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How realistic is a 100% renewable energy portfolio?

Recently the New England states jointly agreed to reduce their carbon dioxide emissions by an additional 30% beyond current goals by the year 2030. New Massachusetts regulations will require utility companies to obtain 16% of their energy from renewable sources in 2018. In Rhode Island, utilities must increase their purchase of renewable energy by 2-3% per year. The Commonwealth of Massachusetts has put out a request for bids for renewable energy projects, and received almost four dozen responses. All signs point to a future of growing renewable energy production, but how realistic is a 100% renewable energy portfolio?

To start, we are many years and many billions of dollars away from meeting all of New England’s energy needs with solely renewable power. It would take hundreds of wind turbines or more than 30 square miles of solar panels to fill New England’s energy gap in the coming years. If we also tried to replace all of our existing natural gas, coal, and oil with renewables, those numbers would be exponentially higher. In 2015, natural gas accounted for 49% of New England’s fuel mix, while renewables and hydro accounted for just 16%.

Massive investment in renewable energy infrastructure would be needed before renewables can grow to a substantial part of our energy portfolio, let alone the only source of energy for New England. Likely, these projects will be taxpayer subsidized and any costs incurred to build new renewable capacity will be passed along to ratepayers. While there are laws that prohibit ratepayer funding of natural gas infrastructure, renewable energy projects have been supported by billions of dollars in costs to ratepayers. For those already struggling to pay their utility bills, rising energy costs could be devastating. It’s unfair to dismiss this reality when we talk about what a renewables-only future would look like, at least in the near future.

Furthermore, renewables do not provide as flexible or reliable a stream of energy as fuels like natural gas. When it’s still, wind turbines do not turn. When it’s cloudy, solar panels don’t capture the sun’s energy. Renewables’ generating capacity can fall dramatically under less-than-ideal weather conditions, a challenge fuels like natural gas do not present. Renewables’ energy production also cannot be ramped up when needed, to meet peak demand on cold winter days or hot summer days; their generating capacity is fixed. In an all-renewables world, without improvements in battery technology to allow us to store large amounts of renewable energy to deploy on these peak demand days, we could have critical energy storages when demand spikes.

Natural gas is the natural choice to pair with renewable energy sources. It can solve both of these challenges – it is less expensive that renewable energy, is twice as clean as coal, already supports almost half of all of New England’s power needs, and is incredibly flexible and reliable. Without balancing natural gas with renewables, middle and working class residents and small business owners would face not only crippling shortages of power but also increased energy prices as we work to build out our renewable energy infrastructure. While there is a lot of conversation about a renewables-only energy system in New England, it’s important to keep these realities in mind – balancing cost, reliability, and carbon emissions will require capitalizing on the benefits of both renewables and natural gas.

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ISO New England’s Winter Outlook: A Cause for Concern

Grid reliability challenges, emission increases and price spikes

ISO New England, the operator of the region’s power system, recently announced that electricity supplies should be sufficient to meet the region’s demand for electricity this winter barring “unexpected resource outages or fuel delivery constraints.” For those who expect affordable, reliable electricity 24/7, this should be a cause for concern.

Natural gas generates about half of the region’s electricity. It is also used to heat about 40 percent of all households and remains the heating fuel of choice for new homes in New England. In addition, some 260,000 businesses and manufacturers rely on natural gas for industrial processes and space heating.

While the region’s demand for natural gas has increased substantially, natural gas infrastructure has not kept pace. Pipeline constraints during cold weather contributed to more than $7 billion in higher energy costs over several recent winters as the system struggled to meet demand from both space heating and power generation customers.

This winter, ISO has identified about 3,450 MW of natural gas-fired generating capacity (about a quarter of the total) that may be at risk of not being able to get fuel this winter.

To make sure the lights stay on, ISO has instituted for the fourth year in a row a “winter reliability program,” which pays power plant owners to buy and store oil or liquefied natural gas (LNG) as a back-up if natural gas-fired plants can’t get enough fuel during the winter. At a cost of $38 million last year, these measures are essential to ensure reliability, but they are limited, potentially costly short-term fixes.

LNG imports supply about 30 percent of the region’s peak winter day natural gas requirements. Since LNG is traded globally, pricing varies and can be expensive. It is also transported from foreign countries to New England by tankers – which can be delayed in severe weather, making price and availability uncertain.

Burning oil is also costly and jeopardizes the significant progress the region has made in reducing carbon emissions from electricity generation, which are down 26 percent since 2000.

Even with winter reliability measures in place, ISO notes emergency procedures may be needed to maintain reliability under a combination of extreme cold, power plant outages and limitations on natural gas delivery.

Beyond this winter, the situation is expected to become more uncertain in the spring as the region will lose 1,500 MW of coal and oil-fired generation. It will be replaced primarily by new gas-fired generation despite lack of additional natural gas infrastructure. ISO has warned that the operating situation is “precarious” and may be “unsustainable by 2019” when options to maintain reliability will become even more limited.

On a positive note, the recently completed Algonquin Incremental Market (AIM) Project will bring additional natural gas from the Appalachian Basin into New England to help meet winter demand. However, the project’s customers are not power plant operators but local gas companies serving homes and businesses.

More pipeline capacity for power generation is needed to ensure delivery year-round. According to ISO’s 2016 Regional Electricity Outlook, it will take a combination of pipeline, LNG and storage solutions to address both reliability risks and price volatility.

New England’s recent energy policymaking has focused on reducing climate change impacts spanning decades. Much less attention has been paid to the challenges facing the region in the next five to ten years when power plant retirements and lack of new infrastructure portend even higher costs, more price volatility, reduced reliability – and significant lost opportunities for economic growth.

Not only does failure to address these challenges threaten regional economic competitiveness in the near-term, it undermines the region’s ability to attract energy-intensive advanced manufacturing companies in highly specialized industries such as life sciences, medical devices, aerospace, semi-conductors and nano-technology. Those companies will look elsewhere unless their concerns about energy prices are addressed. As the New England Council cautions in a comprehensive report on advanced manufacturing, “…these challenges have costly implications….”

