Massachusetts, like other states in New England and beyond, has become overly dependent on natural gas. We have lost balance in our electricity mix, and the consequences could be costly for consumers and businesses alike in the years ahead.
U.S. utilities are gorging on the nation’s newly abundant and cheap supply of natural gas. One new natural gas power plant after another is under construction across the country. Natural gas is also increasingly being used to replace fuel oil for heating.
Manufacturers, too, are building new facilities to take advantage of low-cost gas. The upshot is the U.S. is now on the verge of becoming one of the world’s largest natural gas exporters. With so much demand for natural gas produced in this country, can gas prices stay low?
Don’t bet on it.
New England already has some of the most expensive electricity in the country. Should gas prices spike in the years ahead, the pain will fall like a hammer blow on consumers. Until just a few years ago, volatile natural gas prices were the rule. Sustained, low-priced natural gas is a relatively new phenomenon and one that seems, frankly, not likely to last.
Natural gas now generates nearly half of the electricity supplied to New England and heats a third of the region’s homes. Currently, natural gas costs less than $2 per million British Thermal Units (BTUs), but as recently as 2008, natural gas prices were six times higher, hitting $12.69 per million units.
While a return to 2008 prices is unlikely, a doubling in the price of natural gas is a very real possibility. In fact, Platts, a leading energy market research firm, expects natural gas prices to hit more than $4 per million units by 2020. The question is not whether consumers and businesses will be paying more for electricity or heat but rather when.
In years past, a spike in natural gas prices could be offset, because of greater balance in our electricity mix. If gas prices jumped, we could make greater use of coal to temper electricity prices.
But few coal plants are left. They have been closed or converted to burn natural gas. The unintended consequences of reducing carbon emissions have left us overly dependent on natural gas for electricity production. If you think we can switch to wind and solar power, think again. Wind and solar supply less than 10 percent of our power.
New England’s once balanced electricity mix of coal, nuclear power and natural gas is all but gone. Vermont Yankee is shuttered, and the Pilgrim nuclear plant is scheduled to be taken off-line before not too long, while other emissions-free nuclear plants are facing economic trouble from low-cost gas.
Is there a plan in place to restore balance to our electricity mix and protect us from a potential jump in natural gas prices? Unfortunately, the situation is poised to go from bad to worse.
ISO New England, the region’s electricity grid operator, forecasts increasing reliance on natural gas in the years ahead. New England currently has 30,000 megawatts of electricity-generating capacity. An additional 13,000 megawatts are planned, mainly produced from natural gas.
Despite growing demand, the pipeline capacity to get the gas to where it’s needed is not materializing. Public opposition to greater natural gas production — think of the moratorium on drilling in New York State as well as opposition to proposed pipelines across New England — is putting the reliability and affordability of our energy supply at serious risk.
For the protection of consumers, we need to have more balance in our energy mix. Assuming one fuel — with a history of price volatility — will remain cheap and plentiful for years to come is irresponsible. We ought to keep existing base-load power plants running and avoid a loss in generating capacity due to a shift away from coal and nuclear power. Affordable, reliable electricity is not something we can take for granted.
Bob Leach is a retired radiation protection manager and certified senior reactor operator. He lives in Brattleboro, Vt.