Recently, the New England States Committee on Electricity (NESCOE), which represents the six New England states and its Governors on regional electricity issues, proposed an initiative that would socialize the cost of natural gas pipeline expansion as well as transmission lines associated with large-scale hydropower imports from Canada. The initiative has been rightfully met with abundant scrutiny and skepticism.
For the past few years natural gas prices have been rising and, along with escalating electricity costs, have made New England less attractive to new businesses as well as for expansion of existing businesses. Limited pipeline capacity caused drastic price spikes that saw electricity prices average $132 per MWh this winter—forcing some companies to shut down because of the high energy costs. While pipeline expansion might provide some temporary relief, it will not reduce our overreliance on natural gas for electricity generation—now at roughly 50%.
Unfortunately, the past is coming back to haunt us. Policies enacted over the past decade have favored “green” energy initiatives like 30% production/investment tax subsidies to wind and solar, state-funded rebates for distributed generation, Renewable Portfolio Standards (RPS) and the Regional Greenhouse Gas Initiative (RGGI), among others. These policies have distorted the market and provided little incentive for base load power generators to invest in New England. Elected officials have pushed valuable nuclear and coal generators to the sidelines without providing us with any real solutions for replacing their power.
The six New England Governors are right in recognizing that we have a serious problem regarding the future reliability and cost of electricity in the region, but they are right for the wrong reasons. They are too concerned with meeting renewable energy mandates—all created by them (and their predecessors) with no thought as to how these policies might impact ratepayers. It is the result of the policies of elected officials that have left the region handcuffed.
Often behind these policies are the environmental non-profits, who cheer when reliable power plants providing thousands of megawatts of electricity get shutdown, and they fight projects like Northern Pass which can at least compensate for some of the power loss. They push billion dollar boondoggles like Cape Wind where ratepayers will pay billions for overpriced power. Worst of all, these groups are directly responsible for writing much of the overbearing, expensive and economically damaging legislation that is driving up costs for every ratepayer in the region.
Environmental and regulatory restrictions will prevent new coal or nuclear plants from entering the region any time soon; pipeline expansion proposals have and will be opposed by environmental groups and will no doubt result in lawsuits—presumably arguing that increased fossil fuel use will violate policies like Massachusetts’ 2008 Global Warming Solutions Act or RGGI. NIMBY’s don’t want windmills or Canadian hydro. What’s left? Expensive rooftop solar panels that operate 15% of the time? That isn’t going to keep the lights on or incent businesses to come to the region.
In this environment our elected officials need to “do something” and are hoping that ratepayers bail them out. But why NESCOE would dangle the carrot of ratepayer subsidy for Canadian hydropower is truly perplexing. There is no need to subsidize hydro imports for any of the proposed projects. The Northern Pass Project is capable of providing 1200 MW of affordable, reliable base load power without tax or ratepayer subsidy. However, opposition to transmission towers in New Hampshire’s North Country has led to demands of burial, delays and threats of future litigation – which appears to be driving the NESCOE proposal. Even worse, as reported earlier this year, this plan could lead to the use of eminent domain to Northern Pass developers and once again wreak havoc in the North Country.
What we are left with is the status quo of continually rising electricity prices and growing opposition to any infrastructure. Yet, the proposed solution is more government-led initiatives and mandates? Do we really trust the same group of people who have led us to the edge of the cliff to turn us around instead of jumping off?
So what should we do? NESCOE, with ISO’s assistance, should take a long, hard look at the electricity markets (capacity and energy) and evaluate what causes a plant like Vermont Yankee and its 600 MW of carbon-free, reliable, base load power to leave the market and a project like Cape Wind and its $0.25 per kWh electricity to enter.
If New England’s six Governors really want to fix things they should look at the mistakes of the past and freeze or outright repeal the very policies that have led us down this road. At the very least they should make every effort to avoid the same path of energy mandates, subsidized, favored energy solutions and legislative hurdles that prevent energy infrastructure from being built.
Marc Brown is the Executive Director of the New England Ratepayers Association, a nonprofit dedicated to protecting ratepayers.
(A version of this column originally appeared at Fosters.com.)