Chances for cheaper energy closing
The decision handed down this week by the Massachusetts Supreme Judicial Court is a setback for efforts to make energy in New England more affordable and reliable.
The SJC found that the Department of Public Utilities was wrong when it interpreted 1997 legislation that restructured the electric utility industry as allowing it to review and approve long-term contracts by electric distribution companies for natural gas capacity.
The 1997 act took regulated electric utilities out of the business of producing power. It called, as the SJC noted, for “an expedient and orderly transition from regulation to competition in the generation sector….” Developments since 1997 call into question how well the transition worked and is working.
Over several recent winters, natural gas pipeline constraints pushed wholesale electric costs in New England up some $7.5 billion, raising prices for businesses and consumers. Those natural gas constraints still exist.
On top of that ISO New England continues to warn about the potential retirement over the next few years of 10,000 megawatts of generation, or about one-third of existing capacity.
Potential options to address higher costs and reliability concerns are narrowing. The SJC decision is just the latest example, because it is likely to impact whether additional pipeline capacity can be built. While there may be a legislative fix to the 1997 act that could allow utilities to procure gas as a hedge against future price volatility, advocates of new natural gas pipeline capacity and those who advocate for a renewables-only approach are so polarized that it’s hard to imagine an agreement, a compromise, that would recognize that natural gas and renewables are compatible and complementary.
Coincidentally, The Washington Post reported last week on a study showing “a surprisingly tight relationship between renewables on the one hand, and (natural) gas on the other.” The document, published by the National Bureau of Economic Research, looked at experience in 26 countries and found “a 1 percent increase in the share of fast reacting fossil technologies is associated with a 0.88 percent increase in renewable generation in the long term.”
The New England Coalition for Affordable Energy believes that both natural gas and renewables are necessary to achieve three related goals:
• Make energy more affordable to improve regional competitiveness and economic growth.
• Ensure reliability of electric service.
• Meet long-term climate goals.
A recent survey of our members found that nearly nine in 10 respondents expressed concern about prices. And three-quarters don’t think government performance in making energy more affordable deserves more than a fair or poor rating. The survey produced comments such as “the cost of energy may make us move,” and “relocating or selling my business is becoming a much more serious consideration” as a result of high electricity costs.