The old, familiar pangs of winter

NE Fuel Mix Chart 02-16-15

Nearly a quarter of New England’s power was generated by oil on Monday morning, February 16th. Oil, on average, makes up less than one percent of the annual fuel mix.

The challenges of this winter extend beyond shoveling and parking problems. Just like we saw last winter, the extended cold and snow are again driving up the cost of natural gas and, in turn, power. To meet our electricity demands, the region has been using more oil to generate electricity.

While every winter is different, we are starting to see that in New England our energy problems remain the same year after year. We continue to see evidence that the region must increase and diversify its power supply to ensure reliability and remain economically competitive.

Winter’s relentless grasp grabbed the headlines last week, but we also saw how leaders are making moves to shape New England’s energy future and how the region’s utilities, including Eversource, are seeking to ease the congested transmission system and increase access to natural gas.

Northeast gas demand hits record high on Monday
EIA Natural Gas Weekly Update, 19 February 2015

Make it stop: Winter’s costs adding up
Eagle-Tribune, 22 February 2015

Natural gas prices dropped, but for how long?
New Hampshire Union Leader, 21 February 2015

New supply of electric power for New England states, but at higher prices
WMUR, 15 February 2015

Baker stresses energy costs as key to competitiveness
Boston Globe, 19 February 2015

Renewable energy makeover clears House committee
VT Digger, 17 February 2015

Renewable energy faces close scrutiny at State House
Portland Press Herald, 17 February 2015

Eversource gets nod for huge transmission project
New Hampshire Union Leader, 12 February 2015

New England energy companies detail plan to boost natural gas to region
Concord Monitor, 19 February 2015

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Realizing our potential?

All around us, there is a huge amount of potential to diversify and develop our energy supply. Placing hydropower as the cornerstone of its energy foundation, Burlington, VT now has the distinction of being powered 100% by renewables. The state of Maine is looking to unlock its hydro-possibilities. Natural gas power plant developers and wind advocates see tremendous promise in powering New England’s future. Many even believe solar has bright prospects for homeowners willing to make the investment.Proposed Generation Chart

There are, however, significant hurdles in achieving the energy “era of abundance” sought by some U.S. lawmakers. Whether because of the cost of developing a power plant or infrastructure, or public opposition to proposed energy projects, New England seems to be stuck between what can be done and what is (or isn’t) being done. This position threatens the reliability of our electrical grid and keeps prices volatile and high.

 

Burlington, Vermont Now Runs on 100 Percent Renewable Energy
Triple Pundit, 9 February 2015

Maine dam survey shows wide gulf between hydropower potential and delivery
Bangor Daily News, 8 February 2015

New England gas generation capacity to grow by 1GW
Argus Media, 6 February 2015

South Coast lawmakers hope to boost offshore wind
South Coast Today, 10 February 2015

Malloy to sponsor new solar incentive program
New Haven Register, 10 February 2015

Connecticut Site is No-Go for New PSEG Power Natural-Gas-Fired Plant
NJ Spotlight, 6 February 2015

VT Gas pulls the plug on pipeline expansion to NY
Burlington Free Press, 10 February 2015

Not in anyone’s backyard, by Jeanne Sable
Keene Sentinel, 10 February 2015

Alexandria, vote yes on Article 16 to stop wind turbine project
Laconia Citizen, 10 February 2015

GOP plans for ‘era of abundance’ in energy
The Hill, 9 February 2015

Doesn’t buy NIMBY arguments against project
Nashua Telegraph, 13 February 2015

Winter storm keeps ISO-NE real-time electricity prices above $100/MWh
Platts, 10 February 2015

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Pricey Promises

Pricey Promises

Last week, the region’s electrical grid operator, ISO-New England, reaffirmed what we’ve been seeing for a while: power is getting more expensive. In its ninth Forward Capacity Auction (FCA), the ISO locked in enough power to cover New England’s anticipated needs in 2018-19. But the much needed pledges from power producers come with a hefty price tag of $4 billion – a billion dollars more than last year’s auction.

iso fca chart

Payments to generators in the Forward Capacity Auction have increased significantly. Auctions are held three years in advance of the promised delivery year to allow for enough time for new generation, in theory, to be built. Source: ISO-NE

Capacity payments, as they’re called, are what generators get paid to fire up when called on by the ISO. These payments are figured into the wholesale price of power that trickles down to consumers. The promise of that money is supposed to help encourage the development of new energy sources.