ISO is doing what it can within its mission, but ISO alone cannot solve this problem. Only broad recognition and action to support an all-resource approach to meet future energy needs can – including natural gas for power generation, as well as expansion of wind, hydro and solar power.

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High Energy Costs -- A Competitive Issue for Employers

Electricity prices and uncertainties about future power supply reliability are a drag on regional competitiveness.

Just ask Judson Reis, president and CEO of Gorton’s Seafood in Gloucester, MA. When asked recently by Massachusetts State Senator Bruce Tarr how officials could help Gorton’s continue its dominance in the frozen seafood industry, Reis pointed to the cost of electricity. He suggested that making electricity more affordable would be very helpful to a company in “a very, very competitive business.” (Gloucester Times, Oct. 20, 2016)

Anyone familiar with Gloucester and the fishing industry knows that local fishing itself has been in decline. Yet, Gorton’s, with its iconic fisherman logo, remains the leading frozen prepared seafood brand in the US in a world-wide industry that introduced hundreds of new brands in the last decade.

While Reis is concerned about electricity costs, Gordon Van Welie, who heads ISO New England, the non-profit responsible for ensuring that the region has a reliable supply of electricity, is warning about pending shortages. Van Welie has described a “precarious” and “unsustainable” electric grid operating system over the next few years during periods of extreme cold. That’s a concern for any business operating 24/7 year-round. It is a huge concern to individual consumers who depend on electricity to keep their homes warm and families fed.

The warnings are not new. The New England governors in December 2013, declared that a reliable and affordable energy system requires “…investments in additional energy efficiency, renewable generation, natural gas pipelines, and electric transmission.”

A flurry of recent legislation has focused on renewable generation -- hydropower from Canada, off shore wind projects and subsidies for solar power to address climate concerns. But the region is falling behind on energy infrastructure needed to make electricity more affordable and reliable for Gorton’s Seafood and other employers throughout the region.

In 2014, the New England States Committee on Electricity (NESCOE), which reports to the governors, found that “All studies … (reviewed) concluded that New England needs additional natural gas supply infrastructure to satisfy New England’s power system demand.”

In 2015, the New England governors agreed that the region “continues to face significant energy system challenges with serious economic consequences for the region’s consumers…. The problem is greater than any one state can solve alone.”

Later in 2015, a Massachusetts Attorney General study concluded that burning oil and LNG during severe cold spells, when natural gas may not be available, would maintain electric system reliability. But largely overlooked was the conclusion that “Increasing natural gas transportation capacity in New England would lower wholesale electricity costs by lowering natural gas prices….”

Anti-natural gas activists have used the AG report as a sledgehammer to turn the earlier concerns of all six New England governors about natural gas pipelines and electric transmission lines into something akin to touching the third rail of a subway system.

No organization today looks at the regional impacts of state-by-state policies with a comprehensive, integrated approach that considers electric reliability and the environment, as well as regional economic competitiveness. This approach was recommended by Daymark Energy Advisors in a recent update of an August 2015 study conducted for the New England Coalition for Affordable Energy, whose members include the region’s largest business organizations.

The earlier study concluded that the region’s energy costs could be $5.4 billion higher by 2020 unless actions are taken to add energy infrastructure of all types. The update found that inaction on infrastructure development has increased the risk of even higher energy costs.

Major natural gas pipeline projects that would relieve constraints have been cancelled or blocked, transmission lines that would bring large amounts of wind energy from northern New England and hydropower from Canada to load centers have been delayed or stopped, and up to one-third of the region’s electric power generation has either been retired or is likely to do so in the coming years.

This is a serious near-term regional challenge. It is time to take action to support infrastructure projects – pipelines, transmission lines, power generation of all types -- based on the concerns the governors expressed in 2013 and have reiterated since.

Just ask Judson Reis at Gorton’s -- and CEOs throughout New England -- who battle every day to keep their companies competitive with domestic and foreign producers whose energy costs are a fraction of those in New England.

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Don’t Block Regulators from Doing Their Jobs

In Massachusetts, in mid-July, opponents of a natural gas pipeline walked 43 miles along the proposed route of the line to protest planned construction.  Their journey received considerable press coverage.  And no doubt many people sympathize with their desire to block new supplies of natural gas from getting to power plants and consumers. 

But as well-intentioned as they may be, they’re not serving the interests of consumers and businesses concerned about high and increasingly volatile energy prices, which largely stem from lack of natural gas. 

In Maine, a day after the pipeline opponents arrived in Boston, the Maine Public Utilities Commission unanimously approved a plan that would allow utilities to seek permission to help fund a pipeline by recovering costs through rates.  A Maine newspaper reported that “Mark Vannoy, PUC chairman said in an interview after the vote that the region’s heavy and growing reliance on natural gas leaves the state at risk for future price spikes. Without more pipeline capacity, he said, future prices will be higher.”  But for the Maine decision to have any impact, other New England states will have to take similar action, which today remains highly uncertain.

In the meantime, some local gas companies can no longer allow customers to hook up to natural gas for space heating and other end-uses.   The future of electricity supplies may also be jeopardized without new gas pipelines as nearly one-third of New England’s older oil, coal and nuclear generating capacity faces shutdowns and retirements in coming years.  That capacity will need to be replaced.  That is if New England consumers and businesses really want a reliable and relatively affordable electricity supply system, which they do as shown below. 

Electricity rates for homes and businesses in New England already are at least 50 percent higher than the national average with rates for manufacturers nearly twice that.  Residential and commercial consumers of natural gas don’t fare much better – if they have access to it – and manufacturers see rates that are more than twice the national average.

To gauge real consumer and business concerns, the New England Coalition for Affordable Energy conducted two region-wide surveys a couple of months ago that tell a very different story than the one told by those who oppose new pipelines and any expansion in natural gas usage.

What the coalition found is that four out of five consumers (79%) are concerned about the affordability of energy and about half think state governments are doing nothing or not much to address those concerns.  For businesses surveyed, the findings are similar with 88% expressing concern about energy prices in the region and three-quarters of respondents rated government performance in this area as either poor or fair. 

