New England Utilities artificially constrained gas pipeline capacity

[Brian26]

For those in New England. Interesting article.

Researchers estimate withholding of pipeline capacity cost New England electricity customers $3.6 billion over the past three years. Eversource called the report a “complete fabrication."

A new academic analysis argues gas utility subsidiaries of Avangrid and Eversource have artificially constrained gas pipeline capacity in New England for years, driving up natural gas and electricity prices and potentially violating federal laws.

The systematic withholding of pipeline capacity, particularly on the coldest days, has cost New England electricity consumers $3.6 billion in higher prices over the past three years, according to (broken link removed to https://www.edf.org/sites/default/files/vertical-market-power.pdf) a new white paper.

http://www.utilitydive.com/news/eve...trained-gas-pipeline-capacity-for-yea/507018/

 

[blades]

wouldn't doubt it a bit - definite proof might be a problem though

 

[woodgeek]

WOW. This seems like a big deal.

While the whole US is basically seeing cheaper energy from dirt cheap and plentiful natural gas....my family in New England is paying out the nose on electric and natural gas, and clinging to heating oil to heat their homes because its cheaper and less price volatile (!!) than the alternatives.

Things have to be pretty bad IMO if oil heat looks cheap and low risk.

I mean, I can see juice being expensive in Hawaii or NYC, but why is it an arm and a leg in CT or suburban Boston again?

It seems that the amount of gas shipped during the polar vortex would have been logged, and could be compared with available capacity. That capacity factor, of course, will never be 100% at a maximum, but it must be possible to find comparisons with other pipelines that have had to operate near capacity during other situations.

At the very least, this analysis would show incompetence. But to have the utilities charging whopping surcharges on gas and elec customers and their pipeline operator buddies pitching the need for new pipelines to the statehouse at the same time...

stinks like two week old fish.

 

[blades]

just follow the money for answers.

 

[Seasoned Oak]

Our gas Co is like the Mafia. They have more charges and fees than the cell phone companies, if thats possible. Natural gas is incredibly cheap nowadays to your gas company ,but not necessarily to YOU. I booted them 20 yrs ago. last year they spent a fortune and dug up the street in front of my house just to disconnect my old unused line from the main. I guess they thought there was a slim chance i was somehow pirating their gas.

 

[WoodyIsGoody]

Our gas Co is like the Mafia. They have more charges and fees than the cell phone companies, if thats possible. Natural gas is incredibly cheap nowadays to your gas company ,but not necessarily to YOU.

We have it pretty good here in Washington State in terms of natural gas prices (and protection from abusive business practices in general).

Two years ago my gas company informed me that my residential supply line was not up to code and I would have to pay to have it relocated to a more safe location. The problem wasn't that it ran under the sidewalk to my back door but that someone had turned a stand alone garage into a integrated garage by enclosing the back sidewalk with two storm doors and gas lines are not allowed under enclosed spaces. I told them that's how it was when I bought the place and I wasn't paying to relocate it. They said they'd look into it. They came back a few weeks later and said I would need to pay because there was no building permit issued for the enclosure. I sent them away again telling them the area was enclosed when I bought the place years ago and I wasn't paying to relocate. They came back again and said if I could prove it was like that when I bought it I wouldn't have to pay for the relocation. I sent them away again telling them if they could prove it wasn't like that when I bought it then we can talk. This was all friendly and business like, they were very polite and considerate each time because they didn't want a complaint to be filed with the Washington State Utilities Commission. This is because the regulators here have a long tradition of working for the PEOPLE, not the CORPORATIONS. Unfortunately, in many areas of the country, money has corrupted the system.

Anyway, they came back and said they would pay to have it relocated. They showed me where it was easiest for them to put it but, for reasons I wont go into, I didn't want it there. We finally found a suitable place that met all requirements and wouldn't be in the way of my future plans. They paid everything even though the settled upon location made the job more involved.

It's too bad the regulators in many areas of the country have sold out to the rich business man. It's turning our country into an $oligarchy$. Sad.

