Natural gas is not only odorless and colorless, but also the fuel New England relies on to produce 40 percent of its electricity.
And because New England will most likely continue to depend heavily on natural-gas-fired electricity production for the foreseeable future, ratepayers can expect no relief any time soon, according to a new report.
The study, published by ISO New England, the operator of the region’s six-state power grid, concluded that high prices are largely the result of the substantial investment in new power plants that occurred in the past decade.
Most of those plants generate electricity using natural gas as the primary fuel. That’s because they were planned and built when natural gas prices were low and forecast to remain low. But natural gas prices have doubled since 2000, resulting in major price hikes as well as “concerns about the lack of fuel diversity and overall system reliability,” the report said.
Policy makers and residential and business ratepayers have been clamoring for lower bills and more reliability to relieve the growing threat of brownouts and blackouts. They also worry about environmental damage from use of fossil fuels and seek to decrease the region’s dependence on natural gas.
Accomplishing all those goals is not easy, the report declared, “given the region’s lack of indigenous fuel supplies, its dependence on imported fossil fuels, and its tightening environmental policies.”
To investigate possible scenarios for best proceeding, ISO sponsored the eight-month study starting in the fall of 2006, involving more than 100 utility and environmental regulators, market participants, environmental and efficiency advocates, and other stakeholders.
They identified and evaluated seven basic scenarios of different mixes of generating and demand-reduction resources that were possible over the next 20 years.
The scenarios are:
• Use of gas-fired “peaking” power plants — units that start quickly and operate for a few hours during high demand, totaling a few hundred hours a year — and renewable resources.
• Demand-side resources, including demand-response programs — in which entities agree to reduce power use on demand for pay — and energy efficiency technologies.
• New nuclear plants at or near existing ones.
• New coal-fired combined cycle plants using “gasified” coal that ignites and causes a turbine to turn and produce power, with the resulting heat producing steam that produces electricity.
• New renewable plants, including offshore wind, inland wind, small hydroelectric power, biomass, fuel cells, landfill gas, combined heat and power systems, and solar photovoltaic technologies.
• Increased imports of hydro-electric power and other low-emission resources from Canada and New York.
The report concluded that
• New England likely will keep depending heavily on natural-gas electricity production.
• New England likely will face significant challenges in meeting greenhouse gas emission limits.
• Lower systemwide wholesale electric energy prices and reduced air emissions seem possible by reducing demand or supplying large amounts of electric energy from low-cost fuel sources and those fuels that emit few pollutants.
