WHOLESALE ELECTRICITY PRICES in New England hit near-record lows in 2017, but they spiked dramatically during the last week in December when temperatures plunged.
The operator of the regional power grid said on Tuesday that the total value of New England’s wholesale electric market in 2017 was $4.5 billion, the second-lowest amount in the last 15 years. The lowest year was 2016, when the market was valued at $4.1 billion.
Prices were low because demand for power was down 2.7 percent, largely because temperatures were generally mild during the year. The average price of natural gas – the primary fuel used to generate electricity in New England – was $3.72 per British thermal unit. That price was the second lowest in the last 15 years, trailing only 2016’s price of $3.09.
The pricing picture changed dramatically during the last week in December, when extreme cold weather moved into the region. Demand increased for natural gas to heat homes, and pipeline constraints meant there was limited gas available for power generators. As a result, the price of natural gas spiked and the total value of the wholesale electric market during that one week was $396 million, or 8.8 percent of the bill for the entire year.
“Reliability was maintained with heavy use of oil-fired power plants, but operations became tenuous as their oil supplies were depleted and some neared their emissions limits,” the grid operator, ISO-New England, said in a press release.
The report represented another data point in the debate over whether New England needs additional natural gas pipeline capacity. Opponents of new pipelines could point to the generally low prices and say the system is working just fine as is, while supporters zeroed in on the results from the last week in December when the lack of pipeline capacity meant electricity prices skyrocketed.
Stephen Dodge of the Massachusetts Petroleum Council said more pipeline capacity would have kept electricity prices affordable for the entire month of December. “The ISO data add to mounting evidence that all New England suffers from entirely needless, self-inflicted spikes in energy costs that can easily be eliminated with improved access to natural gas sources just 300 miles away in Pennsylvania,” he said.
The fuel shortages are primarily due to the early retirement of baseline power from coal and nuclear who depend on the wholesale market for revenue. ISO-NE blames in part the above market contracts for renewable energy that bypass the wholesale market for reducing the volume of the wholesale market. It is this market interference by state governments that is responsible for the shortages and the price spike.
state and regional legislators began experimenting with renewable energy with laws like the Green Communities Act in 2008 calling for reengineering the grid to include 20% qualified renewable energy by 2020. We were assured that the grid could handle 20% without major modification. We now know that Beacon Hill’s engineering skills are sorely lacking. With less than 5% coming from renewable wind and solar, the grid is being threatened with blackouts, rates are rising sky high, and carbon avoidance has stalled.
Beacon Hill needs to repeal the green laws that are preventing ISO-NE from giving us electricity with the lowest price possible. If and when green power becomes competitive, it will not need government help to compete.
Reducing pollution is a good thing.
Going wholly green renewable, however, is impossible.
For but starters, manufacturing, installing and maintaining wind and solar power generation assets generate pollution.
Similarly, proposed and so-called battery-based solutions to the variability of solar and wind power generation not only also generate manufacturing, installing and maintenance pollution, they also entail hazardous materials disposal costs.
Solar and wind power generation is also typically more – to a lot more – costly.
Conversely, moving from coal and oil-fired power generation to gas-fired power greatly cuts pollution as well as at moderate cost.
At minimum, gas offers an affordable way to provide power as well as reduce pollution on a transitional basis.within a longer term plan.