Power grid operator sounds alarms

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.

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.”