Boston, MAOn January 8, 2015 Massachusetts released a “Low Demand Analysis” evaluating means to reduce overreliance on natural gas through investments in clean energy. The analysis found that prioritizing energy efficiency, renewable energy, and imports of Canadian hydroelectricity would reduce Massachusetts’s exposure to wintertime price spikes that result from our growing dependence on natural gas for heating and electricity generation. However, constraints placed on the study limit its applicability to current energy challenges facing New England; this initial analysis should not be interpreted to support a new subsidy that would shift multi-billion dollar risks from private corporations to the public.

 

“Massachusetts has taken an important but preliminary step toward thorough analysis of viable supply- and demand-side solutions to meet our energy needs,” said Acadia Center President Dan Sosland. “Because electric ratepayers across New England are being asked to subsidize the construction of a pipeline that could take decades to pay off, alternatives need to be examined in all New England states to ensure that we have an accurate, up-to-date picture of how to power the region while reducing risks to consumers and bringing down greenhouse gas emissions.”

 

A number of key limitations make the need for updated, regional analysis clear:

  • Limitation to Massachusetts – Taken together, Connecticut, Rhode Island, Maine, New Hampshire, and Vermont account for the majority of energy use in New England and offer significant clean energy opportunities but the study evaluated alternatives to natural gas pipeline capacity only for Massachusetts.
  • Outdated assumptions – Key assumptions underpinning the model no longer reflect economic and political realities on the ground. Examples include:
    • Fuel prices – Prices for oil and liquefied natural gas (LNG) have dropped significantly since the study was launched, affecting the economics of pipeline gas versus alternatives that do not require new infrastructure.
    • Electricity imports – Recently-proposed projects to import a mix of Canadian hydroelectricity and wind from northern New England are not reflected in the analysis.
    • Offshore wind – Forthcoming legislation in Massachusetts will feature significant procurement of offshore wind – which reduces gas demand and prices during winter peaks – yet offshore wind was not included in any of the scenarios.

 

Proposals to expand natural gas pipeline capacity rely on an unprecedented region-wide electricity tariff requiring federal approval. It is critical for policymakers both to demonstrate that they have fully examined and exhausted alternatives across the region and also to minimize risks to consumers. These risks include natural gas price increases due expanded exports, which the Department of Energy has concluded could raise prices by almost 50%, or a repeat of last year’s cold weather, which caused natural gas prices in Pennsylvania to skyrocket, undermining the argument that imported shale gas would reduce price spikes.

“This report begins to show a way to break our addiction to natural gas,” said Peter Shattuck, Massachusetts Director for Acadia Center. “Now we need a full assessment of alternatives to a multi-billion dollar pipeline ‘fix’ that would increase our addiction, transfer risk from private corporations to the public, and undermine efforts to reduce climate pollution most cost-effectively.”

It is important to note that New England states’ mere consideration of subsidizing new pipeline capacity has likely had a chilling effect on the market and undermined potential private sector financing for energy infrastructure. In contrast to the proposed pipeline tariff in New England, private producers are bearing the financial risks associated with the Constitution Pipeline running from Pennsylvania to New York. Since New England Governors initially proposed supporting new pipeline capacity in 2013, similar private financing proposals have failed to materialize as developers wait to see if the public will take on project risks.

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Contact: Peter Shattuck, Massachusetts Director, 857-636-2502, pshattuck@acadiacenter.org
Emily Avery-Miller, Director External Relations, Acadia Center, 617-742-0054 x100, eavery-miller@acadiacenter.org

Acadia Center is a non-profit, research and advocacy organization committed to advancing the clean energy future. Acadia Center is at the forefront of efforts to build clean, low-carbon and consumer-friendly economies. Acadia Center provides accurate and reliable information, and offers a real-world and comprehensive approach to problem solving through innovation and collaboration.

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admin@acadiacenter.org / www.acadiacenter.staging.wpengine.com / Daniel L. Sosland, President