Brief

Chamber of Commerce: Northeast pipeline constraints are a $7.6B drag on GDP

Dive Brief:

  • High gas and power prices in the Northeast are only going to get worse unless the region adds pipeline capacity, according to a new report from the U.S. Chamber of Commerce's Institute for 21st Century Energy.
  • The business federation estimated insufficient pipeline capacity will cost the region more than 78,000 jobs and $7.6 billion in GDP by 2020, in a new report that models the question "What if pipelines aren’t built into the Northeast?"
  • While some groups have challenged the need for new pipeline capacity, arguing the region can meet its energy needs with a cleaner mix of resources, regional grid operators have indicated opposition to pipelines could create reliability risks, though they are confident in their ability to serve demand. 

Dive Insight:

There is a battle going on to build pipeline capacity in the Northeast, and project opponents have recently been getting the upper hand. 

Earlier this month, the New York State Department of Environmental Conservation rejected National Fuel Gas' proposed Northern Access pipeline, a roughly-100 mile pipeline that targeted markets in Western New York, the Midwest and Canada. 

Spectra Energy's Access Northeast hit a snag last year, when a Massachusetts judge ruled the state couldn't require electric customers to foot the bill.

Officials at PJM Interconnection and ISO New England say a refusal to build new pipeline capacity in the Northeast could put winter power reliability at risk when heating demand spikes. Generators have warned of possible reliability issues as well. 

On the other hand, Synapse Energy, a consultancy, believes gas demand in the region is poised to decline dramatically — possibly as soon as 2023 — lessening the need for new pipelines. 

The U.S. Chamber of Commerce's report is another installation in the debate, predicting continued high energy prices and a drag on the region's economy if no more pipes are constructed.

Karen Harbert, president and CEO of the Energy Institute, said in a statement that environmental groups are "fighting to block virtually every project that would bring additional natural gas into in the northeast. ... As a result, residents in the northeast are paying the highest electricity rates in the continental United States, with no relief in sight if infrastructure is not built."

According to the report, Northeast residents pay 29% more for their natural gas than the national average, and 44% more for their electricity. And six of the 10 states where residents pay the highest prices for electricity in the country are New England states. For industrial consumers, the report found they pay more than double the national average for natural gas, and 62% more for electricity.

Gas demand averages up to 10 billion cubic feet/day (Bcf/d), and spikes to almost 21 Bcf/d in the winter. The report claims the existing network is "simply not robust enough to facilitate these spikes."

That's a perspective noticeably more dire than recent reports from regional grid operators. Last year, both ISO-NE and PJM told federal regulators they were confident in meeting winter demand in the near term, but that an extended cold snap could put pressure on fuel supplies to generators, particularly if new pipelines are not built.

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Filed Under: Generation Regulation & Policy
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