Maine Natural Gas Conference
October 8, 2015

New England States Committee on Electricity

New England: Dramatic Changes in the Energy Mix from Oil and Coal to Natural Gas

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As New England consumers have learned… Natural Gas and Wholesale Electricity Prices are Linked

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The Region has Experienced Volatile Gas and Electric Prices the Past Few Winters

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Monthly Average Real-Time Locational Marginal Prices

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Winter Season (Dec-Feb) Average Electricity Prices – Wholesale
2010 – Current (March 2015)

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Non-Winter Prices Reach All-Time Lows

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Power plants (oil/coal) that do not run regularly and/or only earn low profits when operating do no earn money to offset costs forcing retirement decisions

Retirements

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New England Electric Power Industry
Monthly Air Emissions: 2010-2014

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New England Governors
April 2015

“New England continues to face significant energy system challenges with serious economic consequences for the region’s consumers. . . . The economic, system reliability, and environmental consequences of inadequate energy infrastructure require action. Cost-effective investment in new natural gas infrastructure and the continued integration of clean energy resources are important to resolving these challenges. With these infrastructure investments, and continuing aggressive investment in other clean energy solutions such as energy efficiency and distributed generation, our region can reduce energy costs and thereby attract new businesses and jobs for our hard-working citizens.”

In all things, balance.

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Some State Activities, Progressing in Parallel

• Multi-State Clean Energy RFP – cleanenergyRFP.com  

• Maine and Rhode Island have enabling laws, with a Maine regulatory process ongoing.
• Connecticut DEEP comment opportunity closed Sept. 30 on three proceedings to procure resources pursuant to Public Act 15-107, An Act Concerning Affordable and Reliable Energy.The Act authorizes DEEP to procure a range of resources – natural gas, energy efficiency, renewable energy, large-scale hydropower, and energy storage. The Act authorizes selection of the most cost-effective energy resources through an open and competitive process.

  On gas: “DEEP is working on issues related to procurement for natural gas resources, and is evaluating options for coordinating the solicitation of natural gas resources with other states who have legal authority and interest in doing so, consistent with the strategic approach set forth by the New England Governors. DEEP expects to provide an opportunity for public comment on a request for proposal for natural gas resources this fall, with more details and questions to consider.”

   

• Massachusetts
  • EDCs and Gas Capacity: DPU issued an order on October 2nd finding that it has “authority pursuant to G.L. c. 164, § 94A to review and approve contracts for natural gas pipeline capacity filed by electric companies.” DPU 15-37Standard of Review: “…EDC must demonstrate that the proposed contract (1) results in net benefits for the Massachusetts EDCs’ customers at a reasonable cost, and (2) compares favorably to the range of alternative options reasonably available to the EDC at the time of acquisition of the resource or contract negotiation (e.g., pipeline capacity, local storage, electric transmission). An EDC must show that the price of the resource is competitive and that the contract satisfies other non-price factors such as reliability of service and diversity of supply.

    Filing Requirement: ”.. an EDC seeking Department review and approval of a gas contract must include with its filing materials that demonstrate a competitive and transparent procurement, that avoid conflicts of interest, and that allow for consideration of procurement by entities other than EDCs.”

  • LDCs and Gas Capacity: DPU approved LDC – Boston Gas, Baystate Gas, Berkshire Gas – Capacity Contracts with Kinder Morgan.
  • Broad legislative proposals under discussion.

• New Hampshire

In mid-September, PUC Staff released report of its investigation into potential approaches involving NH’s electric distribution companies to mitigate the high and volatile electricity prices that have affected electricity markets in NH and other New England states in recent winters

“we view Access Northeast and Northeast Energy Direct (NED) as two very cost-effective projects that will moderate future winter electricity prices though the numbers clearly indicate that NED will provide the greatest benefits to regional electricity customers. Nonetheless, Staff’s principal recommendation in this report is that if the Commission chooses to participate in a regional procurement of gas capacity (whether pipeline or LNG) for the benefit of electricity consumers it should condition that participation on the procurement being conducted through an open and transparent process that is demonstrably competitive and results in the lowest possible cost to consumers”

“Staff has concluded that the Commission may hold that New Hampshire EDCs have authority to enter into gas capacity contracts for the benefit of gas- fired generators, if such a proposal were to be made by a New Hampshire EDC.”