New England Electricity Prices Spike As Gas Pipelines Lag Consumers in the region are in for a shock this winter. Electricity rates there are set to jump as much as 50 percent for some customers as New England awaits the construction of more gas pipelines.
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New England Electricity Prices Spike As Gas Pipelines Lag

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New England Electricity Prices Spike As Gas Pipelines Lag

New England Electricity Prices Spike As Gas Pipelines Lag

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DAVID GREENE, HOST:

And now a story about sticker shock for people in New England when they get their electric bills. Utility companies there have announced rate hikes of 30 to 50 percent. Prices this winter will be some of the highest in American history. New Hampshire Public Radio's Sam Evans-Brown has more.

SAM EVANS-BROWN, BYLINE: Don Sage and his wife make do on a bit less than $30,000 a year in Social Security payments, so he pays close attention to his electric bills.

DON SAGE: When the invoice comes in the mail to get paid, I have a target amount that we can fluctuate up or down based on our fixed budget.

EVANS-BROWN: So when he learned that his electric bill could rise by as much as $40 a month, he got a bit flustered.

SAGE: They don't need my permission to hike up their rates, but the fact is we're the ones that are paying these increases.

EVANS-BROWN: For Sage and other consumers, these changes seem to have come out of nowhere. But in reality, they've been a long time coming. Between the years of 2000 and 2013, New England went from getting 15 percent of its energy from natural gas to 46 percent. That's dozens of power plants getting built. But the pipelines to supply those power plants - not so much.

At the same time, with the fracking boom just a few hundred miles west driving down gas prices, more and more homeowners were switching to natural gas for heating. So now when it gets cold and everyone turns on their heat, the pipelines connecting New England to the Marcellus Shale are maxed out. Power plant operators are left to bid on the little bit of gas that's left over for them, and the prices can get out of hand - Taff Tschamler, chief operating officer of the energy supplier North American Power at a recent conference.

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TAFF TSCHAMLER: In New England this winter, based on what's been recently trading, is likely to have the highest natural gas prices on planet Earth.

EVANS-BROWN: Gas for January delivery is trading right now at nearly $19 per million BTU's. Big pipelines in New England are on the drawing board, but they won't be built until 2018 at the earliest. And that's only if they don't get swamped by local opposition. So what's a region to do? For one, if you import gas and plug it into the pipeline network at a different spot, you can avoid the bottleneck. Distrigas, New England's only liquefied natural gas import terminal is just north of Boston. Vice President of Operations Toni Scaraggi says even with last year's frigid winter, New England only hit its maximum pipeline capacity for forty days.

TONI SCARAGGI: That's equivalent to two-and-a-half to three LNG tankers coming in. You know, so you've got to compare that to the cost of a two to three billion dollar pipeline.

EVANS-BROWN: He says burning more expensive foreign natural gas for those 40 days is still cheaper than building an oversized pipeline. The environmental community is weighing in on the question, too. Peter Shattuck with Environment Northeast put out a paper arguing the region could save money by using less power.

PETER SHATTUCK: If demand for gas remains low because of things like energy efficiency, distributed generation, renewable heating technologies like heat pumps and biomass, we may not need any infrastructure overall.

EVANS-BROWN: So while it's certain that some pipelines will get built, the big question is how much additional capacity, and who will pay? A plan from the six New England governors to subsidize bigger pipes was tabled recently when Massachusetts announced it wanted to study the question further before committing.

Ultimately, whether electricity prices continue to rise in New England next winter and the winter after that will come down to weather. Peter Brown, an energy attorney with the law firm Preti-Flaherty put it this way at this fall's energy conference.

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PETER BROWN: At any rate, what I think we're hoping for is that the good Lord, who protects drunks and the United States, will also protect New England.

EVANS-BROWN: In other words, pray for a warm winter. For NPR News, I'm Sam Evans-Brown in Concord, New Hampshire.

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