Did utilities create shortage with unused capacity requests?
EVERSOURCE AND OTHER REGIONAL UTILITIES have long claimed that New England desperately needs new natural gas pipelines to meet electricity demand, with the “polar vortex” of 2013-14 as a prime example. Electricity prices rose sharply throughout New England at that time because of pipeline constraints, according to the utilities and regional grid operator ISO New England. In a 2014 online paid-content commentary placed by America’s Natural Gas Alliance in the Washington Post, ISO-New England CEO Gordon van Welie warned that the region is in a “precarious position.”
But it turns out that the price spikes were caused by the Eversource and Avangrid — another energy delivery company serving over 3 million customers in New York and New England — who were reserving pipeline capacity and not using it, thereby preventing gas from reaching the market.
Researchers from the University of California Santa Barbara, the University of Wyoming, Vanderbilt University, and the Environmental Defense Fund recently released a white paper showing that Eversource and Avangrid systematically reserved, but did not use, up to 28 percent of gas pipeline capacity needed by New England electric generators on the coldest days between 2013-2016.
That raised gas prices by 38 percent and electricity prices by 20 percent over the three-year study period, according to the authors. That cost consumers more than $3.6 billion, mostly in Massachusetts and Connecticut, about the same as the total of the price spikes announced at the time.
Massachusetts Attorney General Maura Healey is reviewing whether Eversource acted to manipulate prices. The authors of the white paper wrote that even if the withholding of gas was within the “contractual rights” of utilities, the multibillion-dollar impact on gas and electricity prices “underscores the need to improve regulation.” New regulations to assure optimal use of current pipelines are important, the researchers said, not just to protect ratepayers but to also ensure “unbiased price signals” that honestly inform any discussion of new pipelines.
Unbiased price signals could also confirm that we need no new pipelines at all. Healey and several studies project that the region’s use of natural gas will dramatically decline in the coming years because of Massachusetts’ nation-leading efforts on energy efficiency and the region’s rapid adoption of renewable energy.With winter approaching and with billions of dollars at stake, Healey hopefully will fully review Eversource’s actions. Andy Weissman, an attorney in Washington, DC, told the energy news website Utility Dive, “If this analysis is correct, honestly, this isn’t a whole lot short of Enron. If customers really paid $3.6 billion because of withheld capacity . . .that is a big-time scandal that is going to lead to huge litigation.”
This report, stacked on top of last year’s failed attempt by top utilities to stick consumers with a multibillion-dollar tax to finance the proposed Access Northeast pipeline, certainly confirms a scandalous pattern of behavior. Far from New England being in a precarious position, the energy companies and pipeline proponents are every day being more exposed for predatory pilferage of the people. Andrew Savitz is the director of Consumers for Sensible Energy.