This glimpse into the future looks a lot like today. All of the new generation that bid into the 9th FCA is fueled by natural gas, bolstering New England’s reliance on that source. New natural gas power plants will need new pipeline capacity in order to run reliably, and efforts to get that built have been contentious. The ISO also recently noted in a call with reporters that, historically, about 70 percent of proposed energy projects never come online because of siting, financial, or other issues.

So will the lights be on three years from now? Most likely, yes. But until the region is able to diversify and increase its sources of power, high prices will continue.

New England’s Capacity Prices Rise Again
Forbes, 4 February 2015

Annual Forward Capacity Market Auction Acquires Major New Generation Resources for 2018-2019
ISO-New England Press Release, 4 February 2015

A Look Back at the Look Ahead
Northern Pass Project Journal, 7 February 2014

New plants on way, power needs still unmet
New Hampshire Union Leader, 4 February 2015

New England’s dependence on natural gas for power generation expected to increase
Providence Journal, 4 February 2015

New England gas generation capacity to grow by 1GW
Argus Media, 6 February 2015

Pipeline Public Outreach Campaign Brings Voices ‘For’ And ‘Against’ To The Forefront
NHPR, 5 February 2015

ISO on Background: State of the Grid—Managing a System in Transition
ISO-New England Presentation, 21 January 2015

Marc Brown: We cannot keep relying on luck for low winter energy prices
New Hampshire Union Leader, 8 February 2015

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One topic, many questions

There are a lot of questions swirling around about New Hampshire’s and New England’s energy future: Is offshore wind power dead or will states still pursue it as they look to address energy needs with diversity? Should New Hampshire withdraw from a regional carbon emissions reduction pact or increase its sources of renewable energy?

Whether it’s wind, solar, nuclear, natural gas, or hydropower, there is much debate about the direction New England’s energy course will take over the next few years. But, business leaders and others argue delaying consensus will have dire consequences for the region’s vitality.

More doubt is cast on Cape Wind plan
Boston Globe, 24 January 2015

House bill aims to address state’s power shortfall
Boston Globe, 29 January 2015

Bill resurfaces to pull NH from Regional Greenhouse Gas Initiative
Nashua Telegraph, 26 February 2015

N.H. lawmakers consider bills aimed at reducing electricity costs
Concord Monitor, 28 January 2015

Wind auction south of Martha’s Vineyard sees low interest
New Bedford Standard Times, 30 January 2015

As Kearsarge Solar Campaign Nears Deadline, Limit On Incentives Causes Uncertainty
NHPR, 30 January 2015

My Turn: Nuclear power has place in state’s energy future
Concord Monitor, 28 January 2015

Pipeline basics: the players, the project
Union Leader, 24 January 2015

Should Canadian Hydro-Power Count Towards N.H. Renewable Energy Goals?
NHPR, 28 January 2015

To protect jobs, energy projects must move forward
Portsmouth Herald (and other publications), 25 January 2015

Charles Arlinghaus: New Hampshire is an economic backwater
Union Leader, 27 January 2015

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Myth vs. reality: region’s energy exec. issues warning

There was a clear message last week from the head of regional grid operator – New England’s energy challenges are not behind us. “We’ve been very fortunate to have a mild winter thus far,” said ISO-NE CEO Gordon van Welie in a call with reporters last week. “But that’s not something that we can count on in the future.”

gas transitions

New England’s volatile wholesale electricity prices follow those of natural gas. As this chart illustrates, natural gas has become the predominant source of fuel for power plants in the region. Source: ISO-NE.

Those mild temperatures, which have helped to ease the pressure on wholesale natural gas and power prices this winter, were prompting some to declare in haste that New England’s energy crisis is over. The reality is that the need for new energy supply and infrastructure is just as great, if not greater, today than it was a year ago.

The next several years will to see more power plant retirements, uncertainty for new energy projects, and prices that reflect volatile commodity markets. In the meantime, New England families and business owners will pay the price of a market in transition.

 

Dave Solomon’s Power Plays: Power man sounds alarm on system’s demands
New Hampshire Union Leader, 22 January 2015

New England’s energy threatened by natural gas line capacity
New Haven Register, 22 January 2015

Winter energy ‘crisis’ fizzles
Nashua Telegraph, 22 January 2015

Good news for Maine, NH has to wait CMP rate decrease a pleasant surprise
Foster’s Daily Democrat, 22 January 2015

Winter energy crisis averted, but long-term strategy still needed
Bangor Daily News, 21 January 2015

Power grid operator: Without more natural gas, electricity prices will stay erratic
Nashua Telegraph, 22 January 2015

Charlie Baker should focus on wind
Boston Globe, 22 January 2015

State of the Grid: Managing a System in Transition
ISO-New England, 21 January 2015

Poliquin says natural gas could help save Maine mills
AP via WCSH, 22 January 2015

Despite Industry Changes, Energy Questions Linger
Business NH Magazine, 21 January 2015

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The false promise of falling prices

It’s easy to be fooled by recent headlines about falling energy prices, but make no mistake – New England’s energy challenges are still very real. The region’s electricity prices, which are the highest in the nation, continue to be at the mercy of volatile commodities driven by supply and demand.

