TGP Supports Mass. DPU Efforts to Improve Energy Supply to New England

By Brad Kramer June 17, 2015 View Profile

Pipeline companies and state governments are exploring options to improve the energy supply to the New England region. Tennessee Gas Pipeline (TGP), a Kinder Morgan company, submitted a filing with the Massachusetts Department of Public Utilities (DPU) supporting the department’s examination into how new natural gas supply capacity can be added to the New England market, including providing a regulatory mechanism for Massachusetts electric distribution companies (EDCs) to contract for additional natural gas pipeline capacity to help reduce natural gas and electricity prices in Massachusetts.

In its June 15 DPU filing, TGP noted that Massachusetts and New England are consistently experiencing the highest natural gas and electricity prices in the continental United States, which can be significantly reduced through contracting for and building additional natural gas pipeline capacity to service the region.

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“The existing shortage of pipeline capacity to serve the demand from the electric generation sector, particularly during the winter, leads to significantly higher regional natural gas prices and, in turn, higher regional electricity prices,” said Kimberly S. Watson, president of Kinder Morgan East Region Natural Gas Pipelines.

Over the past two winters, New England’s electricity plants have had to rely on high-priced natural gas, imported LNG and fuel oil purchased on the spot market to meet demand because of insufficient natural gas pipeline capacity serving the region. According to the independent electric grid operator ISO New England, this resulted in New Englanders paying more than $7 billion more for electricity during the winters of 2013-2014 and 2014-2015 than what they paid for electricity during the winter of 2011-2012.

ISO New England has also noted that although total use of electricity in New England dropped 2 percent in 2014 compared to 2013, the average price of wholesale electricity rose 13 percent in 2014, with the increase largely due to the increase in the cost of power plant fuel, particularly natural gas.

“There is no doubt that the increasing cost of natural gas and electricity caused by the lack of adequate natural gas pipeline capacity makes it more costly for New England’s businesses to compete with businesses operating in nearby lower energy cost regions and is particularly painful for New England’s working families, retirees and others living on fixed incomes,” Watson said. “The ability to bring additional low-cost, domestic, abundant and environmentally cleaner natural gas to Massachusetts and New England will lower and stabilize energy costs for gas and electric customers and help stimulate economic growth, providing the opportunity for the Commonwealth of Massachusetts to benefit similarly to other regions of the United States, where low-cost natural gas is transforming their economies by creating new jobs and cost savings for families, businesses and public institutions.”

According to the TGP filing, increasing the natural gas supply capacity to New England will also have additional important benefits to Massachusetts and New England, such as further reducing regional emissions of carbon dioxide, nitrogen oxides and sulfur dioxide by replacing higher emitting coal and oil-fired electricity generation with new, cleaner natural gas-fired electricity generation, supporting growth of renewable generation technologies such as solar and wind by ensuring uninterrupted energy supply on cloudy or windless days, and providing the opportunity for additional residences and businesses to convert from oil and other fuels for heating and manufacturing to less expensive and cleaner natural gas, particularly in western Massachusetts and other areas which are currently dealing with moratoriums on new connections due to limited natural gas supply.