CO2, gas pipelines, Canadian hydro and other issues confront New England

A new report on the New England energy landscape examines everything from increasing reliance on natural gas to generate electricity to the potential and problems associated with offshore wind and imported hydro power from Canada.

The report, on the “New England, Energy Landscape: History, Challenges and Outlook,” was released recently by the New England Council.

The New England Council—the nation’s oldest regional business association—“is dedicated to promoting economic growth and a high quality of life in the New England region,” the organization said in the report. Ensuring “reliable and cost-effective electric power service” is vital to the region, the association said.

One of the early charts in the report shows that New England states tend to have electric prices range from 16.62 cents to 19.86 cents/kWh in 2016. All six New England states rank among the top 10 costliest states for electricity, based on Energy Information Association (EIA).  

“This report aims to offer an impartial, unbiased explanation of the fundamental issues facing policymakers, regulators, and legislators in the New England energy debate,” according to the October report.

“Perhaps the central question in this whole debate: How much can New England trust a free market, with policies that don’t pick winners and losers, will solve problems of high price and supply and meet our emissions and climate-change goals?:

“If, as now seems likely, the answer is a mix of free-market forces and policy direction: What’s the right mix? How do we get there?”

New England’s energy system has reached a complex crossroads.

“In coming months and years, legislators, regulators, and policymakers will have to make challenging, interrelated, and far-reaching decisions about how the region meets its future power needs and environmental policy mandates, from what energy sources, and at what cost for businesses and consumers across the region,” the council said in the report.

At the policy level, legislators, regulators—and now judges—are weighing proposals from New England governors to allow electric utilities to have customers pay for more natural gas capacity as a strategy to improve electric and gas supply reliability and lower costs. Also under consideration and taking effect are new proposals to allow those utilities to enter into long-term contracts for renewable energy such as offshore and onshore wind and large-scale hydropower, including big imports from Canada.

“Power-grid managers are bracing for the imminent planned shutdowns of New England’s biggest coal-fired power plant and yet another nuclear plant, with likely more shutdowns to come, while also preparing for billions of dollars in proposed new energy infrastructure, much of it for renewable energy,” according to the council report.

States and grid managers are working to improve the finances and mechanics of incorporating renewable power and energy storage into the grid, and the most effective ways to promote energy efficiency and targeted conservation and “smart-grid” technology.

“This is all happening within mandates in all six states to reduce overall carbon-dioxide emissions, with key deadlines coming in just 3 years, and to meet requirements for getting energy from renewable sources,” the report said.

Given that natural gas delivered 43% of New England’s electric consumption in 2014, and in the workings of the competitive market gas sets the wholesale price 70% of the time, according to ISO New England’s 2016 “Regional Energy Outlook,” proposals for increased pipeline capacity to lower the cost of electric generation will change the economics of renewables and nuclear power, as well as of liquefied natural gas delivered by ship to meet peak local needs.

Key issues facing New England in 2016

The report reviewed a number of big headlines affecting the energy sector and consumers in New England during 2016. Here are a some examples:

• Massachusetts, Connecticut, and Rhode Island are jointly moving to acquire more renewable energy, including on- and off-shore wind from throughout New England and hydro power from Quebec and other areas of Canada, through a three-state Request for Proposals (RFP) that has generated more than 30 initial responses from energy developers.

•In Massachusetts, Gov. Charlie Baker on Aug. 8, 2016, signed legislation that directs the state’s utilities to solicit contracts for 1,600 MW of offshore wind generation and 9.45 million megawatt-hours per year of “clean energy,” most likely Canadian hydro –in all, about 30% to 40%.

•Massachusetts’ highest court has ruled illegal under state law a plan to have electric ratepayers billed to pay for more gas capacity intended to reduce electric rates—something Connecticut, Maine, New Hampshire, and Rhode Island have all been considering.

Kinder Morgan’s Tennessee Gas has announced it is abandoning a $3.3bn pipeline project across Western Massachusetts and New Hampshire amid intense local and regional opposition.

• More than $2bn worth of other gas pipeline upgrades by Kinder Morgan and Spectra Energy and their partners are well under way, but often facing controversy and lawsuits.

• This past winter, New England avoided a repeat of the dire winter of 2013-14. But the region’s power-grid operators remain deeply concerned that New England may be too reliant on natural gas for electricity and could face major reliability problems during a pro-longed winter or gas supply interruption.

• 2020 deadlines in several states for reducing Greenhouse Gas emissions are rapidly approaching, and Massachusetts’ highest court this spring ruled that the state’s Global Warming Solutions Act contains binding limits for 2020 that must be enforced by regulators.

• Owners of the Pilgrim nuclear generating station in Massachusetts announced in the autumn of 2015 that it will close in June 2019. This came soon after Vermont Yankee shut down at the end of 2014. Losing the nuclear plants will make it even harder for New England states to attain their CO2 reduction goals.

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.