THIS WEEK THE New England governors will meet in Connecticut to discuss potential solutions to one of our region’s most serious economic challenges: the high cost of electricity and energy.
This is not a new threat as the region has always been at the end of the traditional energy pipeline, costing ratepayers top dollar for fuel imported for electricity, heating, and transportation. But today’s energy market and system is dramatically different and requires new thinking about how to truly solve the regional energy challenges we face today and in the future.
In recent years, two important trends—natural gas and clean energy—have changed the region’s energy mix. These trends have contributed to declining energy bills—until last winter—and made positive impacts on the region’s economy and a cleaner electricity system. Recent electricity price spikes in Massachusetts, Rhode Island, Connecticut, and New Hampshire were due to natural gas supply constraints from the previous winter, causing many to rush to a natural gas only solution, focused on new pipelines. However, this winter was a different story, with low oil prices, increased fuel storage, and timing of cold weather/peak usage that avoided natural gas supply constraints and a repeat of last year’s dramatic price spikes.
The region, however, remains faced with significant supply constraints due to the retirements of large electricity generating facilities and a lack of traditional in-region energy sources. Some natural gas expansion may be needed, but it is by no means the magic bullet solution and with a tripling of natural gas dependence in recent years, a natural gas only solution will further ratepayers’ vulnerability to price fluctuations. Instead, the New England governors must prioritize diversification with cost-effective clean energy resources as a significant part of the mix. Any investments in gas infrastructure must be thoroughly analyzed under a number of scenarios and in comparison with clean energy alternatives to ensure that the region is not investing in infrastructure that will put New England on a path away from a clean energy future or lead to “stranded” investment.
Additionally, the governors must look for solutions that can provide relief to ratepayers today. The ability to deliver additional natural gas supplies to the region may help electricity prices five years from now, when a new pipeline could realistically be built and operational, but there are cost-effective solutions—like energy efficiency, demand response, and distributed solar—that can be implemented today to provide immediate relief to customers and protect them from volatile fossil fuel energy costs by next winter. These resources also have long-term economic benefits, including avoiding costly investments in other generation, grid, transmission and distribution assets. Large clean energy resources such as onshore wind, hydro, combined heat and power, and biomass can be a cost-effective solution to the region’s energy challenges for the near to medium term, and offshore wind can play an important role in the longer term. But these options require today’s political leaders to think past the immediate future and to do the right thing for our region’s long-term, evolving, sustainable energy system.
The governors need to consider all the costs of energy infrastructure investments, with decisions grounded in a comprehensive analysis of both costs and benefits. It is misguided to fail to take into account ratepayer benefits of clean energy resources, as well as the societal, environmental and economic benefits associated with diversifying our energy portfolio with clean energy. A narrow focus only on the costs of the region’s clean energy programs will only show part of the picture and will not contribute to a constructive dialogue around how to genuinely invest in infrastructure that will create a long-term sustainable energy system for ratepayers.
Our energy system is at an exciting turning point. The New England governors have an opportunity to continue the region’s leadership in creating a sustainable energy future and show how a combination of smart clean energy policies and private-sector innovations can spur a dramatic change, creating an energy system that combines customer benefits (of lower and more predictable energy bills) with clean energy growth and thousands of new jobs that benefit our region today and decades in the future.
Peter Rothstein is president of the New England Clean Energy Council.