We have had two strong winter seasons in a row with high energy costs. Some have said we lack infrastructure capacity, resulting in a classic supply and demand dynamic that drives costs. This economic yin and yang can be resolved as part of a longer-term plan by increasing a broad range of energy sources and increasing existing natural gas pipelines on existing right of ways, not building new pipelines over green fields.
A recent report by the Acadia Center points out the dynamics influencing energy pricing may not be singularly a capacity issue but rather a planning issue. In the winter of 2013-14, the region’s electricity grid did not plan well, and was unable to secure enough lower-priced energy on the quick. Since regulators approve prices for the next season based on the prior season, they increased prices for the recent 2014-15 winter.
Recent utility rate case filings show that prices are falling, and that is happening without adding pipeline capacity – yet. Put simply, the system is planning better. Also, this past winter, a reserve of moderately priced liquefied natural gas was utilized. We also increased the use of alternative energy and energy efficiency was ramped up.
Regardless, electric ratepayers for the first time may be asked to pay a tariff for new gas pipelines over green fields. Given the substantial, long-term financing required to build such gas infrastructure, ratepayers could be obligated to pay for new, over-built natural gas pipelines supplying European markets even if we develop over the next 30-40 years cleaner, cheaper, and more efficient energy sources. That is not a benefit to the Commonwealth and her citizens.
Gov. Charlie Baker has prudently called for a “combo platter” in terms of energy policy. We support the governor. Natural gas currently provides approximately 45 percent of our energy supply. If we were to build new gas pipelines over green-fields our dependence on natural gas could rise to 70 percent. The conversation does not swirl around a yes or no to natural gas use in the northeast. The full discussion is about how we can better plan and diversify our energy portfolio. Long-term energy planning is a policy objective that has never been truly achieved.
That is why we are promoting the fiscally conservative solution. A prudent combo platter may look like this: Increase energy efficiency, boost demand response, and repair gas pipeline leaks to make our energy system less wasteful and more efficient. The energy we do not use equates to an increase in energy supply.
A real, long-term solution includes reasonable incentives for local solar development, allowing consumers to sell back excess energy to the grid at a price fair to the consumer and utility. It also includes bringing Canadian hydroelectricity to our market and, perhaps, Maine-based wind. Developing the deep-water, off-shore wind sites auctioned by the federal government and building out the staging area in New Bedford can also be part of the “combo platter” and, potentially, provide regional economic development. As needed, regulators could approve increasing capacity of existing infrastructure without building over plush green fields. Use of all of these resources offers diversity of investment, less risk, and less cost volatility.
We are promoting a resilient and conservative solution. We promote a diversified portfolio focused more on reasonably achievable energy solutions rather than vulnerable reliance on and over-build of a single source. Fiscal conservatives optimize their portfolio with diversity of investments and less volatility for more reliable, longer-term returns. We do not embrace tariffs or taxes for a long-term investment that serves a fictional need or, worse, only foreign markets. That would be a government subsidy creating a market. Only the market should create markets. The government is not a good selector of winners and losers. Our plan includes energy efficiency, alternative energy sources, infrastructure expansion where needed, and ratepayer parity across the northeast. Learning from historic regulatory dynamics, it is important to plan better and, when doing so, eliminate the possibility for future stranded infrastructure cost.
A serious energy plan can also create jobs. According to recent reports, more than 90,000 citizens of the Commonwealth are currently employed in the clean energy arena, the fastest growing segment of the state. Using more hydro, off-shore wind, and solar plus fixing gas pipeline leaks and adding appropriate pipeline capacity will employ more. This will keep money and jobs inside the Commonwealth.
We support a reasonably diverse energy plan and portfolio. We ask the governor and the Legislature to work with us to solve our energy issues once and for all. Let’s not over-build. Let’s not over pollute. Let’s not underestimate our capabilities and determination.