Time for action on high cost of electricity

THE HIGH COST of electricity is a major issue impacting Massachusetts businesses and residents alike. Cheap electricity is available throughout much of the United States. That is not the case in Massachusetts. In 2014, the cost of electricity in Massachusetts spiked to more than double the cost during the past decade. According to the Energy Information Administration, electricity costs in Massachusetts are now 63 percent higher than the national average for residents, 58 percent higher for commercial users, and 108 percent higher for industry.

Massachusetts electricity usage currently comprises approximately 46 percent of New England’s overall demand. A major factor driving up the cost of electricity is high demand without adequate infrastructure to support consumption. That problem is getting worse with the scheduled decommissioning of approximately 10,000 megawatts of generating capacity within the next few years.

The consequences of a politically driven policy with no real-time solutions, whether intended, or not, should be concerning. For example, the Brayton Point Station in Somerset, once the litigation target of the Conservation Law Foundation, is now slated to close in 2017. While this is a great victory for environmentalists, the 1,530-megawatt power plant was the primary producer of electricity in the SouthCoast. There is no planned replacement for the losses of Brayton Point and the now-shutdown Montauk power plant in Somerset. Collectively, these two power plants equate to a 2,000 megawatts net loss of electricity production in Massachusetts.

The shift away from coal and oil energy production during the past decade has been significant. Electricity produced from oil has dropped from 22 percent of the total generation 10 years ago to a 1 percent level today. Coal production of electricity was formerly at 18 percent and is now down to 5 percent. Meanwhile, the percentage of power produced by natural gas has nearly tripled.

The trend away from “dirty” fossil fuels is generally a good thing. Natural gas as a substitute is much less polluting than oil or coal. Natural gas as a power generator is also more affordable than other options. Another factor to consider is that the introduction of alternative power generation will require the use of significant tracts of land or water, must overcome permitting impediments, and has significant upfront costs for infrastructure investment.

After years of advocacy, state government has finally acknowledged and addressed the issue of electricity infrastructure. What was hoped for by many business groups and ratepayers is a pragmatic solution that reduced or stabilized costs while also looking ahead to sustainability. Sustainability as a priority within the state Legislature has superseded cost.

The House energy bill, passed in June, required utilities to contract for 1,200 megawatts of hydroelectricity and for 1,200 megawatts of offshore wind. The Senate version calls for larger imports of hydropower and offshore wind than the House. Now the House and Senate bills are being conferenced. Time is of the essence as the legislative session is nearing conclusion.

Meanwhile, the Federal Energy Regulatory Commission is reviewing whether to expand the Algonquin natural gas pipeline. This is the gas service line that serves New England, including parts of Massachusetts and Rhode Island. While the House version rightfully does not directly impede the potential expansion of natural gas infrastructure, the Senate version includes a provision that would throw up roadblocks to expanding natural gas supply to lower our electricity bills.

The expansion of natural gas should not be put aside for political convenience. Leveraging gas in combination with the expansion of other green alternatives is a reasonable set of options that can be used to contain the high cost of electricity while also meeting environmental aspirations. There is no reason why Massachusetts cannot be practical by moving forward on both fronts simultaneously. Lack of pragmatic action on this issue will lead to even higher electricity costs, which most certainly will impact the cost of living, employment and the Massachusetts economy. Now is the time for action.

Robert Mellion is president & CEO of the Fall River Area Chamber of Commerce & Industry.