Luck appears to be on New England’s side this winter. Milder temperatures have lowered demand for power compared to last year. On the days that have dipped below zero, there was an adequate supply of fuel for power plants thanks, in part, to ISO-New England’s Winter Reliability Program. Current wholesale prices even mean some customers in Maine are catching a break with their seasonal rates.

Winter fuel mix chart for EB

This chart shows the amount of power, in megawatt hours (MWh) generated by source on January 1, when it was 23 degrees, compared to January 8, when it was 6 degrees. Note the dramatic increase in the use of gas, coal, and oil to meet demand for the colder day. Source: ISO-NE

The energy markets are also reacting to this winter’s dramatic change in oil prices. Cheap oil keeps natural gas prices low by providing a more affordable alternative fuel during times of high demand. It also brings down the cost of importing LNG, which has figured more prominently in to New England’s fuel supply this winter.

In the short term, lower oil prices may seem like good news. But looking long term, relying too heavily on a commodity like oil or natural gas can be risky to consumers who are paying for last year’s high demand and short supply. New Englanders will continue to pay extremely high energy rates until the region diversifies sources of power and ensures adequate supplies of fuel at all times of the year.

 

Electricity prices fall
CommonWealth Magazine, 12 January 2015

New England has most expensive wholesale electricity in nation
New Haven Register, 12 January 2015

England’s natural gas dependence rose in 2014
Hartford Business Journal, 13 January 2015

Dave Solomon’s Power Plays: What crisis? Prices, supply not a concern in 2015
New Hampshire Union Leader, 15 January 2015

Resources’ participation in 2014/2015 Winter Reliability Program improves fuel adequacy this winter
ISO Newswire, 12 January 2015

Price pain turns to gain for many of CMP’s customers
Portland Press Herald, 13 January 2015

What’s happening to oil prices?
Boston Globe, 6 January 2015

Oil Plunge Boosts U.S. Natural Gas Imports to 7-Year High
Bloomberg, 9 January 2015

Column: Why Electricity Costs Spiked
Valley News, 18 January 2015

Haddad files energy bill
CommonWealth Magazine, 16 January 2015

It’s time for answers to state’s energy crunch
Lowell Sun, 15 January 2015

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Passing the test?

The region experienced its first arctic cold snap last week – a major test of New England’s electrical grid since losing the power supplied by Vermont Yankee nuclear power station, which retired at the end of December. So what happened?

To the casual observer, not much felt different other than the frigid temperatures. The lights stayed on and, though prices edged higher, the wholesale cost of electricity was far lower than it was last year during the so-called “polar vortex.” But a closer look shows what went into keeping the juice flowing.

fuel mix 1-8-15

The mix of sources used to generate electricity in New England, just before 7AM, January 8th, which included more coal and oil than usual. Before Vermont Yankee closed, an average fuel mix also included more nuclear. Source: ISO-New England ISO to Go app.

Much more of New England’s power came from firing up coal and oil plants. During extremely cold periods, as the demand for both electricity and for heat goes up, so does the cost of natural gas. Coal and, especially, oil cost less than natural gas to generate electricity during this period and made up much more of the mix than usual.

These existing power plants are critical to ensure grid reliability and temper wild price swings during periods of extreme cold or peak-electricity use. At the same time, as the New England states look for long term solutions that also help meet carbon reduction goals, both public and private sector leaders are calling for a balanced approach that includes the infrastructure needed to access increased supplies of natural gas and clean, renewable energy.

 

Outlook: New England gas demand set to rise
Argus Media, 2 January 2015

“The closure of the Vermont Yankee nuclear power plant could boost New England natural gas prices this winter, with heating demand expected to reach peak levels in coming weeks.”

Arctic Blast Boosts Spot Power on PJM to 10-Month High
Bloomberg, 8 January 2015

“In the Northeast, average spot prices at the hub serving Boston and Northeast Massachusetts were up 1.8 percent at $111.30 a megawatt-hour as of 5 p.m.”

New England power grid forced to deploy oil units
Argus Media, 8 January 2015

“The New England power grid has dispatched oil-fired units more often than normal in the past two days as electricity demand surged amid cold weather and natural gas prices in the region topped those for fuel oil.”

