald

Gov. Patrick backs away from regional effort to expand natural gas capacity
Boston Business Journal

LePage to Mass governor: Blocking regional natural gas expansion is ‘colossal mistake’
Bangor Daily News

Gubernatorial candidates react to Old Town mill closure, show split on energy, jobs policy
Bangor Daily News

New England governors’ energy effort on hold
AP via Nashua Telegraph

U.S. Senator opposes new natural gas pipeline in New England
Forbes

Cape Wind: An obvious choice for a younger generation
Cape Cod Today

Independent on energy
Worcester Telegram

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How New England’s energy policies affect you

“For the next several winters, we’re going to potentially have really high prices and price volatility. Customers are going to simply pay more for gas and energy.”

— William Quinlan, President and COO of PSNH, August 2014

New England is one of the best places to live, but it’s also one of the most expensive places to buy electricity in the country. Our region is highly dependent on natural gas for generating electricity, yet we lack the ability to bring in enough natural gas to meet both our home heating and power generation needs throughout the winter. Add on top of that last winter’s “Polar Vortex” cold snaps and New England’s wholesale energy prices went skyrocketing.

Quinlan-Kocher

Energy companies are closely watching these issues, including PSNH President and COO William Quinlan. In a recent interview on WMUR’s “NH’s Business” segment, Quinlan told viewers that our dependence on natural gas caused winter natural gas prices to double last year. New England paid $3 billion more for energy this winter than it did during the winter of 2012/2013, largely because of our dependence on natural gas. This is a problem that’s not going away any time soon, he said.

“It will take several years to build out the infrastructure to really address this situation,” Quinlan said.

This WMUR segment shows not only how dependent New England has become on natural gas, it explains why this is having an effect on our electricity prices, too.

 

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What’s out there?

The headline of a recent Keene Sentinel editorial sums it up pretty well: Energy choices are becoming fewer, harder.  In some cases, energy producers are reversing course because of the quickly and dramatically shifting landscape.

As we’ve discussed for several months, the need for new sources of energy is increasing while the drive to develop those sources is lagging.  It doesn’t seem to matter whether it’s a wind farm, a gas pipeline, or a hydropower transmission project—the tendency to say “no” is at odds with the majority of voices who are asking “how can we make this work?”

While the lessons of last winter are still emerging, we’re getting ready for what the Sentinel calls “another winter of our discontent.”  In that spirit, we thought it would be helpful to take a bird’s eye view at some the many energy projects being considered which could get us closer to solving the region’s energy challenges.

pipelineNortheast Energy Direct Project – This proposed extension of the Tennessee Gas Pipeline would increase the flow of natural gas from the Marcellus Shale region into New England via a new pipeline that would extend 180 miles across Massachusetts, with a small portion extending into southern New Hampshire.  Advocates say the plan is just what the region needs to alleviate the constraints that limit cold-weather access to fuel.  Opponents’ concerns range from what the pipeline will do to property values, to potential environmental and safety hazards, to umbrage with the fracking process used to extract the gas.

Ridgeline wind farms – Two proposals to build wind farms on New England mountain tops were recently withdrawn from consideration.  Developers for both the Seneca Mountain Wind project in Vermont and the Wild Meadows wind project in New Hampshire pulled the plug on their respective proposals, citing, in part, a lack of community support.  Wind, in theory, remains a popular renewable resource and makes up about 40 percent of the projects in the queue at ISO-New England.

turbinesCape Wind – More than 10 years after it was announced, the Cape Wind project has yet to begin construction, but is inching closer with the developers hiring a lead contractor.  The proposed offshore wind farm for Nantucket Sound would generate more than 450 megawatts of electricity from 130 turbines.  Cape Wind has had steady opposition from some residents and groups; most notably, the Alliance to Protect Nantucket Sound.  Off-shore wind proposals are gaining ground, however, with the federal government recently announcing it would lease hundreds of thousands of ocean acres for such projects.

Northern Pass – The 187 mile long high-voltage transmission line would carry 1,200 megawatts of hydropower from Canada to a substation in Deerfield, New Hampshire, where the energy would enter the New England grid.  Supporters say the vast amount of clean energy would help the region begin to replace the significant amount of generation that’s retiring, reduce carbon emissions, and stabilize energy costs.  Opposition has focused primarily on the potential visual impacts of the line.

There are many other proposals of different sizes and sources and in various stages of development.  As New England continues to look for ways to solve its emerging energy crisis, building consensus in the face of opposition will be one of the region’s biggest challenges.

Sentinel Editorial Energy choices are becoming fewer, harder
(Keene Sentinel)

Owner pulls plug on sale of Maine’s largest power plant
(Portland Press Herald)

Russia Ships Coal to America Despite Sanctions
(Forbes)

Plans for tariffs on New England’s electricity market just hit a new roadblock
(Boston Business Journal)

PJM May Expand Capacity Market Rules: A Handout to Fossil Fuels, Or a Needed Reliability Boost?
(Greentech Media)

Natural gas: Massachusetts is ground zero for Northeast’s pipeline fight
(Christian Science Monitor)

Seneca Kills Wind Project
(Vermont Public Radio)

Cape Wind inks construction pacts
(Boston Herald)

At Five Year Mark, Vineyard Power Gains Foothold in Alternative Energy Race
(Vineyard Gazette)

Opinion: The Northern Pass project is important to New England
(Montreal Gazette)

 

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