State Officials Field Tough Questions From Energy Insiders
At a forum on New England’s energy challenges at St. Anselm College, a panel of supporters of an energy proposal by the six New England Governors fielded tough questions. The plan is to pay for natural gas pipelines and transmission lines through a new charge on the electric bills of customers throughout the region.
The panel of state energy officials from New Hampshire, Maine, Massachusetts, and Rhode Island defended the governors’ plan, while some in the audience suggested the plan amounted to picking winners and losers.
“It just seems to me as if taking money from everybody and giving it to government selected resource, saying we’re going to subsidize you and keep your costs low, I’m not even sure it’s legal,” said Michael Harrington, a former New Hampshire Public Utilities commissioner, and now a Republican candidate for the House of Representatives from Strafford County.
Harrington suggested any such proposal is likely to face a legal challenge from energy producers who would see their profits cut by lower energy prices in the winter months. “Those people are going to fight like hell,” he said after the conference.
But the officials on the panel insisted that something has to be done to reign in the winter energy price spikes.
Birud Jhaveri, Deputy Commissioner of Energy Policy and Assurance with the Massachusetts Department of Energy Resources, pointed out that the average price for a kilowatt hour of electricity in 2012 in his state was 7 cents. By 2013 it had risen to 9 cents and utilities are forecasting it will be close to 12 cents this winter.
“Our utilities have gone on record saying it will be much higher than that. That’s doubling the cost in less than half a decade,” Jhaveri observed. “I’d like to say that the administration takes no pride in intervening in the markets, but having said that, when legislative mandates and/or public policy objectives are not met, it gives government no other option but to intervene.”
The panel argued that the New England energy situation is already so dire that customers are paying billions because of above-market natural gas prices in the winter, and an intervention to charge them for new gas pipelines would result in lower bills in a matter of only a few years.
But they also sounded notes of caution.
“Could there be and will there be unintended consequences? We get that,” said PUC commissioner Bob Scott, “That’s also a formula for doing absolutely nothing, because you could say that for any issue.”
Scott acknowledged that the plan might lead to “stranded costs,” meaning the investments in pipelines or transmission lines could become uneconomical, and ratepayers would wind up paying off the remainder of the construction costs while not getting any benefit. But he said any such costs would be small enough that they would have a “fairly quick payback.”
But they also stressed that this plan is not set in stone. It has to be voted on by regional energy stakeholders at the New England Power Pool in September, approved by the Federal Energy Regulatory Commission after that, and then the states themselves will begin to put out requests for proposals for the actual gas and transmission infrastructure. Even if all that happens, individual projects have to be approved by the individual energy siting bodies in their host states.
All through the process, nothing is set in stone, the officials stressed.
“If there is a market solution out there, we’d like to know,” said Jhaveri.