More gas pipelines may not be the energy answer
Attorney General Maura Healey deserves praise for her plan to study the region’s electricity supply — including the need for expanding natural gas pipeline capacity. In the context of electricity costs, reliability, and climate change, such an inquiry is hugely important for several reasons.
The biggest issue is this: Adding natural gas pipeline capacity may not control energy costs in Massachusetts. The Baker administration and many people in the energy sector are taking it as an article of faith that the region needs to be able to bring in more gas by pipeline. In the face of high prices and limited pipeline capacity, it would be logical to conclude that increasing supply would cause prices to fall. It might also be wrong.
Yes, electricity prices — tied largely to the cost of natural gas — did rise sharply last winter. But that wasn’t because of the especially harsh weather. Instead, it was chiefly due to the anticipation of high natural gas prices and shortages that never materialized. The anticipation drove up the cost of natural gas, which had to be secured before the winter started. Concerns prior to the winter also prompted the region’s electric grid operator to require electricity generators to take steps to mitigate the squeeze on natural gas supplies — a wise maneuver, but one that also added cost.
Another indication that the “more gas means lower prices” logic may not hold comes from the experience of Pennsylvania during the winter of 2014. Natural gas prices spiked, even though Pennsylvania is in the heart of the Marcellus region — home to the largest supplies of natural gas in the Eastern United States. If Pennsylvania isn’t immune to gas price volatility, it’s worth asking whether New England can get better results by increasing supply.
Also, we are still pretty much flying blind about how much natural gas we might need. Gas proponents will say the need for more natural gas has already been studied to death. But the studies to date do not provide adequate guidance. For instance, the Black & Veatch study — done under the auspices of the New England States Committee on Electricity — largely favored more natural gas, but also concluded that if increased energy efficiency limits growth in the demand, no additional gas will be needed. Moreover, the energy landscape is remarkably fluid, and the study is now almost two years old. (Disclosure: I was president of NESCOE when the study was done.) And there is obviously no study that takes into account the final version of the clean energy plan President Obama unveiled earlier this month.
In its waning days, the Patrick administration also undertook a study of the need for more natural gas. A report by the consulting firm Synapse Energy Economics concluded that more gas is needed, but the study has been criticized for a variety of seriously limiting assumptions.
Even if we build new natural gas pipeline capacity, it won’t be a benign solution to the region’s energy challenges. It would exacerbate our dependence on a single fuel with a history of price volatility, bias our future energy use towards a fossil fuel that is far from clean, and increase our reliance on a fuel that depends on fracking.
And the belief that added gas pipelines are the best solution to steep energy costs comes at least in part from an attitude engendered by an outmoded regulatory regime. For example, under current regulations, utilities make more money by building infrastructure than by encouraging conservation and energy efficiency. So, of course, they argue for infrastructure.
Notwithstanding all of these uncertainties about the costs and consequences of increasing natural gas pipeline capacity, the region certainly faces significant energy challenges, including the closing of several large power plants. We may, indeed, need additional capacity. But we don’t know for sure, and we don’t know how much. The attorney general’s study should address some key questions: How much can we limit energy demand over coming decades? How much energy can we expect from renewables like wind and solar power, buttressed by evolving energy storage technology? How will Obama’s clean energy plan affect the region’s fuel mix? What do these conclusions tell us about the need for additional natural gas?
Let’s not saddle electric customers with billions of dollars in infrastructure bills — or burden all of us with the consequences of more fossil fuels — until we know what the energy roadmap looks like.
Ann Berwick was Massachusetts’ undersecretary for energy and later headed the Department of Public Utilities in the Patrick administration.