New England’s growing dependence on natural gas for both electric power and heat is exceeding the capacity of pipelines feeding the region, causing price spikes that are already driving up electric rates, according to an article in the Boston Business Journal.
A price increase reported recently by National Grid will cause the typical residential electric bill to increase by 18 percent between November 2013 and April 2014. National Grid has not indicated how bills for gas heat will be affected.
The Journal predicted other regional utilities would raise their rates too. “It’s a little like a big box store coming into a small town, offering lower prices than all the Main Street shops, and then putting those independents out of business,” The Journal wrote. “What happens next? Prices go up.”
The Journal explained that much of the natural gas imported to New England last winter was sent to home-heating customers first. “But New England still needed natural gas to keep the lights on. We only have two pipelines into New England from the west, where our domestic gas comes from, and these were maxed out. So pricier natural gas was imported, most likely from Canada,” the Journal wrote.
There is more bad news ahead for gas and electric consumers, according to the Journal. “Last year, less than 4 percent of New England’s power came from oil and coal, compared with 40 percent a decade ago. And only one Massachusetts coal plant had been shut down at that time. Other plant shutdowns, such as Salem Harbor and Brayton Point, are in the works. Without a major influx of new electrical supplies … our reliance on natural gas is only going to keep growing. … Even if rates stay roughly the same, it’s almost a certainty that the days when New England enjoyed super-cheap power from natural gas won’t be returning for years – if they ever come back.”
The Journal is not alone in foreseeing trouble with natural gas prices. The San Antonio Express-News wrote recently that some experts are predicting natural gas price hikes. “The U.S. is rapidly putting a lot of eggs in the natural gas basket,” Ethan Zindler, head of policy analysis at Bloomberg New Energy Finance, told the Express-News.
“Power plants are switching to gas because of its relatively low cost and smaller emissions profile compared to coal, as carbon dioxide emission limits loom. But if natural gas prices surge higher than the $4 to $5 per million British thermal units that many analysts expect, the U.S. could be in risky territory,” the Express-News wrote.
“If utilities tether more U.S. power generation to natural gas and prices for the commodity climb higher than predicted, it could squeeze industrial and residential consumers without a readily available, less expensive alternative.”
To read the Boston Business Journal article, click here.
To read the San Antonio Express-News article, click here.