With electric rates steadily climbing, critics say Governor Deval Patrick and his administration have failed to take steps to control prices, even as they have focused on improving efficiency and renewable power.
Businesses, consumers, and other critics say Massachusetts policymakers have neglected pipe lines, transmission lines, and power plants that could increase supply and slow price increases. The result: supply shortages and prices that are expected to double the national average this winter.
“This administration has known about this problem for a long time and for the last six or so years has done little about it,” said Robert Rio, senior vice president at the Associated Industries of Massachusetts, the state’s largest business group. “They’ve simply ignored things they could have done to improve the existing energy infrastructure.”
As an example, critics point to Patrick’s recent decision to back away from an agreement with the five other New England governors to seek surcharges on customer bills to pay for new and improved natural gas pipelines, electric transmission lines, and other infrastructure improvements in the region. Patrick said the state needed more time to study its energy options before moving ahead.
“We aren’t pulling out of the agreement, just delaying it,” explained Mark Sylvia, the state undersecretary for energy. “Massachusetts asked for the delay so we can do an analysis of our existing analysis.”
The cost and availability of energy has returned to the spotlight following National Grid’s announcement on Sept. 24 that its winter rates would jump 37 percent over those of the previous winter, adding more than $30 a month to the average residential bill. The state’s other major utility, Northeast Utilities, has yet to file its winter rates, but it expects prices to rise, too.
The increases are blamed on an inadequate pipeline network unable to carry enough natural gas to meet growing demand from households, businesses, and power generators. The pipeline constraints have limited supplies when they are needed most, particularly during winter cold snaps, and have led to soaring gas prices in wholesale markets and spikes in electric generating costs.
One day last December, for example, a shortage of natural gas drove wholesale electric prices to $1,290 per megawatt hour, compared with an average price of $36, according to ISO New England, the regional grid operator. Those costs eventually get passed to consumers.
Also putting upward pressure on electricity prices are the closings or planned closings of several power plants, including coal-burning plants in Salem, Somerset, and Holyoke, and the Vermont Yankee nuclear plant in Vernon, Vt.
The Patrick administration’s main response to these mounting factors has been to press for greater energy efficiency and more renewable power. By most measures, these efforts have succeeded. Electricity demand in Massachusetts has flattened in recent years and solar power has grown beyond the most optimistic projections. “It would have been much worse without all these measures,” Sylvia said of the rising electric rates.
But the situation is still bad, business officials say, particularly since Massachusetts already has some of the highest electric rates in the country.
Patricia Begrowicz, co-owner of Onyx Specialty Papers Inc., a South Lee paper mill, said she favors energy conservation — and not just in the abstract. Over the years, her mill, which employs 155, has cut electricity consumption in half.
But any savings Onyx has achieved by reducing energy use have been wiped out by annual electricity price increases of 5 to 8 percent.
“We need a much more balanced approach,” Begrowicz said. “We need a whole portfolio of energy options, not just an emphasis on renewable fuels.”
A number of energy projects are on the drawing boards. Spectra Energy Corp. and Northeast Utilities, for instance, have jointly proposed a $3 billion expansion of the existing Algonquin pipeline to bring additional gas into New England. Kinder Morgan Energy Partners LP wants to build a new pipeline from Richmond in western Massachusetts to Dracut, carrying enough natural gas for 1.5 million homes.
Several high-voltage transmission lines are proposed to bring low-cost hydroelectricity into the region from Canada.
Patrick’s delay of the New England governors’ agreement means the decision on whether to support new pipelines and transmission probably will be pushed off to his successor, who takes office in January. Other New England states will have to wait since the support of Massachusetts is important to gain approval for surcharges from federal regulators, who oversee interstate transmission and pipelines.
Late last month, Governor Paul LePage of Maine called the delay “unconscionable.” Like Massachusetts, Maine’s electricity costs are far above the national average. The price of power soared so high in the state last winter that some paper mills, food-processing plants, and other companies had to shut or curtail operations because they couldn’t afford the electricity.
“It is time to wake up,” said LePage, a Republican in a tight reelection contest. “New England is in an energy crisis right now, and we desperately need additional natural gas to power our businesses and keep electric bills affordable.”
Some proposed projects have sparked fierce opposition from environmentalists and the communities through which they would run. They assert that Patrick has taken the right approach; spending billions of dollars on new pipelines, they argue, would cost ratepayers and increase the state’s dependence on a fossil fuel that contributes to climate change.
“We don’t want to increase our use of fossil fuels if we don’t have to,” said Greg Cunningham, a senior attorney at the Conservation Law Foundation, an environmental advocacy group based in Boston.
Steven Graham is a co-owner of Toner Plastics Inc. in East Long Meadow and S&E Specialty Polymers LLC, a plastic and polymer manufacturer in Lunenberg. About 3 percent of S&E’s costs are tied to electricity, about double what rival firms in other states spend on power, said Graham.
Each time rates rise, it puts the company at a disadvantage in a competitive industry. “If we lose an account, sometimes it can be due to a fraction of a penny in product costs,” he said.
S&E Speciality Polymers employs 65 people. Energy costs are so high that it’s unlikely the company would be able to expand in Massachusetts, Graham said. At some point, he added, he may have to look at relocating to another state unless something is done to stabilize electricity prices.
“It’s been really tough on us,” he said.