NE’s dependence on natural gas poses threat to electricity prices, reliability, grid operator says

The region’s growing dependence on natural gas to generate electricity is a “serious” threat that could cause more frequent power outages and increase energy prices, Gordon van Welie, head of New England’s power grid operator, said in prepared testimony to Congress on Tuesday.

Van Welie, chief executive of ISO New England, told the House Energy and Commerce that natural gas is now used by power plant operators to generate more than half of the region’s electricity, largely replacing a diversified mix of oil, coal, gas, and nuclear power. Nuclear accounts for about one-third of the region’s electricity production.

While natural gas is a much cleaner that fuel oil and coal and increasingly plentiful as shale reserves are tapped, New England’s limited natural gas pipeline capacity is constraining supplies here. As a result, the region has experienced price spikes, during periods of high demand, driving average wholesale electricity prices up by more than 100 percent in January and more than 300 percent in February compared to 2012, according to van Welie’s prepared remarks.

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The lack of fuel diversity is particularly troublesome during extreme weather, which increases power and heating or cooling demands simultaneously.

Van Welie points, for instance, to a cold snap in January, and the near blizzard-like conditions that dumped several feet of snow across New England in February. During those periods, he says in his remarks, “ISO operators had to cope with multiple instances where generators (both gas- and oil-fired) could not get fuel to run.”

One solution, van Welie has argued, is to redesign the wholesale electric market to give power generators more incentive to keep extra fuel supplies on hand rather than buying them on the spot market as needed.

His testimony Tuesday reiterated that point.

“As the region’s dependence on natural gas grows, it will become increasingly important to have a flexible gas supply system that can meet the demand for electricity 7 days per week, 24 hours a day,” van Welie says in his remarks.

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