WHEN VERMONT YANKEE stopped producing electricity for the grid last month, it achieved a major policy goal for advocates of deactivation but it also removed a major clean energy source from our region’s mix of power generation. This deactivation comes in the midst of a time of crisis for our region’s energy consumers, a crisis caused by significant challenges to grid reliability and severe spikes in electric utility costs. This recent change in Vermont only highlights the reality of New England’s energy situation, a confluence of multiple factors, which can no longer be ignored.
When Massachusetts consumers opened their electric bills last month, they had a most unpleasant surprise. Massachusetts electric customers—business owners and residents across the Commonwealth– received a rate increase of more than 30 percent.
I have devoted my career to navigating the political realities of energy and the environment in a way that results in cleaner energy, improved environmental quality, and reduced carbon emissions. As an enthusiastic supporter of renewable energy, I am confident that wind and solar will be the future anchor of electric generation for New England and the entire United States. As a pragmatist, though, I recognize that the day when that is technologically feasible is not yet here and that we must find a cleaner, affordable replacement for reliance on coal and oil before the renewable assets we need become available.
In the interim, we need to build the needed infrastructure that will lower our energy costs while still creating a renewable future. Building new natural gas infrastructure today will eliminate the high cost of electricity by making cheaper, cleaner natural gas, located only 200 miles away from New England, available to generators of electricity. Let me explain how since, as with all energy issues, the explanations are complex and have occurred over time.
At the urging of environmental groups at the time, the unified New England electric system moved decisively in recent years toward gas-fired power. Today, more than half of all the electricity consumed in the region is generated by gas, which we happen to have in abundance within the borders of the United States. When natural gas is burned, it has significant environmental advantages over oil and coal.
One of the most abundant deposits of natural gas in the world rests in the Marcellus Shale, roughly 200 miles from the western border of Massachusetts. Unfortunately, there is no way for consumers in New England to gain adequate access to this gas. The network of pipelines servicing New England, most of them decades old, do not have the capacity to supply all of the gas we need on many days of the year, both to heat our homes and run our power plants, and especially on the coldest days of winter.
Because of the mismatch between demand for gas and capacity to deliver gas, New Englanders pay a huge premium for this cleanest of fossil fuels. That premium is called the basis differential and it now totals approximately $3.6 billion per year. Massachusetts pays the largest share of it, about $1.9 billion, and this differential creates the huge increases that consumers are seeing in their electric bills.
Our price differential is hurting every electric consumer who lives and works in New England. Most of us, understandably, do not know what the basis differential is and what it is doing to us, but it is the most significant energy problem hiding in plain sight, and it is one for which there is an actionable solution. How much more capacity is needed? A reasonable estimate is enough to provide an additional 2 billion cubic feet of gas per day. An upgrade that size would cost approximately $3 billion, less than the regional basis differential in one year! In other words, the costs of last winter’s “Polar Express” debacle would have been paid off by today.
Energy infrastructure has a cost beyond dollars, whether it is an electric transmission line running through a forest, a dam altering a river wilderness, wind turbines looming over a beloved mountain or ocean sound, or a gigantic ship carrying liquefied natural gas (LNG) that temporarily shuts a harbor.
But the BANANA approach – Build Absolutely Nothing Anywhere Near Anything — will never work in New England, or any other locale in the global marketplace. BANANA offers no solutions, only a prescription for economic retreat. We should also be mindful that pipelines like the two proposed for Massachusetts will be mainly buried, and that the newly revised route for one will place 90 percent of the pipe on existing utility rights of way.
To get to the clean-energy future we all want, we need a sturdy bridge. It will be built of many parts, including ever-more effective methods of energy efficiency, electric vehicles, and deeper retrofits. The first step to building that bridge is to put in place new gas pipelines in Massachusetts to sustain and grow our economy today and to support the growth for our greener future.
Barbara Kates-Garnick was most recently the undersecretary of energy in the Patrick administration’s office of energy and environmental affairs. She is currently working as a senior advisor to the Coalition to Lower Energy Costs, a group supporting natural gas pipeline expansion as part of an overall strategy to lower energy costs. The coalition is funded by individuals, large energy consumers, and pipeline companies.