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Page added on July 6, 2014
Electricity, gas shortage a real threat
New England’s electricity supply is in peril.
As reported today in our page-one story, the region’s residents are increasingly relying on relatively inexpensive natural gas to heat their homes and turn on their lights. According to the regional electricity transmission organization ISO-New England, natural gas power plants alone produced 46 percent of the region’s power in 2013, up from 15 percent in 2000. But in recent years, natural gas has come at an ever-increasing price to the region’s consumers for a number of complicated reasons — and there’s little chance of the situation abating in at least the next three or four years.
What this means for ratepayers is that those monthly electricity bills, already higher in 2014 than in 2013, will continue to rise. And energy experts from throughout the region say there is really nothing much in the short term that can mitigate the situation.
What is driving this recent crisis, say energy analysts, is insufficient natural gas pipeline capacity coming into New England coupled with the retirement of older and largely fossil fuel-powered plants. Most of the time, the existing regional infrastructure can handle our electricity needs. But during the bitterly cold days of this past winter, natural gas coming into New England was being diverted first to heat homes because gas utilities had contracts to buy the gas. What was left over went to natural gas power plants, and last winter it wasn’t enough. ISO-New England is charged with keeping electricity flowing, no matter the source, so it turned to more carbon-polluting and typically more expensive forms of energy, oil and coal. But many of those plants, which find it uneconomical to run only when cheaper natural gas becomes too expensive, are retiring.
In Massachusetts, both Brayton Point and Salem Harbor coal-fired plants are going offline. And the aging Vermont Yankee nuclear power plant owners recently announced it, too, was heading toward decommissioning. In the next 3½ years, more than 3,300 megawatts of generating capacity is retiring, a number ISO-New England believes could reach 8,300 megawatts by 2020. As the entire New England generating capacity is 32,000 megawatts, the strains on the system are evident.
So significant is this crisis that the governors of all six New England states — from conservative Paul LePage of Maine to progressive Deval Patrick of Massachusetts — jointly signed a letter committing the states to look for a regional solution. As a result, their energy offices have devised a $2 billion-plus plan that calls for a 25 percent increase in natural gas pipeline capacity and additional transmission lines to bring at least 1,000 megawatts of “clean energy” into the grid — including hydro, wind and solar power. It is “an imperfect solution,” said Birud Jhaveri, Massachusetts deputy commissioner for energy policy and assurance. And we agree. Natural gas is not carbon-neutral, and the full implications of fracking operations to extract it are still unknown.
We would like to see more renewable energy solutions in the plan. And ratepayers will once again be faced with the bill for infrastructure improvements — although the states make clear they will not approve the plan unless the savings on ratepayers’ electricity bills are greater than the cost of infrastructure. But we are convinced that energy experts are not exaggerating the extent of the crisis facing us in the next four to seven years if something is not done. It is important that we all start paying attention to this issue. The states have an aggressive schedule for their plan and want to implement it as soon as possible — and its implications are far reaching, setting energy policy for the region for many years into the future.
13 Comments on "Electricity, gas shortage a real threat"
Plantagenet on Sun, 6th Jul 2014 9:51 am
Shifting to clean, cheap natural gas is a smart move. And, as Obama pointed out, we have a 100 year supply of NG so supply shortages are unlikely.
rockman on Sun, 6th Jul 2014 10:14 am
“What is driving this recent crisis, say energy analysts, is insufficient natural gas pipeline capacity coming into New England…”. No…it isn’t. The lack of some pipelines may be inhibiting the distribution of NG from one region to another. But the rising cost of NG and the supply concerns are rooted in the undeniable fact that the US consumes more NG then it produces making us a net NG importer. There is no surplus of NG anywhere in the country that could be sent to the Northern states. They only way new pipeline capacity would help my Yankee cousins would be for them to fill those pipelines with NG by outbidding other consumers for that limited commodity.
And that is much more likely to provide them with more expensive NG since, in addition to outbidding other consumers, the pipeline investors will require the Northern consumers to pay them off via the transport fees.
