Energy costs continue to burden New England ratepayers and hinder the region’s economic recovery.
This is not startling news. Three years ago, recognizing this challenge, Governor Malloy created his Comprehensive Energy Strategy that sought to address rising energy costs and promote more renewable, sustainable energy.
But the urgency of this challenge is intensifying as highlighted in a new study that illustrates the clear, compelling, and immediate economic consequences New England faces if key electricity and natural gas infrastructure is not built over the next five years.
Here’s what we face.
• By 2020, failure to expand the region’s energy infrastructure will cost New England households and businesses an additional $5.4 billion in energy costs.
• The increased costs will reduce disposable income by more than $12 billion and could cause the loss of as many as 167,600.
These stark findings were calculated by economic forecasting firms La Capra Associates and Economic Development Research Group for a study commissioned by the New England Coalition for Affordable Energy. The study examined the economic consequences to the region if no new investments are made to expand energy infrastructure beyond today’s levels.
These are not just abstract future values. Actual data show Connecticut’s families are bearing the brunt of the burden today.
In 2014, the number of non-hardship customers having to make payment arrangements to Connecticut’s largest electric utility increased by 400% compared to just two years earlier. The impact on our poor is even more acute.
Higher energy costs will also make the region less competitive and impact its ability to attract and retain jobs.
So, how did we get into this position?
First, New England’s reliance on natural gas for electricity generation has increased dramatically — from 15% in 2000 to close to 50% today. Infrastructure needed to adequately supply natural gas-fired power plants has simply not kept up with this increased demand resulting in markedly higher electricity costs, particularly during winter months.
Second, many of the region’s older nuclear, coal, and oil electricity generating plants have retired or will soon retire due to a variety of factors, putting even further strain on the current system and customers.
Some argue that the region should meet these challenges simply with ratepayer subsidized energy efficiency programs and 100% reliance on renewable power. But New England already ranks among the most ambitious regions for promoting energy efficiency — spending up to $1 billion of ratepayer funds a year on efficiency programs. Connecticut is regularly ranked among the most energy efficient states in the country.
We also have some of the most innovative and successful programs in the country for promoting development of renewable energy projects. Even so, in New England, such projects currently generate only a tiny percentage of the region’s electricity.
Additionally, projected growth in large-scale renewable generation will still require additional infrastructure to move the electricity from large renewable generation plants to electricity customers throughout the region.
We can make a difference. We have the power to make energy a strong catalyst for economic growth instead of a competitive disadvantage and a significant hardship for residential and business customers in our region.
The good news is that the Coalition’s study modeled an all-resource approach, showing that these dire economic consequences can be avoided altogether through a combination of:
• Expanding development and distribution of substantially larger quantities of cost-effective wind, solar, fuel cell, and other technologies to meet renewable energy goals
• Expanding access to nearby affordable and reliable natural gas for gas-fired electricity generators
• Expanding access to large-scale, clean, and renewable hydropower, along with access to other renewable power generated from remote areas of the region
Additionally, we must continue to pursue policies that encourage a diverse portfolio of fuel sources for electricity generation and for powering our motor vehicles. And we must recognize highly efficient use of traditional fuels such as oil and propane for residential and commercial space and process heating as a viable part of that diverse fuel portfolio.
Several infrastructure projects have been proposed that would provide lower electricity costs, a system to move increasing amounts of renewable energy throughout the region and mitigate adverse economic consequences to the region.
We’re getting there, but we’re not there yet. Now is the time to act boldly and with a great sense of urgency as the consequences of inaction are too compelling to ignore.
Eric Brown is associate counsel at CBIA and Carl Gustin, is a consultant to the New England Coalition for Affordable Energy.
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