A long, cold winter brings energy sticker shock to New England

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New England got socked last week by a massive snowstorm, but that doesn???t compare to the financial pain electricity customers in the region are suffering through this winter.

Small business owner John York in Salem, New Hampshire, received his electric bill last Friday and was stunned by what he saw ??? his utility bills nearly quadrupled compared to this time last year, going from $675 for January 2014 to $2,432.

???This is just awful,??? said York, who owns Allegra Marketing and Print Mail, with two employees in a 1,900 square-foot space.

What does this mean for his business?

???It means less money for the owner because I???m the one who has to pay the bill,??? York told, adding that his company???s energy usage has not changed since last year.

York???s case may be dramatic, but others in the region are also feeling the pain.

Electricity and heating costs have spiked in the six states stretching from Connecticut to Maine, even though natural gas prices across the country have remained consistently low.

The chief reason?

New England doesn???t have enough pipeline capacity to service its energy users.

???Supplies that the area has historically relied on were no longer attractive for various reasons ??? cost, environment, whatever it was,??? said Geoffrey Styles, principal at the GSW Strategy Group, an energy consulting firm in the Washington, D.C., area. ???The whole area has been allergic to infrastructure projects for at least the last decade.???

Energy for many New England states used to come a variety of sources, but coal and oil-fired plants have been shut down in recent years, largely due to a combination of environmental regulations and the low cost of natural gas.

As a result, the region went from getting 15 percent of its energy from natural gas in 2000 to 46 percent by 2013.

Pipeline construction hasn???t kept up and that???s led to the price spike.

???We had a nuclear plant in Vermont, Vermont Yankee, that???s retiring, a coal plant in Massachusetts, Salem Harbor, that???s retiring, and with that, it???s basic economics: Fewer plants, less supply to meet demand, and there???s a price response,??? Dan Dolan, president of the New England Power Generators Association, told New England Cable News last fall. 

What???s more, the six states that make up New England are supplied by only two pipelines and share the same integrated electrical grid.

In 2014, utility companies warned about a spike of up to 37 percent when winter set in and now those predictions have come true.

???We call it a crisis,??? said Jim Roche, president of the New Hampshire Business and Industry Association, who worries the higher costs will hurt the state???s economy.

???We know in New Hampshire that we have lost business expansions,??? Roche said. ???I think the spiking electrical energy prices may well mean that existing employment in New Hampshire may be quietly moved elsewhere.???

Building more pipelines is proving much easier said than done.

Kinder Morgan, one of the world???s biggest pipeline and infrastructure companies, wants to build a line ??? called the Northeast Energy Direct project ??? connecting the plentiful natural gas supplies in the Marcellus Shale formation in Pennsylvania to Massachusetts.

But the proposal has received furious pushback from environmental groups opposed to hydraulic fracturing, as well as from property owners who don???t want a pipeline running through or near their property.

???This project, aside from causing environmental disruption during the construction phase, would post many hazards if there are leaks, ruptures or explosions,??? said a post on the website run by No Fracked Gas in Mass, an organization that has helped organize rallies against the plan.

???Building big pipelines not only locks us into a system we need to outgrow but also undermines efforts to address the climate crisis,??? Shanna Cleveland, an attorney at the Conservation Law Foundation, told the New York Times.

Pipeline opponents have called for concentrating on energy efficiency and expansion of renewables, but analysts have expressed doubt those measures can meet New England???s growing demand.

???The area is understandably interested in renewable energy, but there are clearly limitations to what you can do with renewable energy,??? Styles told ???Massachusetts has some pretty attractive solar subsidies, but if you look at putting solar in Massachusetts, it???s not a very good place to put it because there???s not enough sunlight ??? Wind power is fine, but nobody wants it on mountaintops and nobody wants it in sensitive areas. And even there, it???s intermittent.???

But even if the pipelines get approved, it???s estimated to take three to four years for them to become operational. Thatdoesn???t provide much relief for low-income residents seeing a big hike in their electric bills or small business owners like York.

???While I agree we need to be as green as we can, the bottom line is that we need this,??? York said. ???We???re in the Northeast. We need affordable heat ??? I don???t know how (opponents) expect it to be inexpensive. They don???t want coal. They don???t want nuclear power so that leaves gas as the power of choice for electricity.???

???Our position is the state and the region need to do all they can to encourage expanded pipeline capacity and transmission capacity,??? Roche told in a telephone interview. ???We???re not picking any particular project, but it???s quite clear we don???t have enough capacity in the region.???

In 2013, it appeared a political solution might ease the financial pain when the governors of the six New England states agreed to pursue a strategy for more pipeline capacity and establishing at least one major hydropower transmission line.

But the Massachusetts Legislature backed out, citing a number of reasons that included concerns that cheap energy would flood the market and hinder wind and solar projects.

???You have all this gas right next door (in Pennsylvania),??? said Styles. ???If you look at the Marcellus Shale, this is one of the largest natural gas deposits, certainly in North America, but even in the world. It???s really the long-term gas supply for the whole Northeast ??? If New England is going to rely on natural gas, they need a way to get it from where it???s being produced ??? to their markets,??? Styles said.

In the meantime, York is left trying to cope.

???This (latest bill) is just one month,??? he said in a telephone interview. ???Let???s say this occurs for the months of February, March, April and May. That???s $10,000 that I have to pay that would have been income for me. I can???t pass those kinds of increases to my customers. We do a hundred, 120 jobs a months. If I were to pass those costs on, I???d have to hit every customer with a $20 electrical charge. They???re not going to accept that.???


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