Ensuring Electricity Reliability for New Englanders Will Come at a High Cost
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Recently, Energy Fairness wrote about energy problems in New England caused by a lack of infrastructure. Sadly, lawmakers in the region have repeatedly blocked new natural gas pipelines at a time when natural gas is playing an increasingly larger role in power production. To that point, grid operator ISO New England INC. (ISO-NE)has repeatedly warned officials that a lack of pipeline capacity could cause reliability problems, but those warnings have mostly fallen on deaf ears. As a result, the region could soon face future winter power shortages as colder temperatures drive customers to use more power for home heating.
The news isn’t all bad though. A plan by ISO-NE to ensure electricity supplies are available was moved forward last week. The proposal, originally filed in March, automatically took effect because the Federal Energy Regulatory Commission (FERC) lacked the quorum it needed to act on it by August 8th. At least two of the four commissioners declined to vote on the proposal, highlighting the current gridlock between FERC commissioners that has prevented much-needed recalibration of U.S. energy markets.
The plan, while good news for customers who want to stay warm, is bad news for their wallets, coming with a price tag of $150 million a year in a region where power prices are already higher than the national average. The program will pay power generators $85.49 per megawatt-hour to stockpile fuel for the winters of 2023-2024 and 2024-2025. ISO-NE is still working on a long-term fix to ensure reliability for customers.
Coal and nuclear power plants would see a boost under the plan since they can keep large amounts of fuel onsite, but gas fired power plants could benefit as well if they sign binding agreements for gas deliveries. Hydropower and renewable energy storage systems would be able to participate in the program too.
Power producers Calpine Corp. and Vistra Energy Corp. called the proposal “less than perfect” but still supported it. The American Petroleum Institute commended ISO New England for “recognizing the essential role that natural gas-fired generation resources play in supporting fuel security.”
While this plan to keep the lights and heat on in New England isn’t perfect, the good news is that some future-minded officials are committed to less expensive long-term solutions down the road. The better news is that New Englanders now have a plan to provide them adequate access to power and heating for years to come.