Washington State also has strong consumer protections in other areas like banking, credit, car sales, real estate, etc. Shady practices that are common in many states are ILLEGAL here. Contrary to what the shysters tell everyone, this does not limit consumer choice, drive business away or drive prices sky-high. It just means that people who do business here have to follow common sense business norms and refrain from dishonesty and misrepresentation (or they can be successfully sued or even jailed). Because it's obvious few people have the time to read all the fine print. Washington State has a thriving economy so don't believe what the politicians in Alabama or Georgia will tell you about consumer protection! Buyer beware! Very aware.

 

[georgepds]

FWIIW

Utility dive has published a response

http://www.utilitydive.com/news/res...g-meets-irresponsible-market-analysis/507372/


"When weather predictions are uncertain, as they often are in New England, it is common sense to err on the side of caution in reserving gas supply and to have a safety margin or cushion to cover unexpected operational issues. That is what Avangrid and Eversource did. We can only imagine the outcry if they had failed to reserve enough gas supply and homeowners, schools, hospitals, nursing homes, businesses, and industry lost access to fuel."

 

[woodgeek]

Wait. Let me get this straight.... the response is: 'companies have to pad their future allocations projections to avoid shortfalls'.

Independent investigators point out that during a **historic multi-billion dollar** shortfall, a company is routinely cancelling a large portion of its allocations for an extended period of time! This behavior significantly worsens the same shortfall by preventing their competitors from getting supplies. When prices spike, the same company makes a bundle AND their supplier seeks to build out their infrastructure, enriching them further.

This guy's response is from the logic-free zone. The problem is not that they placed allocations. Its that they repeatedly cancelled them (without penalty under existing rules) during a major shortfall, and it is clear to anyone who can do the math or think, that that made the shortfall much worse AND put money in Eversource's pockets while sticking it to their competitors.

I lived in SoCal during the rolling blackouts in LA. At the time, there was all this explanation that there simply wasn't enough power capacity to cover demand. Despite all the rest of the country accurately projecting and meeting their rising demand somehow LA had effed it up...so rolling blackouts for months, and a liberal governor getting recalled for incompetence and fecklessness.

Turns out some Enron bros were playing the market and flicking some switches in Texas to cause the whole thing, and joking about the grannies in LA going without air conditioners and raking in billions of dollars.

During the polar vortex, there is an epic 'gas shortage' in New England, DESPITE the fact that people have been using gas there for a century, everyone there KNOWS that it sometimes gets really freaking cold in New England, and half the houses are heated with oil unlike the rest of the country that uses mostly gas and electric heat that spikes gas demand when it gets cold.

What's the problem?.....we need more pipelines...its the NIMBYs that done it! Let us build more pipelines! And until you do here is a hefty surcharge on gas and electric that never completely goes away, even when the emergency is over.

To my friends in New England...looks like y'all been Enron'ed. We are just waiting for the tapes of some bros joking about the grannies in Boston freezing their butts off when its -10°F outside.

 

[dh1989]

Our electric rates just went up again. Averaging $0.22/kWh all fees and supply/transmission included. They closed the nearby coal power plant and the last remaining nuclear plants are set to go offline in the near future. RI gov't was boasting the great offshore wind farm, which supplies power to the grid at a cost of about $0.30/kWh with the astronomical construction cost. In the meantime people have lawn signs everywhere protesting the gas pipeline projects.

I just made the move from clothes dryer to clothes line to make up for the rate increase. I have oil for hot water and backup heat since the gas co wanted $12k to extend the line 100' to reach me.

I did the math and if we hit $0.35/kWh it might just be cost effective to run a diesel generator over grid power.

 

[georgepds]

I have the opposite problem... so much solar energy I built up a large surplus in the net metering account (as the killer in the wire said.. that's one of them good problems)

Running the car off solar.. next step is to heat the house with the split duct heat pumps.

 

[woodgeek]

Our electric rates just went up again. Averaging $0.22/kWh all fees and supply/transmission included. They closed the nearby coal power plant and the last remaining nuclear plants are set to go offline in the near future. RI gov't was boasting the great offshore wind farm, which supplies power to the grid at a cost of about $0.30/kWh with the astronomical construction cost. In the meantime people have lawn signs everywhere protesting the gas pipeline projects.