Business respondents were offered a chance to leave a comment.  A Connecticut manufacturer said “the cost of energy may make us move.”  “Our policy makers don’t appear to care about the high costs of operations…(we may be) forced to move to lower cost environments,” wrote a Massachusetts company.  And a New Hampshire company representative wrote this: “We compete against manufacturers in other states.  High electricity costs put us at a competitive disadvantage….” 

So those protesting new pipelines and those concerned about energy affordability are heading in different directions.  The vast majority of consumers and businesses surveyed support an all-resource strategy – one that includes natural gas along with renewables and energy efficiency. 

Unfortunately, some government leaders are moving to take away regulatory authority over options that may help make energy more affordable and reliable in New England.  For example, by blocking consideration of standard and widely used funding mechanisms, such as tariffs used to fund energy efficiency and renewables, to support needed natural gas and electric transmission facilities, government officials would be setting a bad precedent. 

More importantly, they could be sending the region down a path to higher costs, less reliable supplies of both electricity and natural gas and ultimately to an economy that is even less competitive with fewer jobs in segments such as manufacturing, trade and construction.  Apparently Maine regulators share that concern and the concerns of consumers and businesses throughout New England.  Legislation and administrative actions that would block the legitimate role of regulators should neither be encouraged nor implemented.

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Climate Goals – Focus on Power Plants Misplaced

Ken Kimmell, president of the Union of Concerned Scientists and former head of the state’s Department of Environmental Protection in the Patrick Administration, made a disturbing statement to Boston Globe reporter David Abel in a lead story May 16 on carbon emissions in Massachusetts.  

In reporting that the state would have trouble meeting its legally required target to reduce overall greenhouse gas emissions by 25 percent below 1990 levels by 2020, Abel quotes Kimmel saying, “The electricity sector is by far the lowest-hanging fruit…. We need to make disproportionately large cuts there to meet our overall goals.” 

It apparently doesn’t matter to Kimmel that carbon emissions from electric power generation are already 50 percent below 1990 levels thanks to natural gas and renewables.  Nor does it seem to matter that the electricity generation sector now produces less than a quarter of the region’s carbon emissions. 

Nevertheless, Ian Bowles, former secretary of energy and environmental affairs in the Patrick Administration chimed in saying “We need steep, sustained declines in emissions here (in the electricity sector), and not a step back.”

The shutdown of the carbon-free Vermont Yankee nuclear plant is one reason for the uptick in carbon emissions last year.  Its power had to be replaced by plants burning natural gas, a relatively clean fossil fuel, but still a fossil fuel.  Another reason is that because natural gas pipelines are inadequate, some power plants during cold spells often switch to dirtier oil.

There’s no mention in the story of the warnings from ISO New England, the organization responsible for keeping the lights on, that nearly one-third of the region’s oldest and largest power plants are at risk of shutting down in the coming years and will need to be replaced regardless of whether demand for electricity grows or not.  Fueling new plants with natural gas is the only realistic option for now.  There’s no mention of study after study -- with the exception of one from the MA Attorney General’s office, paid for by private funds, not the state -- that have concluded that the region desperately needs additional natural gas supplies. 

There’s no mention of the challenges facing electric transmission line construction in New Hampshire that makes imports of Canadian hydro by 2020 uncertain and speculative.   And there’s no mention of the low capacity factors of wind and solar, and the lack of energy storage technologies today. 

While not mentioned in the story, these are realities and addressing them will require highly reliable, relatively clean-burning natural gas power plants to provide backup to intermittent sources while also meeting the around the clock energy needs of businesses, manufacturers and other employers.

No.  Instead, we have Kimmel calling for “disproportionately large cuts” in the power generation sector and we have Bowles saying, “We need steep, sustained declines in emission here, and not a step back.” 

It’s no doubt blasphemes, at least to those who see molecules as a bigger threat to our future than loss of jobs and a weak economy, to suggest that maybe we do need to take a step back – or at a minimum a pause. Maybe, just maybe, 25 percent is too much too soon.  The least we could do is shed more light on the relationship between affordable and reliable energy, and the sources that make a major impact today and those that are growing but remain more aspirational than currently dependable.  

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Energy Policy, US Senate Gets It. Do we?

It seems ironic that 11 of New England’s 12 U.S. senators were among the 85 who voted on April 20 for a comprehensive, all-resource bill that streamlines permitting of natural gas pipelines and electric transmission lines and supports natural gas exports.  It’s ironic because in New England, pipelines and transmission lines are about as popular as mosquitos. 

It happened the same day Kinder Morgan bailed on its plans for a $3 billion, 188-mile pipeline project citing lack of signed agreements with customers.  Kinder Morgan’s Northeast Energy Direct project was also the subject of intense opposition from officials in several states, as well as communities through which the pipeline would have traveled. 

What’s striking about the U.S. Senate’s vote is that a supposedly dysfunctional Senate came together on a bill that encourages and supports fossil fuel development, as well as a basket full of renewable resources, energy efficiency, electric grid improvements and even workforce development in energy industries. 

New England appeared heading down a similar path. The region’s governors in recent years agreed on the need to relieve gas pipeline constraints that were keeping low cost gas to the west from reaching New England during critical high-demand periods.  That need is no less today, but political support for natural gas seems to be wavering even as important legislation to encourage imports of hydropower from Canada moves forward.

ISO New England, the regional electric grid operator, continually flags the fact that nearly one-third of the region’s electric generating capacity is likely to retire in coming years.  Canadian hydro will help but much of the planned replacement capacity will be from new natural gas-fired plants.   Kinder Morgan’s decision to cancel its New England project has cut the region’s gas distribution options by about half.  That, along with the upcoming closure of Pilgrim Nuclear Power Station, makes the need for remaining pipeline projects, such as the ones proposed by Spectra Energy, critical. 

A study last year by Daymark Energy Advisors for the New England Coalition for Affordable Energy found that investments in a combination of new transmission lines to bring hydropower from Canada, new and expanded natural gas pipelines and onshore wind -- built and in service by 2020 -- could avoid $5.4 billion in higher energy costs and save more than 160,000 jobs throughout New England.

