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Natural gas supply worries arise

New England’s increasing reliance on natural gas has regional energy officials worried about potential shortages over the next few years that could disrupt electricity production, especially if the area is hit with an extremely cold winter.

Abundant supplies and falling prices have led many power producers and home and business owners to switch to natural gas in recent years, but federal energy officials and the operator of the region’s power grid, ISO New England, say they are concerned that pipeline capacity is not keeping up with growing demand. In the case of an extended snap of very low winter temperatures and a rise in heating demand, pipelines might not be able to transport enough gas for both homes and power producers, leading to cutbacks in electricity generation and possible power interruptions, according to a study by ISO New England.

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“You have all these stresses and strains being applied to the gas pipeline that weren’t there before,” said ISO New England chief executive Gordon van Welie, “and that manifests itself in reliability problems on the gas supply system from time to time, which causes reliability problems on the power side.”

The issue also has caught the attention of federal energy regulators, who hosted a Monday meeting with local leaders in the power and natural gas industries to discuss possible solutions, including expanding pipeline capacity, changing the way the wholesale natural gas market operates, and requiring power generators to keep fuel reserves.

Cheryl LaFleur, a commissioner at the Federal Energy Regulatory Commission and a New England native, said the issue is particularly important in a region that relies so heavily on natural gas to produce its electricity.

“It does lead to concerns about the reliability of the electric system and the reliability of [getting] gas to gas customers if we don’t do careful planning,” LaFleur said. “I don’t think there’s a reason to panic, but I absolutely think there’s a reason to plan.”

Today, more than half of the electricity consumed in New England is generated with natural gas, according to ISO New England, up from just 15 percent in 2000, and 5 percent in 1990. In Massachusetts, more than 70 percent of the state’s electricity is made with natural gas, according to the Department of Energy.

More than 70 percent of Massachusetts’ electricity is made with natural gas.

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At the same time, more homes are converting to natural gas from heating oil. NStar, one of the state’s biggest utilities, has estimated that conversions in Massachusetts have tripled over the past three years. National Grid, the state’s other leading utility, said earlier this year that conversions in Massachusetts and New Hampshire were up 34 percent during this period.

Spectra Energy Corp., a Houston pipeline company, is exploring an expansion of its 1,120-mile Algonquin Gas Transmission line, which it says is running at or close to capacity. The expansion project, which would cost about $500 million to build, would allow Spectra to bring more natural gas into New England from nearby shale formations.

Representatives for the pipeline company attended Monday’s meeting with regulators and said they were encouraged by the discussions.

“These are important decisions for New England. As gas becomes more prevalent, you’re reshaping the electric generation business,” said Richard Kruse, a Spectra vice president. “There’s a need now.”

Local power generators agree about the need to plan, but said they don’t see a crisis in the making. The power grid functioned smoothly this summer, they said, despite higher than normal temperatures and disruptions in liquefied natural gas supplies from the Middle East.

“I don’t want to say there is no problem,” said Dan Dolan, president of the New England Power Generators Association, a trade group, “but I think the system will continue to be managed reliably.”

NStar and National Grid officials said they are involved in federal regulators’ discussions about natural gas, but offered assurances that residents need not worry about having enough gas to heat their homes.

“Our contracts for supply are long term and locked in,” said David Graves, a spokesman for National Grid. “We’re not anticipating any shortages for our customers in the coming heating season.”

Erin Ailworth can be reached at eailworth@globe.com. Follow her on Twitter @ailworth.
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