BIA stresses policies beneficial to NH economy
Union Leader, 5 January 2015

“The energy positions include advocacy for policies that ensure reliability and lowering the long- and short-term costs of energy, with positions including efforts to alleviate ‘the current regional energy crisis, advocate for state and regional policies and initiatives that enable the development of low cost, reliable sources of energy, e.g. expanded natural gas pipeline capacity and increased electrical transmission into the region.’”

State-funded report recommends big increase in gas pipeline capacity
Boston Globe, 8 January 2015

“The report looked at various scenarios — allowing for major new power lines from Canada, for example — to come up with a range of 0.6 billion to 0.8 billion cubic feet per day of additional gas pipeline capacity for Massachusetts in 2020.”

Utilities agree to provide power line access to Aroostook wind farm
Portland Press Herald, 7 January 2015

“The agreement between Central Maine Power and Emera Maine is the first of several transmission projects the two companies are jointly pursuing to address transmission congestion issues that must be solved to bring large-scale renewable generation into the region.”

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The end of an era

The end of the year also brought the end of an era for energy in New England as the Vermont Yankee nuclear power station powered down its reactor for the final time. The plant’s closure inspired a number of articles and editorials reflecting on VY’s economic impact, nuclear as a power source, and the future of the region’s strained power system; it was the third generator on the grid to close in 2014, following Salem Harbor and Mt. Tom coal plants in Massachusetts earlier in the year.

Where does New England’s power grid go from here? It’s a topic that will likely be at the center of continued debate in 2015 as the region ponders proposals for new natural gas pipelines and the integration of more renewable resources. It’s also a discussion that has a sense of urgency, considering the recent power plant retirements, noticeably higher electricity prices, and the continued effect of a constrained supply on New England’s energy market.

2014 retirements

New England lost three sources of power in 2014. Other power plants are scheduled to close or are at risk of retiring by the end of the decade.

Mixed reaction as Vermont Yankee plant shuts down
Boston Globe, 29 December 2014

Three States Shoulder Economic Burden Of VT Yankee’s Closure
New England Public Radio, 24 December 2014

Vermont Yankee nuclear reactor shutdown does not end debate: Editorial
Springfield Republican, 31 December 2014

Maine and Vermont’s Yankee connection: Nuclear shutdown, natural gas, dry casks
Bangor Daily News, 1 January 2015

Pipeline politics
Worcester Telegram & Gazette, 31 December 2015

Pipeline push gets a second wind
New Hampshire Union Leader, 25 December 2014

Americans Want America To Run On Solar and Wind
Forbes, 1 January 2015

Fuel prices fall, electricity rises: Confused about energy costs?
Providence Journal, 1 January 2015

Wholesale electricity prices and demand in New England
ISO-Newswire, 22 December 2015

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Rising rates, important debates

GREEN_Elect_Rates Chart

New England’s energy challenges are driving up rates for all utilities, compared to last winter.

As the weather cools off, the debate over energy projects is heating up. Whether it’s natural gas pipelines, wind farms, or just about anything else, one energy consultant says we’ve gone BANANAs (meaning Build Absolutely Nothing Anywhere Near Anything).

The difficulty in finding consensus is getting heightened attention as the region’s energy crisis drives up electric bills and raises the possibility of rolling blackouts. Yet, despite the climate of opposition, both project developers and policy makers in the region continue to work to solve these challenges before they become worse.

(The links below are referenced above)

Mike Marland Editorial Cartoon
Concord Monitor, Dec. 21, 2014

For help responding to pipeline plan, local residents look south
Keene Sentinel, 16 December 2014

“The New Hampshire towns affected include five in Cheshire County —Fitzwilliam, Richmond, Rindge, Troy and Winchester where residents and town officials have already begun to look to Massachusetts anti-pipeline activists for help.”

Opposition lines up against new Alexandria wind plant proposal
Union Leader, 16 December 2014

“Whitlock said the company understood there was opposition to Spruce Wind already in place, in part from opponents of wind-energy plants in the area who take credit for playing a role in chasing away a previous wind-energy project from the area.”

New energy projects face long road ahead
Union Leader, 10 December 2014

“Michael Harrington, a former commissioner of the New Hampshire Public Utilities Commission and now an independent energy consultant, put it this way: ‘It’s so difficult to build in New England we are now BANANAS,’ he said in an interview between presentations.”

Pipeline And Nuclear Shortages Send New England’s Utility Bills Soaring
Forbes, 17 December 2014

“Not sure why New Englanders are so surprised. It was their choice to throw all-in for natural gas and renewables in a land of harsh winters. But they’ve refused to build new gas pipelines. And they’re shutting a nuclear plant that has 20 years of cheap reliable cold-resistant energy left on it.”