Unfortunately, climate change goals are superseding concerns, especially among major businesses, about the impacts of higher and more volatile energy prices in the future on regional competitiveness and jobs.

Among members of the New England Coalition for Affordable Energy are the region’s major business organizations.  Most of those organizations, and their members, support renewable energy and share concerns about climate change. They are also responsible for hundreds of thousands of jobs.  Many operate in highly competitive national and international markets.  Virtually all depend on affordable and reliable energy around the clock, every day of the year to maintain competitiveness.  For most, intermittent power is not an option.

In time, renewable energy, including offshore wind, energy storage and decentralized grids may provide that level of reliability.  But not in the next five to ten years when new and expanded natural gas pipelines should be bringing more low cost gas from the west and electric transmission lines should be tapping hydropower from Canada, as well as delivering more wind power.   

Public officials at all levels should recognize that New England businesses need to be reassured that energy policy leaders will not ignore near-term warnings and statements of need from organizations such as ISO New England for the sake of a long-term vision built around renewable energy.  As admirable as it may be, that long-term vision may not be achievable in the absence of more affordable and uniformly reliable energy in the years immediately ahead to help ensure continuation of a strong, vibrant and growing economy. 

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"The Beautifully Simple Energy Solution." Really?

By Carl Gustin, Coalition Spokesperson

Kumi Naidoo, executive director of Greenpeace, said following the international climate change deal in Paris last month, “We will push our beautifully simple solution to climate change – 100% renewable energy for all – and make sure it is heard and embraced.”   

His statement, beautiful in its simplicity, might be viewed as stunning in its naiveté and even dangerous in its consequences.  Greenpeace is not the only environmental organization that believes abandoning fossil fuels is necessary to save future generations from a worldwide environmental catastrophe.

For many of them, the collapse of energy prices, in part resulting from abundant U.S. supplies of natural gas and oil, is an unwelcome development.  Looked at another way, this new abundance “cannot only help restore U.S. competitiveness but can also create geopolitical advantages for America…. while substantially mitigating local environmental impact and speeding up the transition to a cleaner future that is both practical and affordable.”  

That’s a conclusion reached by Michael Porter and a team from the Harvard Business School and the Boston Consulting Group in a report last year on “America’s Unconventional Energy Opportunity.”  It outlines an all-resource strategy to develop domestic resources, make energy more affordable and create a cleaner environment.

It is consistent with findings in a report prepared last year for the New England Coalition for Affordable Energy by a team headed by Daymark Energy Advisors in Boston that found a mix of new natural gas pipelines, wind energy and electric transmission lines could mitigate or eliminate $5.4 billion in higher prices New England consumers and businesses will have to pay if no new energy infrastructure is built in the region by 2020. The report also projected the loss of $12.5 billion in disposable income and the permanent or temporary loss of some 167,000 jobs without new infrastructure.

Unfortunately, virtually all infrastructure projects in New England, from pipelines to transmission lines and even wind projects, face strong opposition.  Much of that opposition is either ideological, driven by false narratives about environmental harm – and the speed with which our reliance on energy resources can be altered – or simply a political response to the loudest voices.  

Energy transitions do not happen quickly.  President Jimmy Carter came to office in 1977 and his administration immediately began to tackle energy as a top priority.  In a comprehensive energy plan released just three months after taking office, Carter set out national energy goals, one of which was to have “solar energy in more than 2 ½ million homes by 1985.”  By 2013, 36 years after the Carter goal was announced, there were just 400,000 homes powered by solar. 

In June 1979, Carter delivered a “solar energy message to Congress” in which he outlined “the major elements of a national solar strategy,” the goal of which was to supply 20 percent of the nation’s energy with solar and renewable sources by 2000.  But, as the Union of Concerned Scientists notes, “solar energy generation is still a small percentage of total U.S. electricity generation – less than one percent in 2013.”

Use of renewable energy in all forms is growing, and in some cases growing rapidly.  Nevertheless, the contrast between government plans and goals of the 1970’s and infrastructure realities of 2016 show that change comes slowly. 

This is not to suggest that solar and renewables should not, or cannot, play a major role in meeting future energy needs, only that abundant supplies of domestic natural gas and oil will continue to power the American economy for the foreseeable future.   For New England businesses and most consumers, a reliable 24/7 supply of affordable energy is vital.  Intermittent renewable resources alone won’t meet that requirement.

The Greenpeace position is simple – some say beautiful – but it ignores, or rejects, economic realities, as well as the tremendous economic, social, health and even environmental benefits that fossil fuels have provided.  Balancing and integrating fossil fuel use with renewable resources is a good thing, not just for businesses and consumers economically, but for the environment as well. 

An important step in that direction is to make sure New England has the energy infrastructure it needs to keep prices affordable and supplies reliable.  That means removing physical and regulatory constraints that limit delivery of low-cost natural gas from the west, hydropower from Canada, and wind energy from remote areas of New England.

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For New Hampshire, a Greater Sense of Urgency Needed on Energy Decision-Making

Posted by Carl Gustin, Coalition Spokesperson

New Hampshire has become a major battleground for determining whether consumers and businesses will see more affordable energy in the years ahead or face severe economic consequences from failure to act on major infrastructure projects, such as the Northeast Energy Direct pipeline, Northern Pass transmission line, the Antrim Wind Project and others.

A study sponsored by the New England Coalition for Affordable Energy underscores the need for timely decision-making to approve new natural gas pipelines, electric transmission lines and new electricity generation, including wind power. The study finds that if no new infrastructure is built in New England by 2020, regional consequences will include $5.4 billion in higher energy prices, $12.5 billion in lost disposable income and the loss of some 167,000 jobs between 2016 and 2020.

While the Coalition, which represents the region’s major business groups including New Hampshire’s Business and Industry Association, does not take positions on individual projects, it is concerned about delayed decision-making, especially when process takes precedent over affordability.

