Connecticut says natural gas infrastructure needs to be upgraded

The Connecticut Department of Energy and Environmental Protection (DEEP) said in a recent report that infrastructure to deliver natural gas to the region’s power plants is inadequate in winter months, when much of the capacity of existing pipelines is used to guarantee fuel for heating.

The department announced release of its draft integrated resource plan (IRP) on Dec. 11. Comments will be accepted on the draft IRP through Feb. 11, Connecticut said.

The draft IRP says that last winter, increased delivered gas prices to power plants and reliance on more expensive and dirtier power from oil and gas fired plants cost the New England region an additional $3bn in wholesale electricity costs. The draft IRP notes that this situation could worsen as several non-gas power plants are scheduled to be retired in the next few years.

This 2014 IRP is a 10-year plan designed to ensure that Connecticut’s electric ratepayers have access to cheaper, cleaner, and more reliable electricity. The 2014 IRP analyzes trends in electric supply and demand, customer costs and rates, and environmental impacts over the 2014-2024 timeframe.

Some of the highlights from the report include:

**As a result of increased use of natural gas to generate electricity in New England since 2007, emissions of nitrogen oxides, sulfur dioxide, and carbon dioxide have fallen 71%, 95%, and 28% respectively.

**Over the next 10 years, Connecticut’s recently expanded energy efficiency investment is expected to offset growth in the state’s annual electricity consumption. The analytics of the IRP include projections of future electricity supply and demand, both in Connecticut and throughout the New England region.

**Connecticut is on track to meet its commitment to using clean energy sources at the lowest cost to ratepayers as a result of long-term contracts signed with commercial-scale wind, solar, and biomass facilities and renewable deployment within the state as a result of programs launched under Governor Malloy’s Comprehensive Energy Strategy. The report notes, however, that as other states in the region work to reach their renewable energy goals there will be competition for the limited supply of existing renewable resources and a shortage of these resources could develop by 2018.

The effect of regional pipeline constraints is seen in rising standard service generation charges and may continue to be felt until additional pipeline capacity or other solutions are put in place.

Report cites increased reliance on natural gas

Air pollution emissions in Connecticut have decreased markedly, as low-cost natural gas-fired generation continues to displace coal and oil-fired generation, according to the 127-page report.

In 2013, natural gas generated 45% of the energy used in New England, a proportion that reflects the current generation capacity without additional gas infrastructure build-out.

Due to market failures, gas-fired generators — who now produce more than half of the region’s electricity — are not contracting directly for the gas capacity they need to run. Demand for natural gas in New England has increased to a point that there is no longer enough “excess” pipeline capacity in the region to deliver the gas needed for reliable, competitively-priced electricity generation, particularly in the winter months when existing gas capacity is needed for building heating, according to the Connecticut draft report.

Consequently, the wholesale spot market price of natural gas delivered to New England is significantly higher — from only about $1-$3/MMBtu before 2012/13 to $8/MMBtu in 2012/13, and almost $14/MMBtu in 2013/14 — than the price of gas delivered to other regions in the country.

During the winter of 2013/14, these increased delivered gas prices cost the New England region an additional $3bn in wholesale electricity costs, driving up retail generation rates for families and businesses across the region.

This infrastructure challenge is expected to worsen as thousands of megawatts of non-gas power plants retire and are replaced with new gas generation, the report said.

“For more than a decade, the New England region has enjoyed a surplus of electric generating capacity needed to meet reliability objectives,” according to the draft IRP. “At the regional level, however, the New England capacity surplus is rapidly dwindling. Beginning in 2017, the region will face a capacity shortage of 143 MW, primarily due to the announced retirement of 4,100 MW of non-gas generation resources and a reduction in capacity imports,” according to the draft report.

“This shortage is expected to worsen over time,” DEEP goes on to say in the report.

 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.