New England governors vow to boost natural gas capacity
States will coordinate policies but tackle details on their own
THE NEW ENGLAND governors met behind closed doors on energy issues in Hartford on Thursday and vowed afterwards to work collaboratively to expand the region’s natural gas pipeline capacity.
What shape that collaboration will take was unclear, as a seven-paragraph statement issued by the governors after their meeting offered no specifics. The plain-vanilla statement blamed the region’s high electricity prices on “a lack of natural gas pipeline infrastructure” and the retirement of non-gas power plants. The governors said they would coordinate policies jointly while taking action individually.
“We all believe this is a crisis and collective action needs to be taken,” said Connecticut Gov. Dannel Malloy, who was joined at a press conference by Govs. Charlie Baker of Massachusetts, Gina Raimondo of Rhode Island, Peter Shumlin of Vermont, and Paul LePage of Maine. New Hampshire Gov. Maggie Hassan was attending a funeral in her home state and sent some of her top aides in her place.
Elin Katz, a Connecticut consumer official, said winter 2015 electricity prices averaged 17.34 cents a kilowatt hour across New England compared to a 12.81-cent average across the three states of New York, New Jersey, and Pennsylvania. Malloy said the price spikes collectively added about $7.5 billion to the region’s electricity tab over the last two winters and LePage said the high costs put the region at a competitive disadvantage.
Government intervention in the market is needed, Malloy said. “The marketplace itself has not resolved this issue,” he said. “If I made $7.5 billion, I’m not sure I would resolve the situation.”
Numerous companies want to build pipelines that would bring relatively cheap natural gas from Pennsylvania into New England. Other companies want to build electric transmission lines that would bring in hydroelectric power from Canada and wind power from northern Maine. The work can’t begin until the states figure out who will pay the billions of dollars needed to build these projects.
Judging from comments made at Thursday’s gathering at the Connecticut Convention Center, officials from Massachusetts, Connecticut, Rhode Island, and Maine seem on board with splitting the costs among their ratepayers. Matthew Beaton, the secretary of energy and environmental affairs in Massachusetts, said the participation of New Hampshire and Vermont is more iffy. New Hampshire is where some of the proposed pipeline and transmission projects would be located.
“The biggest challenge is who is paying for it,” Beaton said of the proposed pipeline and transmission projects. Still, he said, the meeting of the governors was a big step forward. “It’s very powerful,” he said. “It shows the unity.”
The New England governors have been down this road before. In December 2013, they agreed to explore a regional solution to the high cost of electricity and proposed paying for new gas pipeline and transmission lines with a tariff on the wholesale price of electricity. That approach was simple and straightforward, but officials at the Federal Energy Regulatory Commission viewed it as too interventionist in local markets. Former Massachusetts governor Deval Patrick pulled back his support in the face of opposition from state lawmakers and environmentalists.
The new approach outlined by the governors on Thursday is far more complicated and politically challenging. The governors would agree on a policy framework but individual states would carry out those policies as they see fit.
Environmentalists are wary about building more pipelines carrying fossil fuels into a region that is already heavily reliant on natural gas. They favor the development of renewables and the promotion of energy efficiency measures.
Gordon van Welie, president and CEO of ISO New England, the region’s power grid operator, said the region relies on natural gas for 44 percent of its electric energy production, a percentage that is likely to increase over the next decade as coal, oil, and nuclear power plants retire. He said natural gas shortages this winter were dealt with by importing liquefied natural gas and shifting more electricity production to oil and coal, which generate more pollutants.
“There are alternatives to burning fossil fuels, such as renewable energy,” van Welie said in a talk prior to the governors meeting. “While these resources can offset the need for gas, they are unlikely to be developed in sufficient quantity in the time frame needed. There is also the operational reality that renewable resources cannot be fully relied on when our demand is highest in the winter months. The one possible exception is imported hydro energy, but only if the delivery of that energy has been guaranteed, since our neighbors to the north also experience high demand for that energy during cold periods.”
According to 2014 data, solar and wind power currently meet only a tiny portion of the region’s energy needs, less than 2 percent.Patrick Woodcock, director of LePage’s energy office, said Maine is losing manufacturers because of the high cost of electricity, but needs the help of the other New England states to address the problem. “This problem requires regional cooperation. There is no way one state can handle this problem on its own,” he said. “We’re one regional energy market. We need one regional energy plan.”
Malloy echoed that theme. “We’re either going to solve these problems together or suffer the consequences in our individual states,” he said.