JuanP on Sun, 6th Jul 2014 10:59 am
Better home design, insulation, and smaller homes is the only permanent solution. At least one room in every house should be seriously insulated.
The energy crisis is not temporary, seek permanent solutions!
Nony on Sun, 6th Jul 2014 12:07 pm
It’s their own fault. It’s technically feasible to build the needed pipeline capacity in less than 12 months. A lot of the delays are permitting hassles. Or they could stick with coal and nuclear. But they don’t want that either. WEll, have fun conserving, Yankees.
Nony on Sun, 6th Jul 2014 12:11 pm
Rock:
In eastern Ohio, gas is going for under $4. The issue is ABSOLUTELY a transport bottleneck to New England. There are plenty of industry veterans (e.g. RBN) writing about this.
As far as the problem coming from the US being a net importer, why then has New England price gone up while the PERCENT that we import has gone down?
Nony on Sun, 6th Jul 2014 12:33 pm
See this image:
http://www.eia.gov/todayinenergy/images/2014.01.07/chart3.png
That’s a regional issue. You got a bottleneck and when demand spikes, you get price increases. New York solved their problem by adding capacity. Boston hasn’t. QED.
GregT on Sun, 6th Jul 2014 3:08 pm
“Electricity, gas shortage a real threat”
That’s OK, we have enough _____ ( insert your favourite other finite non-renewable resource here) to last for ___ ( insert any comforting non- realistic, random number here) years.
So simple, even a complete moron can figure it out!
rockman on Sun, 6th Jul 2014 3:31 pm
“The issue is ABSOLUTELY a transport bottleneck to New England.” Exactly as I said: inter-regional distribution problems exist. But shipping more NG to New England means it will be supply taken away from other US NG consumers. As you say: go with coal or the nukes. Or maybe start importing LNG.
But again the stats still holds for overall consumption: the country cannot supply all the NG required by our consumers whether more pipelines are built or not. If folk want all the domestic NG they require the encourage more NG drilling.
As far as $4 NG in Ohio no one is going to spends $billions for pipelines to buy $4 NG in Ohio and sell it in NY for $4. A really simple economic model.
Nony on Sun, 6th Jul 2014 3:38 pm
It’s the Yankees being all enviro-librul and not building pipelines. It’s permitting holding things up…not the cost of steel in the ground.
toolpush on Sun, 6th Jul 2014 5:58 pm
Rockman,
I hope the Marcellus has a surplus of gas waiting on pipelines, as 9-10 bcfpd takeaway capacity is coming online in the next 3-4 years by reversing the current south-north and west-east pipelines.
New England must be a much more logical market for this gas if takeaway capacity existed, or pipelines could be easily built but it looks like it is going to La, Chicago and Florida.
Now if you are saying the Marcellus doesn’t have spare gas for the New England, then there is going to be a lot folks down your way very disappointed.
Nony on Sun, 6th Jul 2014 6:10 pm
RBN energy has great posts on Marcellus. Marcellus is truly mighty. Amazing how few rigs (40) required to keep production stable. That is definitely a takeaway limited formation.
toolpush on Sun, 6th Jul 2014 6:19 pm
Nony,
I agree, Marcellus must have a lot of gas, it will be interesting to watch how it handles all the up coming take away capacity. You never know a systems limits until it is stressed, so time will tell. Remember Saudi only had 20 rigs working back in the 70’s and 50 in the Naughties, now they are aiming for 200. I think we can say they are now coming under stress. We will have to wait and see how much it takes to stress the Marcellus.
rockman on Mon, 7th Jul 2014 9:22 am
Pusher – And that highlights why the discussion gets off track: local supply dynamics vs national supply dynamics. S Texas will always have a surplus of NG because the is little local demand. But that doesn’t change the fact that nationally the US consumes more NG then it produces. And perhaps one day the Marcellus may produce more then the local economy might require. But that doesn’t guarantee the US won’t still be a net NG importer.
Sometime down the road Texas and La will collectively have a surplus of NG while other areas in the country will be desperate for the commodity. IMHO at that time pipelines won’t be the limiting factor determining if those regions get the supplies they need…prices will.