This report from UNH came out last week, while I was on vacation, so here it is late. It will, I think, change few minds because of some of the folks behind it (funding by The Nature Conservancy? Cameron Wake is involved? Conspiracy and fake news!) but it’s interesting – especially the comment about energy bills being at the national average despite energy rates being high.
By UNH News Service: New England does not need to increase energy use to continue to grow its economy, according to new research released by the Carsey School of Public Policy at the University of New Hampshire that looked at cost, reliability and risk associated with the region’s electricity future. Support for the research was provided by the New Hampshire chapter of The Nature Conservancy and the New Hampshire Community Development Finance Authority.
According to the researchers, from 2005-15 real GDP in New England grew by 9.7 percent while energy use fell by 9.6 percent. In addition, electricity consumption is expected to drop by 0.2 percent per year over the next decade.
The researchers also found that, contrary to conventional wisdom, New Hampshire residents and businesses actually pay the same or less for energy as other areas of the country. While the price per kilowatt has been higher than the national average for decades, the average residential electricity bill in New Hampshire is equal to the national average.
“It is important to prevent further increases in the cost of energy and ideally to reduce the overall cost of electricity in New Hampshire, especially for customer groups adversely affected by the state’s relatively high electricity prices, including more intensive commercial and industrial users as well as low-income households that pay a greater portion of their income for energy,” the researchers said.
While some have called for investment in new natural gas pipelines, the researchers found that the data suggest current natural gas pipeline capacity is adequate. Better contracting and other soft-infrastructure changes such as changes to rules, regulations and policies combined with the promotion of energy efficiency and renewable energy will have at least as much return on investment as expanded pipeline capacity without exposing ratepayers to higher electricity rates from expensive infrastructure investments.
The share of electrical power generated from natural gas has grown in New England from 15 percent in 2000 to almost 50 percent in 2015. Previous studies suggesting that grid reliability may be an issue after 2021 recognize the challenges are primarily associated with extreme operating conditions. In fact, the new Carsey study concludes that New England’s electrical grid has been reliable during periods of high energy demand associated with cold winter temperatures, including the extreme polar vortex event of January 2014.
“We believe that while the utility companies’ goal of reducing electricity costs in the state is admirable, their strategy of expanded natural gas capacity in the region funded by ratepayers poses a significant risk of raising electricity costs further,” the researchers said. “Policy makers may want to consider options that carry less risk and a better return on investment, including better use of existing infrastructure and increased investment in energy efficiency and renewable energy.”
The Carsey report can be found here: https://carsey.unh.edu/
The research was conducted by Cameron Wake, research professor with the Earth Systems Research Center and the Josephine A. Lamprey Professor of Climate and Sustainability at UNH; Matt Magnusson, doctoral student in UNH’s College of Engineering and Physical Sciences; Christina Foreman, affiliate research professor with the Earth Systems Research Center at UNH; and Fiona Wilson, executive director of the Center for Social Innovation and Enterprise and associate clinical professor at the Peter T. Paul College of Business & Economics at UNH.
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IMO, it’s a bit confusing that energy and electricity are used interchangeably in the report. I’d expect that New Englanders use more energy than the average once transportation and home heating are figured in.
That said, it’s great to see some analysis pushing back on the idea of electricity ratepayers paying for new pipeline infrastructure. IMO, this will likely result in ‘stranded cost recovery’ charges on our electric bills in a few years down the road. No one can guess the share of ng in the generation mix in even 5-10 years, let alone the 20 years that these contracts extend out. I liken the proposal to committing to a 20 year lease on an oil truck to help control your home heating bills. To make matters worse, you don’t even have an oil burner in your basement, you get your heat piped in from a third party supplier and you don’t have any control over what fuel source they use. You have no guarantee whosoever that you’ll be able to resell your oil truck capacity to them or to anyone else for that matter.
One interesting tid bit from that report is that they tried to estimate the magnitude of the stranded cost risk for having ratepayers on the hook for the pipeline project. It’s eye opening. The Merrimack scrubber will add $400 million in stranded costs and increase our electricity bills by around 3%. The analysis for the pipeline shows a $2 billion dollar worst-case stranded cost. In that bad luck scenario, we’d get hit with a 15% electricity surcharge as a result of just on bad decision.