Today, record low natural gas and oil prices, and recently announced cuts in utility rates, simply mask the severe consequences New England consumers and businesses could face over the next five years. The stage is currently being set for either success, in the form of lower prices, or failure, which means higher and more volatile prices. For New Hampshire, with 10 percent of the New England economy, the impact on higher prices could be akin to a $540 million tax increase over five years.

According to the Coalition study, by 2020, New England needs at least 1,300 megawatts of additional wind energy just to meet Renewable Performance Standards, at least 500 megawatts of new transmission, 1.7 billion cubic feet per day of new natural gas delivery capacity and 900 megawatts of natural gas power generation to avoid the severe consequences noted above.

Recent actions by the U.S. Department of Energy (DOE), the Federal Energy Regulatory Commission (FERC) and the New Hampshire Siting Evaluation Committee (SEC) are not encouraging.

For example, DOE, starting in late September, announced three extensions, totaling five months, of the public comment period on a draft Environmental Impact Statement for the Northern Pass electric transmission line project. The reasons may be valid given changes in the project, but delays have consequences and further delays in permitting will likely delay the time when new transmission will deliver economic benefits to New Hampshire.

In the meantime, FERC has asked one of the major natural gas pipeline project sponsors –Kinder Morgan – to respond to over 25 letters from towns, planning commissions, siting boards, state environmental agencies, charitable trusts and others, most in opposition to the pipeline project. It is too early to tell, but FERC may be moving down a path that could make the findings in the Coalition’s study prophetic. Many may applaud this approach, but they may not be the ones running businesses, hiring employees and paying household energy bills.

Wind energy projects do not appear to fare any better than pipelines and transmission lines in New Hampshire. Two years ago, the SEC rejected a proposal for nine wind turbines to be built in Antrim for aesthetic reasons. The project developer, Eolian Renewable Energy, proposed a revised plan, but that too faces opposition. Another rejection is likely to sour other potential investors from trying to build wind turbines, at least in New Hampshire.

Further complicating the challenges facing project sponsors is a new rule adopted by the New Hampshire SEC regarding “public interest.” In addition to a vague rule on what constitutes “public interest,” the SEC faces at least three major project reviews at one time, which is beyond what it has been called upon to do in the past. The rule apparently satisfies neither project proponents nor opponents, in part because it is too vague and open to interpretation. Few seem to think it will lead to timelier decision-making.

New Hampshire businesses and consumers who, in the coming years, will likely face escalating and volatile energy prices need public officials and community leaders to act with a greater sense of urgency when it comes to energy choices. Project delays, given the region’s energy delivery constraints, are the enemy of affordable prices in New Hampshire and the rest of the region.

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Three Conferences, Four Days, One Topic: The Need for Energy Infrast

Posted By Carl Gustin, Coalition Spokesperson

If there is any doubt about the level of concerns surrounding the affordability of energy in New England, conferences by the New England-Canada Business Council, the Business and Industry Association of New Hampshire and Bloomberg BNA together with America’s Natural Gas Alliance should dispel it.

The New England-Canada conference November 12 and 13 was titled "The Economic Impact of Integrating Energy Infrastructure in a High Cost Region." New Hampshire BIA’s conference November 15 and 16 drew 140 attendees, including more than 40 state senators and representatives and other elected officials from throughout New Hampshire. It included a panel on "New Hampshire’s Energy Crisis." And the Bloomberg BNA November 12 event was on "Fueling the Future: New England’s Energy Infrastructure."

Speaker after speaker made similar arguments in favor of building new infrastructure --- and doing it now. Granted, at times there seemed to be a divide between those advocating for longer term solutions, such as energy storage and more aggressive deployment of solar technologies, and those calling for new pipelines, transmission lines and generation including wind. But that divide had more to do with timing than disagreements over whether storage and renewables were important technologies for a clean energy future.

As one of the speakers at the BNA event at the Massachusetts State House noted, it’s like a family arguing over whether to order a full meal or a la carte, stressing “it’s time to just place the order.”

Among the speakers drawn to the topic were New Hampshire Governor Maggie Hassan, Maine Governor Paul LePage, Quebec Premier Philippe Couillard, the cabinet heads of the Massachusetts and Maine energy offices, a NH PUC commissioner, the general president of the Laborer’s International Union of North America, investment bankers and advisors and energy executives and consultants representing broad segments of the industry from clean tech to natural gas development and power generation.

Two takeaways from the conferences stand out: One is that there are abundant, lower cost energy resources just beyond the reach of New England’s energy delivery capabilities today.

The other is that advocates for various resources and technologies often talk past each other in part because they have different time frames.

As speaker after speaker pointed out, pipeline constraints are preventing New England consumers and businesses from benefiting fully from low cost natural gas resulting from technological breakthroughs that created a natural gas boom just beyond New England’s borders. Fortunately, well-financed pipeline developers are prepared to remove those constraints, subject to meeting environmental, safety and economic requirements. And they can do it within a few years.

At the same time, New England governors and other elected officials are working aggressively with industry to tap hydroelectric resources in Canada, as well as wind resources in remote areas of the region, in particular northern Maine.

Timely action is important if we are to remove, or at least reduce, the potential volatility in energy prices seen in recent years. Coal, oil and nuclear plants are retiring for environmental and economic reasons and many more plants are considered “at risk.” So, expanding natural gas pipeline capacity is essential if we are to avoid higher energy costs, estimated by the New England Coalition for Affordable Energy at $5.4 billion, loss of disposable income in the range of $12.5 billion and loss of more than 165,000 jobs over the next five years.

That five-year period is important for at least two reasons:

  • First, developers are prepared in that time frame to build -- subject to final approvals -- the pipelines, transmission lines and power generators, including wind turbines to mitigate and even eliminate those higher costs.
  • Second, addressing that five-year horizon buys time to thoroughly consider, and act on, proposals to deploy new technologies for energy storage and production, such as solar and other forms of distributed generation.
Ultimately, traditional forms of energy production and delivery must be integrated with larger scale deployment of renewable resources, distributed generation and energy storage.

In the meantime, it’s time to act on near-term needs to make energy more affordable. This, in turn, will provide the runway necessary for emerging technologies to meet the region’s environmental and economic development goals.