I just made the move from clothes dryer to clothes line to make up for the rate increase. I have oil for hot water and backup heat since the gas co wanted $12k to extend the line 100' to reach me.

I did the math and if we hit $0.35/kWh it might just be cost effective to run a diesel generator over grid power.

Looked up the Block Island pilot project....I saw the price is $0.24/kWh + 3.5%/year (!!). Doesn't look like a winner to me. On the bright side, since it only supplies 1% or RI electricity, it is only responsible for increasing your rate by 1/100th that amount less the cost of gas electricity (about 7 cents/kWh) or $0.0017/kWh. If you use 10,000 kWh/yr, that project adds $17 to your annual bill (and increasing 3.5%/yr), maybe less if the cost is shared over a larger pool.

As for closing the coal plant and nuclear plant...good riddance! They were closed because they were not making money....they cost more to run than the gas plants they ramped up to make up the power. Odds are that the utility was not running the coal plant much for the last several years. Those coal plants were largely kept around to run during higher demand periods when wholesale power was more expensive....and then they ended up being used so little that it didn't make sense to even pay to have it on call.

Good old fashioned capitalism that should in principle reduce your rates. These kinds of market changes and cheap gas has reduced rates across the country. My (conventional) power costs from my Exelon utility have fallen 3 cents/kWh.

If you rates in New England are still going up....maybe its torches and pitchforks time.

 

[dh1989]

Not debating the fact that the coal and nuclear plants aren't cost effective. The coal plant only ran at peak summer demand and there was an issue for years with hot water discharges into the bay killing off the ecosystem. The issue is that we rely increasingly on natural gas and can only pipe so much into the region on existing infrastructure.

This morning we are generating 56% of grid power from natural gas and 30% from those nuclear plants that will be going offline in coming years: https://www.iso-ne.com/isoexpress/

 

[georgepds]

Looked at the iso chart this morning. I was encouraged by the 10%renewable and 4% hydro, and less than 1% coal..but like you said the biggest were natural gas and nuclear

My understanding is there are several transmission lines in the works to wheel down power from Quebec (hydro)

Also there are at least two initiatives to increase sources a 1.6 GW plan for offshore wind and another large bid opening for any source(at least in Ma, don't know abut Ri).. but the iso chart is for all New England.. so that should help

 

[peakbagger]

"My understanding is there are several transmission lines in the works to wheel down power from Quebec (hydro)"

There are several proposed electrical transmission line projects but only one, the Champlain Express in VT, is without controversy. There have also been several gas transmission projects that would "cure" new england's gas problems but it comes down is that the developers will gladly build them if someone guarantees a profit. They also require acquiring right of ways adjacent to developed areas and much of their proposed routes usually end up going through conserved land which brings lot of adverse publicity and litigation. The New Hampshire project, Northern Pass, is couple of years behind and the developer had to make a 400 million dollar concession to bury a portion of the line just to get to the point where they had a hope of getting it permitted. Currently the permitting process will be complete by April 2018 at the earliest and construction will take a couple of years assuming no litigation (which is unlikely).

There is one already built gas line coming into the region, PNGTS, that has significant additional capacity if there were booster stations added. When it was built the developers were in a rush and did not want to go through air emission permitting so they installed a booster station at the Quebec border and then lived with the pressure loss in the line all the way to the tie in point (over a 100 miles). If they installed a few booster stations, they could ramp up the flow with minimal disturbance. The reason it has not happened is they will not do it unless someone guarantees they will make a profit by signing on for fixed capacity.

There is always a battle between firm and non firm buyers. Few entities are willing to sign fixed contracts except for regulated utilities and the non firm buyers are always complaining they cant get enough gas when the market is tight.