Despite outcry over hike in R.I. electric rates, National Grid tells state panel it has no choice
Providence Journal, 16 December 2014

“While the price of power alone is going up 54 percent in Rhode Island, the increase is even steeper in other parts of the region. Rates in Massachusetts have gone up between 59 and 99 percent, while rates charged by one utility in New Hampshire have more than doubled.”

Donnelly: Who’s afraid of rolling blackouts?
MASSter List, December 18 2014

“Rolling blackouts? It sounds like an alarmist comment from some kind of survivalist. But the rolling blackout concern came from the most sober of energy institutions, ISO New England, which is charged with ensuring the reliability of New England’s power grid. And ISO New England is worried about 2016.”

Editorial: Power plant plan deserved a fair hearing
Eagle Tribune, 17 December 2014

“No one wants a power plant in their back yard — and that’s the problem. We all need and use electricity. Well, electricity does not appear by magic. It comes from power plants.”

William A. Walaska: Fighting R.I.’s soaring energy bills
Providence Journal, 14 December 2014

“Addressing these challenges requires a coordinated regional effort. That is why, in December 2013, Gov. Lincoln Chafee joined with all the New England governors to create the Regional Energy Infrastructure Initiative to advance regional infrastructure investments and diversify our energy sources. Critical to the success of this initiative is participation by all New England states.”

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Locating our energy future

We are still more than two weeks away from the end of the year, but some are already declaring 2015 the year of energy. Looking around New England, one can see why. After repeated calls from business leaders, and warnings from power companies, the region is seeing a number of energy proposals come forward.

Some would be located in Maine, some in Vermont, and some in New Hampshire. These projects would expand natural gas pipelines or deliver hydropower and wind energy via transmission lines. In Massachusetts, policy makers are pushing for more incentives to get at least one of these projects built.

New England’s energy challenges require a comprehensive solution. Regardless of which projects get final approval it is clear that the region’s energy future depends on all states working together, and that Northern New England will play an important role.

(The links below are referenced above)

2015 predictions: The year of energy
Electric Light & Power, 10 December 2014

In 2015, utilities will shift their perspective on solar and other alternative sources of energy, and it won’t happen just because of new regulations. They’ll have to offer these resources; if they don’t, they will lose customers to independent renewables providers.

Economic Development Council in favor of increased natural gas capacity in New England
Springfield Republican, 9 December 2014

A shortage of natural gas to fuel power plants, heat homes and power industry could stifle the economy in Western Massachusetts, according to a position statement issued Tuesday by the Economic Development Council of Western Massachusetts.

Utility leaders: We need natural gas pipeline to contain electricity prices
Concord Monitor, 11 December 2014

“It’s pretty simple. We’ve got renewables, we’ve got all kinds of solutions, but at the end of the day, if you want to knock these prices down, if you want to buffer them for the long term, a natural gas pipeline has got to come into the state,” said Daniel Saad, president of Liberty Utilities.

New plan to join wind power with hydropower enters the mix of New England energy proposals
Nashua Telegraph, 10 December 2014

These two separate projects, each of which would cost at least a billion dollars and not be ready until 2019 at the earliest, are part of the large-scale debate over how New England should deal with spiking winter electricity rates, a function of the region’s dependence on natural gas.

National Grid joins hydropower rush
Boston Globe, 9 December 2014

National Grid has partnered with the electricity transmission developer Anbaric Transmission to propose an undersea cable that would bring Maine wind power and Canadian hydroelectricity to Massachusetts.

Natural gas pipeline path through New Hampshire formally introduced to the feds
Concord Monitor, 8 December 2014

The proposed project would expand the natural gas infrastructure of Kinder Morgan subsidiary Tennessee Gas Pipeline Co. to help meet the Northeast’s growing energy needs, the company said.

Firm files for power line under lake
Valley News, 9 December 2014

A company that wants to bring Canadian power to New England through a new line under Lake Champlain formally asked the Vermont Public Service Board on Monday for approval.

Patrick makes a push to help hydropower
Boston Globe, 9 December 2014

Patrick’s top environmental aides are working feverishly on new rules that could compel electric utilities to buy a certain amount of energy from Canada’s big hydro plants.

Even Before Long Winter Begins, Energy Bills Send Shivers in New England
New York Times, 13 December 2014

These latest increases are salt in the wound. New England already pays the highest electricity rates of any region in the 48 contiguous states because it has no fossil fuels of its own and has to import all of its oil, gas and coal.

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