Despite the efforts of the region’s governors to improve New England’s natural gas pricing and supply, relief is still several years away at best, according to a recent article by Platts.
New England natural gas customers continue to pay elevated prices due to a shortage of pipeline capacity serving the region. Spot gas prices at New England’s Algonquin Gas Transmission city gates have remained above $10 per million BTU for more than half this winter, according to Platts price data. That is more than double what customers in many other parts of the country are paying. Gas utilities and other customers pay the spot price to meet natural gas demand that is unmet by their advance purchases, such as when demand increases due to cold weather.
The governors of the six New England states have proposed financial incentives to encourage construction of more pipeline capacity, but Platts reports that the pipeline expansion is not a sure thing and would take years even if approved.
The governors’ plan calls for imposing surcharges on utility customers to help pay the cost of new pipelines. Pipeline companies typically secure long-term purchase commitments from utilities to ensure sufficient sales once a pipeline is built, but New England utilities have been reluctant to commit to long-term deals, according to Platts.
Even with the governors’ aggressive intervention, the proposed financial incentive for pipeline builders is “far from a done deal,” according to the article. Several reviews are required, and opposition could come from renewable energy producers who don’t want false incentives created for a competing fuel, the article states. Even in a best-case scenario, new capacity could not come online before 2017 at the earliest, the article states.
To read the Platts article, click here.