So far, relatively mild weather this winter has insulated New England natural gas consumers from pipeline capacity-related price spikes that occurred during cold snaps in previous winters. And even if another polar vortex were to happen, it’s likely the regional electric grid operator’s Winter Reliability Program to shift gas-fired generators from pipeline gas to stockpiled oil or LNG would keep the lights on. But New England’s day of reckoning is coming. The region is becoming ever-more dependent on gas-fired power, most gas pipeline projects into New England are stalled or scrapped, and New York’s recently announced plan to close two Indian Point nuclear units will only make matters worse. Today we discuss the still-widening gap between Northeast pipeline capacity and gas demand.
New England may have another Super Bowl win (yell “Go Pats!” or groan here), but once the glow of victory fades, Patriots fans will be, um, deflated by their next electric and gas bills—they pay some of the highest energy rates in the U.S. As we have written about often in the RBN blogosphere, New England suffers from woefully inadequate pipeline capacity for power generation on frigid winter days and nights, and remains vulnerable to natural gas price spikes that affect gas and electric customers alike. This is ironic, of course, because the six New England states (and New York, their occasionally pipeline-averse neighbor) are so close to the Marcellus production area, which sends out about three times as much gas per day as New York and New England combined consume (on average). Another irony is that while the seven states (New York plus New England) have been among the most difficult places on God’s green earth to develop incremental gas pipeline capacity (the Constitution Pipeline, Northeast Energy Direct et al), they also have been particularly aggressive in 1) shutting down nuclear and coal-fired power plants and 2) adding new gas-fired plants to replace them.
First, let’s review the situation in New England. Figure 1 shows the rapid ramp-up in gas-fired generating capacity in the region—area shaded (appropriately) in Patriot Blue. Note that the pace of gas-fired additions increases in the latter half of this decade; as we said in I’m (Not) Shipping Up to Boston, ISO New England (the regional electric-grid operator) already has approved plans for seven new gas-fired plants totaling more than 3,000 MW (enough to power 300,000 homes) that will begin commercial operation between May 2017 and May 2019, and within a few weeks the ISO is likely to give its blessing to at least another gas fired power plant or two that would come online by May 2020.