Power grid operator sounds alarms

Gas pipeline concerns raised at conference

OFFICIALS CHARGED WITH KEEPING the lights on in New England raised alarm bells on Thursday about what might happen if the region’s natural gas pipeline infrastructure is not expanded.

Gordon van Welie, the president and CEO of ISO-New England, which operates the regional power grid, has long been a proponent of bringing more natural gas into the region. But he said he now believes new pipelines will not be built because of environmental concerns. He also said growing opposition to new power plants that can burn both natural gas and oil will make it more difficult to weather future natural gas shortages.

“This has got us really worried,” he said at a conference on US-Canada energy trade and technology at the Seaport Hotel.

Without a new gas pipeline coming into the region, van Welie said, many power plants are likely to run short of gas during extreme cold periods during winter months. While that didn’t happen last winter, van Welie said the odds will increase in coming years as the Brayton Point power plant in Somerset, Pilgrim Nuclear Station in Plymouth, and other existing power plants go offline.

Van Welie said one response to any gas shortage has been the construction of power plants capable of burning natural gas when gas is plentiful and shifting to oil when gas is scarce. But he said environmental opposition to so-called dual-fuel power plants is growing, and he no longer sees that as a viable solution to gas pipeline constraints in the region.

As a result, he said, it may be necessary to pay non-gas power plants more in the future to keep them operating. He said decisions on price supports for non-gas power plants would probably be made on a case-by-case basis.

Van Welie also raised concerns about New England states contracting directly for renewable energy outside the existing marketplace for electricity purchases. Massachusetts, for example, is preparing to sign contracts directly with offshore wind and hydroelectric suppliers. Van Welie said these one-off contracts make sense for policymakers trying to reduce greenhouse gas emissions, but they have the potential to undercut the existing forward capacity market, which has been fairly efficient in meeting the region’s power needs at the lowest possible cost.  “This market framework is vulnerable,” he said.

John Reed, chairman and CEO of Concentric Energy Advisors, said the solution is to incorporate the greenhouse gas concerns of policymakers into the existing market structure. “Bite the bullet. Price carbon,” he said.

Van Welie agreed that putting a price on carbon or creating some sort of surrogate for carbon pricing would make the most sense, but he said he sees little chance that state leaders or commissioners of the Federal Energy Regulatory Commission under Donald Trump would go along with such an approach.

James Judge, the president and CEO of Eversource Energy, expressed confidence the Access Northeast natural gas pipeline will be built. The project, a joint venture of Spectra Energy, National Grid, and Eversource, ran into problems this year when the Massachusetts Supreme Judicial Court ruled that electric ratepayers under existing state law could not be charged extra on their bills to finance a gas pipeline. Lawmakers in both branches of the Massachusetts Legislature also took stands against a so-called pipeline tax.

In an interview after his talk at the energy conference, Judge said Eversource will lobby the Legislature this coming year to pass a law permitting electric utilities to assess their customers for natural gas pipeline infrastructure. He said more natural gas would bring down electric prices in the region and save customers more money than they would be charged to build the pipeline.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Judge said the company will also explore a Plan B, having natural gas ratepayers finance or partially finance a new pipeline. No law prevents natural gas ratepayers from financing a pipeline, but in general gas purchased this way flows to natural gas customers. Only excess gas that isn’t needed is sold off, typically to power plant operators.

Van Welie said the problem with Eversource’s Plan B is that, during periods of extreme cold weather, there may not be much surplus gas that could be sold to power plant operators. At best, van Welie said, Eversource’s Plan B would delay the advent of natural gas shortages and not eliminate them.

Asked why Judge is so optimistic and he is so pessimistic about a new pipeline being built, van Welie said their views reflect their different positions.  “I think maybe he has to be more optimistic, while we have to be pessimistic,” van Welie said. “I hope Eversource is right.”

  • NortheasternEE

    The Green Communities Act and the Global Warming Solutions act are forcing the early retirement of baseload coal and nuclear power plants in the false expectation that wind and solar power will fill the gap. Lawmakers have been misled into the belief that all megawatt-hours fed into the grid are the same. What Gordon Van Welie is telling us is that the grid does not run on energy. The grid runs on power, and the baseload power forced into early retirement by the policymakers can only be replaced with fossil fuel, not wind and solar.

    Beacon Hill has forced the system into danger for blackouts and brownouts, skyrocketing rates, and little to no carbon avoidance.

    Tell Beacon hill to stop before it’s too late!

  • anonymousnethead

    This is what happens when technocrats are cut out of policy decisions in favor of well-intentioned but misinformed activists. The Legislature and the public are entitled to a good bit of skepticism about claims from Spectra and Eversource. When ISO New England is “really worried” about our electrical energy supply, it is time to listen.

    I fear that the environmental movement’s jihad against pipelines is going to backfire. If there is a serious supply shortage, they will own it.

    • Pat Brady Martin

      “Technocrats?” What technocrats? Are you referring to the paid lobbyists who push pipeline solutions? At least here in NH, many of them are good looking and equipped with talking points from the State and National level Chambers of Commerce and ALEC. I would hardly call them “technocrats!” Yes, our legislators are definitely listening to them above the voices of environmentalists with PhD’s in science and technology who are advising against pipelines. But, hey, we should just trust those pretty faces and nice suits, eh?

  • Mhmjjj2012

    On 9/16/2016, CommonWeath ran an article “Study: Storage could deliver 600 MW in 10 years” in which Massachusetts Department of Energy Resources Commissioner Judith Judson said last year the most expensive 1% of electricity hours accounted for 8% of electrical costs. What’s CommonWealth doing to look into that? Previously CommonWealth reported New England’s wholesale electric generating market is the “most lucrative” in this country according to Moody’s. Are those two connected? If so, how?

  • Mhmjjj2012

    Gordon van Welie, the president and CEO of ISO-New England, said these one-off contracts…have the potential to undercut the existing forward capacity market, which has been fairly efficient in meeting the region’s power needs at the lowest possible cost. How about some background on that forward capacity market? Especially it’s very recent past history where ISO-NE paid the poorest performing or perhaps more accurately nonperforming electricity generators for not providing electricity when needed?

  • Mhmjjj2012

    According to ISO-New England’s 2014 IRS Form 990, Gordon van Welie received more than $1.8 million as president and CEO of ISO-NE. Each member of the Board of Directors received about $100k for 6 to 11 hours of work a week.