Recent decisions in other New England states have sunk hopes for a near-term solution to a wintertime bottleneck in the region’s natural gas supply that can cause huge spikes in electricity prices in Maine.
Gov. Paul LePage is joining an emerging effort to harness demand for residential and commercial heating to help pay for infrastructure that could help ensure a steadier gas supply for electricity plants too.
Late last month, Connecticut regulators delivered the latest blow to a regional effort to improve natural gas supply lines by canceling a bid request for new gas capacity infrastructure. That followed similar moves in other New England states, triggered in turn by a ruling from the Supreme Court in Massachusetts saying it’s illegal to stick electricity consumers with the bill for new gas infrastructure.
The idea may not be completely dead in the region. Maine regulators, for instance, have ruled that local consumers could be charged for such costs, as long as the rest of New England’s electricity users are paying a share too. But the effort is clearly stalled and states are looking for new ways forward.
LePage, who has made improved natural gas supply a centerpiece of his energy policy, was asked about it in a brief interview last week.
“My idea is to come in from Canada. And we’ve got a proposal, we’re going to be looking to bring natural gas in from Pennsylvania up into Canada and down through Quebec,” he says.
The idea is to boost demand for natural gas in Maine by encouraging the conversion of oil-burning heat and power systems — residential or commercial — into more efficient and cleaner gas-fueled systems. With more firm contracts for gas supply in hand, the owners of the pipelines LePage mentions, TransCanada and the Portland Natural Gas Transmission System, would have the incentive to upgrade supply infrastructure and build the cost into gas bills, with a side benefit of creating new capacity that would also ease wintertime constrictions on gas for electricity plants.
“For the entire gas pricing it would have benefits for all gas users, including end-users for the electrical system,” says Maine energy chief Patrick Woodcock.
Woodcock says LePage is looking at a circuitous route from Pennsylvania’s Marcellus Shale, where the lowest natural gas prices in the world can be found, up through Canada then back down here. It would bypass much of the Northeast’s liberal topography.
“The last few years have shown that, to be frank, the environmental community has been successful at blocking projects, in New York, in Massachusetts,” Woodcock says.
The proponents of one big project, Kinder Morgan, have altogether abandoned their plan. But backers of another vowed to forge ahead.
One idea for keeping the $3 billion Access Northeast project — as it’s called — viable is similar to LePage’s. By securing gas supply contracts for residential and commercial heat and power users, known as LDC buyers, the hope is that some electricity generators, known as EDC buyers, in states where there’s political or regulatory support, like Maine, can be brought on board too.
“You’ve got three states that clearly want an EDC solution, so it’s kind of marrying that up with a large enough LDC solution to make for a project that will have a meaningful difference in the region in terms of reliability and price stability,” says Leon Olivier, a vice president at Eversource Energy, in a conference call with investors last week.
LePage’s Canada connection would be a much smaller foray, one that a spokeswoman for TransCanada says would not require massive investments. And Woodcock says the LePage idea would be only a very small part of solving the winter supply issue, but it could be one part of the puzzle to help tide the region over when the next ultra-cold winter comes around.
Still, there’s concern a monster gas and electricity price spike along the lines of one that occurred two years ago could happen again in coming years. That could spur intervention by the organization that operates the regional electricity grid, ISO New England.
“If it plays out in a way that creates reliability problems on the grid, then they will act immediately to do that, and one way might be to revisit this issue of pipeline capacity,” says Richard Silkman, an energy consultant at Portland’s Competitive Energy Services.
That could open a new battlefield for environmentalists, whose work to wean the region from natural gas has been instrumental in stalling the big pipeline projects.
Greg Cunningham, who directs the Conservation Law Foundation’s clean energy and climate change program, says even if consumers have to pay a short-term premium for moving to wind, solar and other renewable sources, that pales in comparison to the stakes.
“These technologies aren’t just on the way, they are here. And they’re not just going to become less expensive, they are already less expensive. So this is not our future, this is our present, and Maine and the rest of the New England need to take hold of it,” he says.
Meantime, LePage and others are working to create new demand for natural gas in the state — demand they say is needed to encourage new infrastructure that could ultimately put a brake on electricity prices in Maine.