The following commentary was written by Adam Gallaher, a Ph.D. student at the University of Connecticut researching energy and electricity issues in Connecticut and New England. See our commentary guidelines for more information.
Connecticut and New England have a natural gas problem, the likes of which recently emerged in consumers’ utility bills.
On Nov. 4, 2021, the State of Connecticut Office of Consumer Counsel released a notice warning consumers of an impending increase in the supply rate for electricity. Many factors influence supply rates, such as the price of natural gas, increased demand for electricity, and extreme weather. Natural gas prices are the highest they have been since February 2014.
The recent Nor’easter gave us a cold reminder of the reliance New England has on natural gas. By reducing our reliance on natural gas and instead investing in renewables, New Englanders could see reduced rate increases and stable electricity supply.
Natural gas serves as the primary fuel source used to generate electricity and the secondary fuel source for home heating. However, unlike other regions in the U.S., New England is situated “at the end of the pipeline,” leading to bottlenecks in the network during periods of high demand, mostly felt during harsh winters when supply shifts to meet home heating needs. During these times, New England is forced to use high emission fuels like coal and oil to meet demand. When the pipelines are tapped, electricity generators pull from imports of liquified natural gas (LNG), a global commodity susceptible to price volatility.
Twice a year the two major electric utilities in Connecticut, Eversource Energy and United Illuminating, adjust the standard service supply rate for electricity following approval by the Public Utility Regulatory Authority. This is the rate that consumers pay for the generation of electricity. Those rates end up being passed on to generation facilities and not the utility companies. The new rates become effective Jan. 1 and July 1 and are locked in for the 6 months spanning those two dates. The Office of Consumer Counsel reports that Eversource and United Illuminating customers will see a 37% and 14% increase, respectively, over the Jan. 1, 2021, service rate.
By now you may be thinking, temperatures this winter are predicted to be higher than average, why are supply rates increasing over last winter?
The answer lies in how the majority of our electricity is generated. Natural gas is the main fuel source for electricity generation in New England and Connecticut, meeting 53% and 56%, respectively, of overall demand. Even with U.S. natural gas production reaching all-time highs in 2019, Connecticut, and more broadly New England, continue to face infrastructural constraints and at times are at the hands of the global LNG market.
Over time, there have been many opportunities for natural gas pipeline expansions through New York. However, these projects were repeatedly shut down in the name of lowering emissions. While opposition is driven by good intentions, the result has meant relying on higher emission power generation during periods of high demand. As New England continues to electrify fossil fuel sectors and personal transportation transitions from fossil fuels to electricity, Connecticut and New England will continue to experience mini energy crisis events each winter, much like the recent spike in supply rates.
There is never one solution to these complex problems. One way to increase electricity supply while also reducing reliance on natural gas would be to develop the highly contentious Hydro-Québec transmission line. If constructed, the line would provide nearly 1,200 megawatts of clean electricity, enough to power 1 million homes. Another solution is the continued procurement and expansion of offshore wind. On June 7, 2019, the Connecticut Department of Energy and Environmental Protection released a request for the procurement of up to 2,000 megawatts of offshore wind energy by 2030. Less than one year later, Massachusetts increased its procurement to 4,000 megawatts by 2027.
While our natural gas woes will not be resolved anytime soon, it now falls on Connecticut and New England residents to reflect on what is most important to them. Do we want continued reliance on natural gas and possible future price hikes in supply rates for electricity? Or clean renewable resources that can ease the demand on natural gas power plants when home heating diverts supply? Only time will tell what the real solution is, but for now, my vote goes in favor of renewables.