More gas pipelines may not be the energy answer
ATTORNEY GENERAL MAURA Healey deserves praise for her plan to study the region’s electricity supply — including the need for expanding natural gas pipeline capacity. In the context of electricity costs, reliability, and climate change, such an inquiry is hugely important for several reasons.
The biggest issue is this: Adding natural gas pipeline capacity may not control energy costs in Massachusetts. The Baker administration and many people in the energy sector are taking it as an article of faith that the region needs to be able to bring in more gas by pipeline. In the face of high prices and limited pipeline capacity, it would be logical to conclude that increasing supply would cause prices to fall. It might also be wrong.
Yes, electricity prices — tied largely to the cost of natural gas — did rise sharply last winter. But that wasn’t because of the especially harsh weather. Instead, it was chiefly due to the anticipation of high natural gas prices and shortages that never materialized. The anticipation drove up the cost of natural gas, which had to be secured before the winter started. Concerns prior to the winter also prompted the region’s electric grid operator to require electricity generators to take steps to mitigate the squeeze on natural gas supplies — a wise maneuver, but one that also added cost.
Another indication that the “more gas means lower prices” logic may not hold comes from the experience of Pennsylvania during the winter of 2014. Natural gas prices spiked, even though Pennsylvania is in the heart of the Marcellus region — home to the largest supplies of natural gas in the Eastern United States. If Pennsylvania isn’t immune to gas price volatility, it’s worth asking whether New England can get better results by increasing supply.
Also, we are still pretty much flying blind about how much natural gas we might need. Gas proponents will say the need for more natural gas has already been studied to death. But the studies to date do not provide adequate guidance. For instance, the Black & Veatch study — done under the auspices of the New England States Committee on Electricity — largely favored more natural gas, but also concluded that if increased energy efficiency limits growth in the demand, no additional gas will be needed. Moreover, the energy landscape is remarkably fluid, and the study is now almost two years old. (Disclosure: I was president of NESCOE when the study was done.) And there is obviously no study that takes into account the final version of the clean energy plan President Obama unveiled earlier this month.