As these three conferences over four days suggest, we shouldn’t be arguing either-or but instead be looking for ways of integrating and leveraging “all of the above.”

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Fantasy in Search of Reality

Posted by Carl Gustin

The Irish author Iris Murdoch wrote, “We live in a fantasy world, a world of illusion. The great task in life is to find reality.”

A story this week from Bloomberg Business highlighted New England’s energy reality when it wrote how energy traders elsewhere are grappling with consequences of a natural gas supply glut, but “don’t tell Boston.”

Bloomberg just reported (10/27) “Gas deliveries into New England are trading at triple the level of the benchmark futures in New York.” It quotes an energy analyst saying, “New England is in its own world in the gas market…” We’ve become an island whose energy infrastructure no longer serves the economic interests of the region.

According to Val Zanchuk, incoming chair of the NH Business and Industry Association, “Businesses may well be forced to move facilities to another region with lower electricity prices, taking jobs and income away from New Hampshire.” That’s happening throughout New England.

Low home heating oil and gasoline prices, and a milder forecast for this winter, create the illusion that the experiences of the last few winters were anomalies, that the worst is over, and that we can now turn our attention almost solely to renewables with LNG deliveries providing the cushion.

Not so.

Yes, New England needs more renewables, especially on-shore and offshore wind, but also hydro from Canada. It also needs new pipelines. Keep in mind that older coal and nuclear plants – think Pilgrim and Vermont Yankee – are shutting down with many more to follow, to be replaced primarily by natural gas.

Bloomberg in the same story reported that natural gas plants accounted for 66 percent of the regions power generation in recent days, “up from about 48 percent the same time last year.” As recently as 2000, natural gas accounted for just 15 percent but that growth from 15 percent to more than 50 percent was not accompanied by growth in the gas supply system.

And New England needs new electric transmission lines. Notably, Bloomberg in the same story reported that maintenance on transmission lines caused spot wholesale power serving Northeast MA and Boston to jump 73 percent on Tuesday.

These are facts leading to a truth that we’re not out of the woods. On the contrary, we’re getting in deeper and action is needed across the resource board. Aggressive efficiency programs need to continue. The same is true for solar and wind -- and pipelines and transmission too.

One analyst with years of first hand experience said the other day, “If we get any kind of weather this winter, markets are going to explode, especially relative to non-NE prices.”

Instead of moving forward , we see opposition all across the region to virtually every infrastructure project -- and every policy action to address the shortfalls. A vocal minority and single-issue special interests are working hard to obstruct new construction.

As Michael Porter and his colleagues wrote in a recent Harvard Business School/Boston Consulting Group study on America’s Unconventional Energy Opportunity, “Long, inefficient, and highly political permitting processes are the major driver of infrastructure delays….” Overlapping assessments, according to the report, can involve more than 10 stakeholders including federal agencies, regional bodies, state regulators and local ordinances.”

In no other part of the country are the obstacles more obvious than in New England. And probably no other region today needs strong, cooperative leadership among public officials more than New England.

The New England Coalition for Affordable Energy’s recent report on the consequences over the next five years of inaction on new energy infrastructure highlighted the potential loss of more than 167,000jobs, $12.5 billion in disposable income and increased energy prices totaling at least $5.4 billion. These are conservative estimates.

Reality could be a lot worse as energy costs become a larger factor in job growth. Just ask one of our members representing the region’s leading business and industry organizations and labor.

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Expanding Energy Infrastructure: Looking Behind – and Beyond – the Numbers

Posted by Carl Gustin, Coalition Spokesperson

More than 167,000 permanent and temporary jobs could be lost or forgone over the next five years if sufficient new energy infrastructure is not built to meet New England’s need for more affordable energy.  That’s according to a recent study by the economic consulting team of LaCapra Associates and Economic Development Research Group, which was commissioned by the New England Coaliton for Affordable Energy.

Who gets hit by those job losses?  Certainly the construction industry is hit hard, accounting for nearly one-half of those losses from underinvestment.  Other sectors hit hard by not investing include manufacturing, retail trade and even health care and social assistance.  Sectors hit hardest as a result of the resulting higher energy prices include retail trade, wholesale trade, transportation, financial services, education and, of course, construction.   According to the study, those job losses reflect a $12.5 billion reduction in disposable personal income. 

These are real job losses effecting real consumers and real businesses.  And it comes during a prolonged period during which household incomes have not budged and thousands of employees have stopped looking for work.

Despite clear and compelling evidence that additional natural gas supplies, new transmission lines and new electric generation from traditional and renewable sources would help to lower costs, making energy more affordable, opposition to many projects remains intense.  Much of that opposition reflects tensions between those who advocate for one form of energy over a more balanced, all-resource strategy.  Such an all-resource strategy would provide flexibility, recognizing that transitions in markets characterized by large capital investments take time – usually decades – and instead of favoring either the environment or the economy, it would balance both. 

New England has the resources to take such an approach – lower cost natural gas to the west, hydropower to the north, vast amounts of on-shore wind energy in remote areas and offshore wind off the southern coast.  And it will continue its aggressive pursuit of energy efficiency and solar energy.

One of the latest examples of the more narrow approach comes from the Conservation Law Foundation.  CLF once had a strong influence on energy policy as an advocate for a cleaner environment, lower costs and a stronger economy.

A decade ago CLF advocated for natural gas as the fuel of choice for new power plants.  Its advocacy was influential in energy restructuring legislation that led to a dramatic increase in the number of plants operated by natural gas and more stable prices.  The demand for natural gas skyrocketed.  Today, 50 percent of New England generation is powered by natural gas, compared to just 15 percent in 2000.   CLF’s argument was that natural gas was less costly and cleaner and would help combat global warming.  In 1999, CLF’s Richard Kennelly noted in a Boston Globe story that “gas is very good news in terms of regional air quality.”   New gas plants totaling more than 5,000 megawatts of power are operating or under construction around the region, Kennelly said, with as many as 12,000 additional megawatts ‘significantly advanced’ in government permit proceedings.”