 

[georgepds]

Read about the line here

(broken link removed to http://www.tcpipelineslp.com/portland-natural-gas-transmission-system.html)

 

[georgepds]

Re new England pwre is 1% coal

"The Brayton Point Power Station, New England's largest and one of its last coal-fired power plants, appears on a cloudy day, Wednesday, May 31, 2017, in Somerset, Mass. The plant, which has been generating electricity since the 1960s along Mount Hope Bay, is shutting down permanently. It's been cited by federal regulators as one of the region's heaviest polluters. (AP Photo/Matt O'Brien)(Matt O'Brien)"

That was the last coal fired plant in Massachusetts.

 

[georgepds]

Re "There is one already built gas line coming into the region, PNGTS, that has significant additional capacity if there were booster stations added. "

Just curious.. any idea of how increase in PNGTS capacity compares to the proposed ( now dead) kinder Morgan pipeline ??

Tennessee Gas Pipeline is soliciting contracts for new natural gas pipeline capacity in New York and New England... do you know if pngts is bidding.. it should be a shoe in... no need for all that right of way permits for a new pipeline

 

[peakbagger]

I would guess PNGTS would be about a 30% increase in capacity of the existing line. The Kinder Morgan pipeline would be a whole lot more capacity plus its hooked into the Marcellus gas fields. PNGTS comes off the Canadian pipelines so its less desirable. I dont think they would bid on some other companies RFQ. Prior to the PNGTS, there was an attempt to convert the Portland Pipe Line which runs 3 lines from Quebec to Portland Maine into a gas pipeline. It was designed to pump crude from Portland Maine to refinerys in Montreal. Most are shut down and the line is rarely used. PNGTS shares right of way south of Gorham NH. I expect the pipe (or pipes) would need to be replaced but the right of way exists.

It comes down to everyone wants non firm gas but no one is going to pay to build the pipelines.

 

[georgepds]

• Now the state is looking into the allegations...
• 
  
• 
  
• The Massachusetts Department of Public Utilities confirmed yesterday that it will review allegations that Eversource and Avangrid artificially acted to constrain natural gas capacityon the Algonquin pipeline, particularly on the coldest days.

The impact on consumers was significant, according to EDF's analysis. The practice tied up as much as 7% on the most constrained days — translating into 28% of the gas that would have been used by power generators. According to the researchers, the behavior cost consumers $3.6 billion in higher power bills over the past three years.


https://www.utilitydive.com/news/ma...legations-eversource-avangrid-constra/508100/

 

[woodgeek]

Paging Elizabeth Warren.....Senator Warren....

 

[georgepds]

Paging Elizabeth Warren.....Senator Warren....

Nah... I think this is a matter for the DPU and the state attorney general... Warren can shame them.. the DPU and the state attorney general can put the screws to them ( fines, change of utility policy and cost reimbursement)

 

[Brian26]

My mom's gas bill was way higher than last year so I looked into it. According to the EIA data for CT the price of gas has doubled since Jan this year.

Going to be another expensive winter for natural gas. Will be interesting to see gas prices this winter in New England.

Oil is at record lows and heating oil is down to the $2.30's in the New Haven area now.

https://www.eia.gov/dnav/ng/hist/n3010ct3m.htm

 

[CaptSpiff]

I followed this thread with interest last year, but when posters suggested "it's torches and pitchforks time" I decided to hold off posting myself.

The thread has had a year to settle, but no facts have changed and I suspect this will be another tight gas constrained winter season for NE natural gas supply.

The issue discussed about pipeline supply is simpler than the conspiracies presented. It is a "long game" for anyone to get a pipeline installed, but the game rules haven't changed much, and they are always driven by economics. Those existing pipelines got their financial backing (ie loan approvals) after the New England gas companies made firm commitment reservations on the future pipe's capacity. That, and some estimates of the non-firm customer future uses got the Banks to pony up, and the project to build the pipelines began. Now N.E. is supplied by several pipelines to meet all the firm customer load (ie primary end user of the local gas company). That's you and me heating our homes and businesses. Even if a pipeline fails, called a contingency, there is reserve capacity on the rest of the pipelines.

Most days of the year the usage of the firm customer is so much lower than the "available capacity" on the pipeline that the other users (power plants and large factories) can buy Natural gas at spot market prices (in PA, Ohio or Canada) and have it sent on (thru) the pipeline at non-firm transport rates. This has been the reason why electricity wholesale costs from NG in NE have been so cheap compared to other fuel derived resources. Local Gas companies "give up" their firm capacity rights, opening up low cost non-firm capacity for electric power producers.

