The People of America's Oil and Natural Gas Indusry

The Pipeline Solution to High New England Energy Costs

Mark Green

Mark Green
Posted March 15, 2017

A 2016 survey of registered voters in New England found 80 percent were concerned about the affordability of energy in their region. There’s good reason for that concern – and perhaps never a better opportunity to discuss it than when the region has just received a late-winter blast of snow and cold temperatures.

Government data for December shows New Englanders paying more for energy than anywhere else in the Lower 48 – a reality that continues to point to the need for additional energy infrastructure and more specifically, for additional natural gas pipelines.

A series of charts using data from the U.S. Energy Information Administration (EIA) illustrates New England energy costs. First, for residential electricity, with the region’s residents paying an average of 18.85 cents per kilowatthour (kWh) in December, compared to the national average of 12.55 cents per kWh:

NE_residential_electricity    

Higher electricity costs in New England occur in other sectors as well. For commercial consumers:

New_NE_commercial_electricity

For industrial users:

NE_industrial_electricity

Now, average electricity prices across all end-use sectors, with New England’s 16.13 cents per kWh topping every other region in the Lower 48 and well above the U.S. average of 10.28 cents per kWh:

NE_all_sectors_electricity

The region’s energy cost dilemma also is seen in residential natural gas prices for December (EIA data for Maine and New Hampshire not available):

NE_NG_prices

Generally, when it’s cold in New England, and natural gas demand from power generators, individual households, businesses and industries peaks, infrastructure limitations may not keep up with that demand. Hence, higher-than-the-national-average energy costs. In a presentation last fall, ISO New England President and CEO Gordon van Welie called the regional transmission organization’s operating situation “precarious” in winter months. Van Welie:

“We are concerned that beyond 2019 it may become unsustainable during extreme cold conditions.”

Failure to increase regional infrastructure could have significant economic impacts. A 2015 study pointed to billions in higher regional energy costs, job losses and household spending reductions if New England doesn’t add infrastructure.

The solution is more natural gas pipeline capacity, by building new lines or by expanding existing ones. New England policymakers should foster infrastructure by considering fair and appropriate financing mechanisms to help pay for new projects and by working to build community support for safe and responsible project construction. This is the sensible path to keep New England’s consumers from paying more than is necessary for their energy.


ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.