Unfortunately, pipeline capacity did not keep pace with that growth.  Instead of reaping the benefits of stable, low cost gas to the west, New England has been exposed to price volatility resulting from pipeline constraints.  That led New England’s governors, other public officials, consumers, and businesses throughout the region to grow increasingly concerned about the affordability of energy.  Businesses are threatening to locate outside the region and consumers, already strained by household incomes that have not grown in years, increasingly have to make payment arrangement with utilities.  

Instead of advocating for the fuel that powers the plants they once favored, CLF now advocates for renewable energy virtually at the expense of all other sources.  Instead of a balanced diet and integrated approach, CLF seems to have a singular focus on renewables that under any scenario are disadvantaged if consumers and companies gain access to lower priced gas.  

While renewables – solar and wind –  are still a small part of the region’s generation, their success has and will continue to place greater demand on natural gas generation at a minimum to back up the intermittent generation from renewables.  CLF acknowledges this but that seems to be the extent of support.

It is important for energy planners and policy makers to recognize that between 10 and 20 percent of the region’s older power plants are at risk of shutting down and will need to be replaced.  That’s on top of the 10 percent already scheduled to be shuttered in the next few years for economic and environemental reasons. 

Wind and solar can’t replace that much capacity, and certainly not in the foreseeable future.  Nor can even the most aggressive energy efficiency programs.  Only natural gas will replace those units as they retire.

So what is CLF doing today?  Fighting expansion of natural gas pipelines that would bring down prices to make energy more affordable for those low and middle income families who have not seen incomes rise in years. 

Its argument: That energy storage and distributed solar, coupled with LNG, can meet the region’s needs – even this winter.

The LaCapra/EDRG study makes clear that additional natural gas supplies would provide year-round benefits.  Other information makes clear that imports of LNG from places such Trinidad and Yemen, while an important resource, cannot meet power generation needs throughout the region – and its pricing is tied to world markets.

CLF has become an advocate for renewable energy at the expense of more traditional forms of energy including the vast amounts of low cost natural gas discovered in this country in recent years.  It’s unfortunate because CLF once played a constructive role in framing energy policies more broadly. 

We need only be reminded that in 1999, CLF’s then-president Doug Foy and his co-author David Marshall hailed industry restructuring and the introduction of competition when they wrote in the Boston Globe that “We can cut demand and increase supply….This is one of those rare moments in which the forces of economics and environmentalism are in alignment.” 

Maybe now in 2015, we have another one of those rare moments.  We should not let it pass.  

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New England Quest for Affordable Energy Takes Some Hard Hits

Posted by Carl Gustin, Coalition Spokesperson

The quest for affordable energy prices in New England has taken some hard hits in recent weeks, especially this week. National Grid’s announcement that it is seeking a 20 percent increase in rates in Massachusetts is just a symptom of a much broader problem.

This week alone:

· The Conservation Law Foundation sued Massachusetts over approval of a gas pipeline for Western Massachusetts, even as gas companies in the area have a moratorium on new hookups for consumers and businesses, effectively blocking them from lower cost energy.

· A prominent energy consultant concludes that Canadian hydropower, even under a market-based 26-year contract, would be too expensive and do little to help meet climate goals in the near-term.

· Owners of the Pilgrim Nuclear Power Station warned that it may have to shut the plant down because of the cost of improvements, which comes at a time when nuclear power provides more than one-third of the region’s electricity without emitting anything that effects the climate.

These are not isolated events. They are linked to a much broader debate about the region’s energy future and how to contain costs and improve reliability of supplies. ISO New England has been cautioning for several years that action is needed. ISO's latest plea, issued in recent days, is for more generating capacity, transmission capacity and natural gas pipeline capacity to ensure reliability and to minimize price volatility.

The New England Coalition for Affordable Energy warns in a recent report that inaction on new energy infrastructure could cost the region more than 167,000 jobs, some $12.5 billion in lost disposable income and add $5.4 billion to energy costs – and all that occurs between 2016 and 2020.

California learned an important lesson in 2001 when, according to the California Energy Commission, natural gas supply constraints cost the state $19.4 billion or “more than double the price paid for similar amounts” in preceding years. California’s solution was “an insurance policy” in the form of “extra infrastructure, coupled with supplies from lower-priced production areas (that) helps shield the state from the brunt of price volatility.” That’s according to William Wood, Jr., of the Electricity Supply Analysis Division of the California Energy Commission in a 2009 report.

Following the 2001 crisis, California ordered utilities to overbuild pipeline capacity with an eye toward a future when flexibility matters. The chart below shows how California benefited. It compares natural gas prices in California with prices in the Northeast. The value of removing constraints is obvious. New England just might benefit from California’s experience, especially as it considers how to replace the thousands of megawatts of existing generation – Pilgrim being a prime example – that are at risk of retirement with little apparent thought given to their replacement.

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FAQs about the report: The Economic Impacts of Failing to Build Energy Infrastructure

Posted by Carl Gustin, Coalition Spokesperson

Since the New England Coalition for Affordable Energy’s report was issued on August 27th, there have been several frequently asked questions that are answered below.  Interestingly, none of the questions either address or undermine the key results of the report – that by not building additional infrastructure, New England households and businesses will be hit with $5.4 billion in added energy costs between 2016 and 2020. And, that over the same period, the combination of higher prices and some $9 billion in forgone investments in new power generation, transmission lines and pipelines will cost the region about 167,000 jobs – both permanent and temporary – and reduce disposable personal income by some $12.5 billion.  

Q. What makes this report different from other economic studies on pipelines or transmission lines?

A. The Coalition’s report is the only one that actually quantifies the economic consequences to New England – in terms of jobs, higher energy prices and disposable income – if the region’s energy infrastructure remains the same over the next five years.
   
The study considered a broad range of infrastructure options based on ISO New England’s regional forecast of electricity demand that reflects aggressive energy efficiency and solar initiatives.   Unlike many reports that are project or technology-specific, this report is agnostic about resources and projects.  It also recognizes wind generation as a substantial contributor to meet the Renewable Portfolio Standards of each state.  It further recognizes electricity transmission lines as a means of importing hydropower from Canada and the wind energy noted above from remote areas of the region.  The natural gas pipeline component of the analysis is conservative at 1.7bcf relative to other studies that propose an additional 2.4bcf or more of new pipeline capacity.  

