A recent paper published by the Carsey School of Public Policy on New Hampshire’s electricity future provides a distorted view of our energy markets. Elected officials and the general public should understand the flaws in this analysis.
The authors state “We find evidence that near-term levels of demand and supply pose no threat to grid reliability.” This statement downplays the need for additional energy infrastructure in the region, presumably to ensure that public money continues to flow to favored solar, wind and energy efficiency interests.
Unfortunately for the rest of us, their findings are without substance. In fact, in the 2013-2014 winter, our region was a few hours away from a severe electric grid event that would have resulted in major blackouts and brownouts.
Since that time, instead of bringing more non gas-fired baseload generation assets online we have seen two nuclear plants close or announce closure. This is why Gordon van Weile, president of ISO-NE, has been discussing the need to address serious problems coming over the next several years. Unless and until there is new infrastructure in the region, we will face continuing threats to our electric grid.
Beyond the issue of reliability, the authors are critical of transmission investments made over the past decade. Using 2015 data, they argue that the high cost of electricity is due to these investments and not the high cost of energy supply, but here in New Hampshire that is just not true. The Eversource average retail rate for electricity in January 2017 was 18.25 cents. Only 2.2 cents was transmission cost, making up 12 percent of the total, which is consistent with national averages. Distribution cost was 4.4 cents, which also matched the national average of about 24 percent of the bill. Far more expensive was the supply charge of 11.2 cents, much greater than the national average.
The authors further attempt to show the benefits of energy efficiency. They compare New England versus national GDP increases between 2005 and 2015 and contrast this with total energy consumption. The New England economy grew 9.7 percent while energy use declined 9.6 percent. Nationally, GDP grew 15.2 percent while electricity consumption fell 3.4 percent. They argue that we are improving our energy intensity versus the rest of the country, but what they fail to acknowledge is that our region is growing a lot slower than everywhere else, and our electricity prices likely have something to do with that. In fact, they omitted the inconvenient truth that during that period our region lost more than 100,000 manufacturing jobs and that most of the drop in electricity demand is due to the loss of our industrial base (residential demand has increased despite hundreds of millions of dollars in energy efficiency investments.)
Our distorted and expensive electricity markets are driving good, high-paying manufacturing jobs out of New England. That is what is driving the “energy intensity” metrics, and it is not something to be proud of — it is something we need to fix.
It is difficult to make the case that the past 10 years of transmission reliability projects have been bad investments. Between 2005 and 2008, New England spent about $600 million a year on electric reliability agreements, uplift charges, and congestion costs. By developing transmission projects, the region is better able to move electricity from producers to consumer. The grid is more reliable and the cost of moving that electricity is much less.
Between 2009 and 2016, the same charges were more than $500 million less each year. That’s over $4 billion of savings for electricity users, with ongoing savings for decades to come.
The Carsey authors’ conclusions are as flawed as their distorted data. Our region has serious energy problems that need to be addressed. The authors want to delay any major infrastructure projects and funnel more funding into renewables and energy efficiency, hoping that over time we can figure out what to do. What they don’t acknowledge is that the supporters of this paper are the same groups fighting energy infrastructure projects in the region, turning what should be a few years of siting, permitting and construction into decade-long quagmires. We will soon have another 2013/2014 winter, but we will have fewer reliable generators, no additional natural gas resources and potentially a less reliable transmission grid to manage a crisis.
Let’s hope our elected officials and decision makers do more homework than the Carsey School did and address the real problems before a day of reckoning comes.
Michael Sununu is a selectman in Newfields.