Electricity Costs in New England Will Likely Continue to Climb, Report Says

On August 2, ISO New England released a report analyzing the electricity scenario in New England and concluded the region will continue to rely heavily on natural gas sources. This likely means that electricity costs are not going down anytime soon.

ISO New England runs the six-state power grid and the whole-sale power market. Its most recent report explores "the economic, reliability, and environmental impacts of various resource[s] for meeting the region's future electrical needs." For consumers, the immediate conclusion on their bottom line is most likely to be of greatest interest, however, the report also predicts environmental impacts.

Findings

New England has one of the U.S.'s highest electricity rates, according to data from the American Public Power Association. This high rate is due in large part to its reliance on natural gas. The study found that unless the cost of natural gas falls, there will be no drop in electrical costs in the near future, and the winter price spikes of natural gas will likely continue.

"Given the region's lack of indigenous fuel supplies, its dependence on imported fossil fuels, and its tightening environmental policies, substantially reducing regional electricity costs will be difficult," the study says.

The report reviewed seven distinct scenarios of electricity usage and sources, including 1) The Queue Mix of a combination of power plant technologies, 2) Demand-Side Resources of energy-efficiency technologies and shifting usage to off-peak hours, 3) Nuclear Power Plants, 4) New Coal Power Plants, 5) New Gas Power Plants, 6) New Renewable Power Plants that combine renewable technologies like wind, hydroelectric and solar power, and 7) Increased imports of hydroelectric power and other low-emission resources. The scenarios presented are based on a one-year snapshot of data, and because of the uncertainty of global oil and gas prices, the report did not predict New England's future power grid or recommend one model over another.

The underlying value of the report revolves around the research of varying technologies, as well as bringing together a range of participants from utility regulators, environmental advocates, ISO representatives, and other interested stakeholders. Being able to refer in one place to how various technologies affect the reliability of the electricity system is a beneficial first step in making decisions about future changes in the electrical grid.

Consumer Impact

Key findings of the report imply that as New England continues to rely on natural gas resources, the costs of natural gas and oil will strongly affect the price of electrical energy. Additionally, diversification away from natural gas will have an initial cost associated with it. For consumers, this means that electricity bills will continue to climb.

As a result, consumers' energy conservation will be more necessary in the future. Initiatives such as the Connecticut Light & Power Company's "Wait Til 8" that advocates waiting until after peak hours for high-usage appliances such as dryers and dishwashers and "Summer Saver Rewards" to promote energy conservation will likely increase in importance and prevalence in the years to come.

Source:

ISO New England

American Public Power Association

Connecticut Light & Power Company