Q. What does this mean for energy policy in the region?

A. Quite simply, the study shows that a policy that is based on doing nothing or on the belief that there is only one type of infrastructure that can meet the region’s immediate energy needs, instead of building all types of infrastructure – to include wind generation, natural gas pipelines, electricity transmission lines and non-renewable generating plants – are not viable economic options.   In fact, it quantifies the consequences of pursuing such policies by estimating that over the next five years alone, energy prices will increase by $5.4B, about 167,000 jobs will be lost and that disposable income will be reduced by $12.5B. 

Q. Isn’t your credibility suspect given the funding you receive from the energy industry, in particular oil and gas interests?


A. No, because credibility rests on authorship and transparent analysis. Alvaro Pereira of La Capra Associates, the lead author of the report, holds a doctorate in economics from the Massachusetts Institute of Technology and, for more than a decade, headed a group at the Massachusetts Department of Energy Resources that performed economic and technical analyses of policies, programs and regulatory filings.  La Capra Associates and their subcontractor EDRG have worked with a wide range of clients in energy and consumer affairs – which is a testament to their credibility and capability.  

The study itself contains appendices totaling over thirty pages, including assumptions and detailed calculations, and was endorsed by 18 member organizations representing tens of thousands of employers and consumers throughout the region.   Finally, the proof is in the pudding.  No individual or organization has refuted the bottom line results of the study:  that over the next five years alone, energy prices in New England will increase by $5.4B, about 167,000 jobs will be lost and disposable income will decline by $12.5B if no energy infrastructure is built.

Q. Does the Coalition have a preference for one energy source or one infrastructure solution over another?  

A. No.  There are plenty of options to address the concerns raised in the report.  The assumptions used in the analysis are just that – assumptions.  But they highlight both opportunities for achieving more affordable prices and the consequences if the region cannot come together on an “all options” approach that could put the region in a much stronger economic position, one that values diversity and flexibility, while also addressing environmental issues.  

Q. Why doesn’t the study go beyond 2020?


A. The time frame was driven by concerns expressed over the last several years by New England’s governors, other government officials, regional planning organizations and business leaders about escalating energy prices, regional supply constraints and adverse impacts on consumers and employers.  The short time frame proves the consequences of not building additional energy infrastructure are immediate.  Higher prices, job losses and lower disposable income are all avoidable with near-term construction of new energy infrastructure.

While the report doesn't look beyond 2020, it is clear that the economic consequences would only increase from failing to build energy infrastructure as demands for natural gas and renewable electricity will increase.  The report doesn't look at retail impacts, and the value to local gas distribution companies that have had to impose a moratorium on new hook-ups, but it is clear that consumers would benefit from additional supplies during the study period and beyond.  Also, ISO New England warns that more than 8,000 megawatts of older "at-risk" generating units could retire after 2020, and many of those plants will need to be replaced one way or another.  

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New England's $5.4 Billion Energy 'Tax'

Posted by Bob Rio, Senior Vice President, Government Affairs, Associated Industries of Massachusetts on Aug 27, 2015 

How serious is the energy cost crisis in New England?

A new study from business and labor organizations warns that failure to expand electricity and natural-gas infrastructure in the six-state region will generate the equivalent of a $5.4 billion tax on employers and homeowners between 2016 and 2020. Such an increase would negate 80 percent of the region’s projected private-sector job growth and drain $16.1 billion from economic output.

The study comes from the New England Coalition for Affordable Energy, which includes AIM. Other organizations include Associated Industries of Vermont, Business & Industry Association of New Hampshire; Brotherhood of Utility Workers Council, UWUA 369; Connecticut Business & Industry Association; Independent Oil Marketers Association of New England; NAIOP Massachusetts; National Federation of Independent Business (CT, MA, ME, RI, VT Chapters); Maine State Chamber of Commerce; and the Retailers Association of Massachusetts.

The economic devastation outlined in the study would be on top of the reported $7.5 billion in energy costs the region has already incurred over the past three winters due to the natural gas pipeline system reaching maximum capacity during winter months to meet both electricity generation and space heating demands.

“Energy issues are almost universally mentioned by members as the number one impediment for expanding in Massachusetts,” said John Regan, Executive Vice President of Government Affairs at AIM.

“This study clearly shows that without action, Massachusetts’ energy costs will go even higher, permanently hurting our competitiveness and resulting in major direct and indirect job losses as consumers are forced to pay higher prices for energy rather than investing that capital here.”
In May of this year, Massachusetts commercial and industrial electric rates paid some of the highest prices in the country for electricity, nearly double North Carolina and even higher than California. While rates in other parts of the country are flat or declining due to available and cheap natural gas, Massachusetts’ rates are increasing.

The study, conducted by Boston consulting firms La Capra Associates and Economic Development Research Group, found that failure to expand the region’s energy infrastructure will lead to a reduction in disposable income that could top $12 billion, and 167,600 jobs lost or not created. These impacts would ramp up from 2016 through 2020, with similar or larger impacts expected beyond that timeframe if infrastructure is not added.

AIM has consistently advocated for more natural gas infrastructure to take advantage of close and abundant natural gas supplies, while at the same time continuing to explore the use of large hydropower and renewables to help with diversification.  The association does not take a position on any individual infrastructure projects or financing mechanisms.

Five New England governors, including Massachusetts Governor Charlie Baker, pledged in April to work together to help consumers who pay more for electricity than almost anywhere else in the United States. While the costs and political challenges of investments in natural gas pipelines, transmission wires and renewable energy remain formidable, the governors nevertheless acknowledged that solving the energy crisis “is greater than any one state can solve alone.”

“We recognize that each state may support addressing our regional energy challenge in different ways. These efforts must be done in partnership with state legislatures, and respecting the requirements of laws, regulatory proceedings, and opportunities for public participation that are unique to each individual state,” the governors said in a statement.

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