Now for a few weeks a year the temperature drops to "record lows" and home heating customers demand for NG supply climbs in line. Days in advance the local Gas Companies start to project this and begin calling on the pipeline companies to reserve firm delivery capacity on the pipelines. This reduces the non-firm capacity available and the pipeline companies begin a process similar to an over-booked airline, except the non-firm electric power plants have no refusal rights because they are non-firm. Suddenly, and predictably, the price war starts over the remaining available non-firm capacity, and the end user pays the bill a month later.

Now during this time the wholesale price of NG is also climbing everywhere, so even the local gas companies who have firm pipeline capacity reserved are delivering more expensive gas. But it is the non-firm power plant that see's their wholesale costs double, plus transport cost quadruple, that drives the NE spot market wholesale electricity price thru the roof. Suddenly coal power plants seem cheap, and fuel oil fired plants are starting up systems which haven't been used in 10 months. It is a Ground Hog Day moment which will continue until more pipeline capacity comes into play, or alternative energy supplies become reliably available under severe winter conditions.

PS. As you can probably surmise, the existing pipeline companies have little to gain by having another pipeline enter the fray. And there are plenty of people making money on the present process as it is, so the opposition to change is not always who they appear to be. Nuff said on that.

 

[peakbagger]

The only thing that could change the status quo is Hydro Quebec. The kills the economics for natural gas plants and as the nukes shut down New England gets dependent on HQ. Of course HQ isnt just hydro, they too have natural gas plants fed from big pipelines. Once HQ has driven out competition they build the generation and New England pays a premium.

 

[CaptSpiff]

Looked up the Block Island pilot project....I saw the price is $0.24/kWh + 3.5%/year (!!). Doesn't look like a winner to me. On the bright side, since it only supplies 1% or RI electricity, it is only responsible for increasing your rate by 1/100th that amount less the cost of gas electricity (about 7 cents/kWh) or $0.0017/kWh. If you use 10,000 kWh/yr, that project adds $17 to your annual bill (and increasing 3.5%/yr), maybe less if the cost is shared over a larger pool.

As for closing the coal plant and nuclear plant...good riddance! They were closed because they were not making money....they cost more to run than the gas plants they ramped up to make up the power. Odds are that the utility was not running the coal plant much for the last several years. Those coal plants were largely kept around to run during higher demand periods when wholesale power was more expensive....and then they ended up being used so little that it didn't make sense to even pay to have it on call.

Good old fashioned capitalism that should in principle reduce your rates. These kinds of market changes and cheap gas has reduced rates across the country. My (conventional) power costs from my Exelon utility have fallen 3 cents/kWh.

Just wanted to zone in on "Wood's" look at the Block Island "Deepwater Wind Project" offshore RI. I didn't know the numbers (0.24/Kwh + 3.5%/yr) on that project, and I assume those numbers are wholesale cost. Compare that to other present wholesale electric cost of 0.06 to 0.10 (NG & Nuc) in $/Kwh and you'd be right to be concerned. Luckily this was just a tiny project of 5 large windmills, so the net effect it will have on the total customer bills will be small.

It is worth looking at the effect to the customers of Block Island itself. This small summer-time tourist destination was totally separated from the mainland power grid. They got their power from large local diesel generators, and a tiny windmill, running 24/7. Deep-water commercial fuel barges would make the weekly trips to top off the local tank farm, and a local resident friend of mine claimed his electric rate was about $0.54/Kwh.
The installation of the 5 windmills also included a new local substation and a 35Kv submarine cable to the mainland connected to the National Grid RI system. Meaning that even if the windmills stopped producing energy, the residents of Block Island would be able to purchase their power over that 35Kv cable, and permanently put their diesels on standby. My friend has since moved off the Island, but was expecting his bill rate to drop to about $0.35/Kwh. Plus there was talk of allowing rooftop solar for the first time, it was not considered compatible with the Diesel only operation previously.

Progress.