The six New England governors have a plan to improve the region’s natural gas supply, but their attempt could have serious negative consequences, such as increasing the price of natural gas and undercutting other energy supply solutions, according to a recent article in the Hartford Courant.
The governors have called for a major new pipeline to deliver natural gas from the gas fields in Pennsylvania and Ohio to end users in New England. The project has an estimated cost of $2 billion, which would be paid by natural gas customers.
“The push for a natural gas pipeline followed two winters in which the region's power plants passed higher-than-usual fuel costs on to residents and businesses,” the article states. “Even though natural gas is cheaper than oil at its source, that supply has had trouble getting from the sources to New England.”
One potential problem is that natural gas delivered by the new pipeline could be twice as expensive as gas from other sources. A report by ICF International, conducted for liquefied natural gas provider GDF Suez and cited in the Courant article, stated that natural gas from the new pipeline would cost $16 to $20 per million British thermal units. That is nearly double the average residential price of natural gas in the United States in 2013.
Another potential problem is that the governor’s plan could cause other developers to delay or cancel plans for natural gas pipelines into New England. Dan Dolan, President of the New England Power Generators Association, told the Courant, “There are four large, proposed natural gas pipeline expansions into New England, and part of my concern is that the state initiative has put a chill in the marketplace,” he said.
The Courant also noted that the New England governors are counting on increasing demand for natural gas to make the pipeline cost-effective, but initiatives to improve energy efficiency and add renewable energy sources could keep demand low enough that the pipeline would become an expensive boondoggle.
"If the states and their citizens think that their governments entering into the market will turn out well, they ought to rethink that," Jonathan Peress, Director of Clean Energy and Climate Change for the Conservation Law Foundation, told the Courant.
To read the Hartford Courant article, click here.