After eight years of Governor Deval Patrick's Democratic administration, Massachusetts’ voters decided to give Republican Charlie Baker a chance at the helm. Energy and climate were not high on his agenda, but this winter’s soaring cost of electricity brought the issue to the forefront, right behind dealing with a record-breaking 9 feet of snow.
E2 proposes a clean energy agenda for the new administration
One of Governor Baker’s first appointees was Matt Beaton, Secretary of Energy and Environmental Affairs (EEA). Secretary Beaton, a Republican member of the Massachusetts House of Representatives, was the former owner of Beaton Kane Construction, a green building and energy efficiency consulting company that focuses on building energy efficient homes.
E2 developed a clean energy agenda and delivered it to Secretary Beaton shortly before he took office. We suggested six broad policies and provided details on each.
1. Continue and enhance policies that are working
- Clean energy, economic growth, and lower emissions can go hand in hand as demonstrated by the chart below
2. Energy efficiency is the best way to lower energy costs
- Despite being number one in efficiency there’s a lot more that can easily be done
3. A diversified portfolio of regional energy resources will lower costs and risks
- Our booming clean energy sector can provide cost-effective solutions
- The devil is in the details
5. Gas pipelines are risky business
- The wrong pipeline decision could be costly for the state as well as ratepayers
6. Prepare for a distributed energy future with greater resiliency and reliability
- Storage, microgrids, and a new utility business model are required
In March, E2 Directors met with Secretary Beaton and senior members of his team, and talked about these principles based on our first hand experience. E2, along with other groups, have also met with Senator Ben Downing, Chair of the Senate Telecommunications, Utilities and Energy Committee, and with other legislators active on these issues to spread the message of our clean energy future.
The Problem: How to close the energy gap with a cost-effective solution
Many of the state and region's dirtiest oil and coal-fired power plants and the Vermont Yankee nuclear power plant have either gone offline or will soon do so, leaving the region with a potential shortfall of about 6300 megawatts of power.
Last winter the 'polar vortex' came barreling out of Canada sending temperatures into the single digits and the spot price of electricity through the roof. Conventional wisdom held that the problem was due to a lack of gas pipeline capacity to supply fuel at peak periods on extra cold days. When rates were set for this winter season, utilities expected a repeat of last year and were granted huge rate increases – up to 100% higher.
But those higher prices didn't materialize. Despite even colder temperatures this year, the price of electricity was well below last winter's – often roughly half the price on equally cold days. The reason? The New England grid operator, ISO-NE, made prudent changes: increased shipments of liquefied natural gas; requirements for backup duel fuel at power plants; a new 'pay-for-performance' program; and other regulatory changes.
Does the region need more gas pipelines?
In 2013, Massachusetts generated 63% of its electricity from natural gas, leaving us highly dependent on this single source of fuel. Is it possible that investments in energy efficiency, new renewables, Canadian hydropower, off shore wind and other local, cleaner resources would be the most cost-effective way to meet our region's energy needs? The answer is unclear because there hasn’t been an in depth evaluation of alternatives.
The risks of new gas pipelines are well known: increasing our dependence on a single fuel; the historic price volatility of gas; environmental damage; potential over building leaving ratepayers to absorb the cost of stranded assets; and the increased cost and difficulty of meeting GHG goals, to name just a few.
There are two major pipeline proposals under consideration. Kinder Morgan, the largest energy infrastructure company in North America, has proposed Northeast Energy Direct (NED), largely a greenfield project that would carry 1.2 billion cubic feet of gas per day (Bcf/d) initially with a potential capacity of up to 2.2 Bcf/d. To put that in perspective, that amount would be more than double the average daily amount of gas the state used during January 2014, one of the coldest months on record. Cost estimates for this project range from $2 to $5 Billion. The original route would have been entirely Massachusetts-based, but opposition led to a new proposal that goes partway through Massachusetts and then winds into New Hampshire.
The second major proposal is a joint offering from Spectra Energy and the region’s two largest utilities, Eversource (formerly Northeast Utilities) and National Grid. This proposal is for up to 1 billion cubic feet of gas per day in increments and would largely be an expansion of an existing pipeline in southern Massachusetts. Its cost is estimated at about $3 billion.
One high profile group actually believes we need both pipelines. The Coalition to Lower Energy Costs argues that FERC should impose a tariff on electric ratepayers to pay for both of these gas pipelines – an unprecedented action – that would shift the development risk and cost from private developers to electric ratepayers.
E2 is continuing to push for a clean energy future. Before we ask ratepayers to support billions of dollars in new infrastructure, Massachusetts and New England need to look carefully at all choices, including local and regional distributed and renewable resources, as a source of meeting energy and electric power requirements, minimizing risks, while maximizing economic and environmental benefits.
– Berl Hartman is an E2 New England Chapter Director.