If New England’s governors wanted something to help buttress their case for an unprecedented new electricity tariff, ISO New England just gave it to them.
The Holyoke-based grid operator reported today that the volatile natural gas market in this region pushed wholesale electric prices up by 55 percent last year. We’re already seeing some of this at the retail level, but the real impact will likely be seen in our monthly bills next winter.
Driving this increase is a 76-percent jump in natural gas prices in New England over the same time frame. This region has become increasingly reliant on natural gas as older plants are retired, but pipeline constraints are making it tougher to take advantage of the cheap shale gas from Pennsylvania.
Wholesale electric rates had hit their lowest point in 2012 since the current market system took effect in 2003. So we had been enjoying some benefits from the low-cost Marcellus Shale gas. But it’s going to get harder to do so as more people and businesses convert from heating oil to natural gas, putting added pressure on the pipeline network.And how would they pay for this expanded pipeline network? From the same source, different link:
Here's one more reason to complain about this bitter cold snap we're all experiencing: It could cause our electric bills to go up again next year.
We saw this already in the past year, with National Grid's and NStar's rates rising by double-digit percentages this winter. Blame New England's constrained pipeline capacity: On cold days, the natural gas pipelines are filled to capacity, but power plants that normally rely on that gas get bypassed to ensure heating customers get what they need.
To keep the lights on, more expensive gas is imported from Canada, and rarely used oil and coal turbines are fired up. (During this cold weekend, as much as 35 percent of New England's electricity came from coal and oil, compared to less than 4 percent normally.) This pattern of tight natural gas supplies and high wholesale electric prices already happened last February, driving up the cost of electricity to consumers this winter.
Well, top state officials across New England are paying attention, and they've come up with an unprecedented solution. The New England States Committee on Electricity, a group of the six governors' top electricity regulators, sent a letter to electric grid operator ISO New England last week on behalf of the states' governors. In that letter, the regulators ask ISO New England to approve a tariff on electricity that would help pay for increased natural gas pipeline capacity into New England by the end of 2017.