Rising electric costs could crush N.H. economy
Given our alarmingly expensive energy, we now face a bleak scenario
Three New Hampshire electric utilities recently announced substantial rate increases, which in some cases will double the cost of electricity for their customers. This should put policymakers on notice. New Hampshire’s and New England’s economic future is at risk.
New England has always been a high-cost region when it comes to energy. We have little in the way of indigenous fossil fuels, which has given other resource-rich regions a competitive edge. The “fracking revolution” in neighboring Pennsylvania and New York has played a big part in New England’s shift to natural gas. However, even before the fracking boom the region was becoming more dependent on natural gas.
Since 2000, New England’s reliance on natural gas to generate electricity has grown from 15 percent to 54 percent today. As early as 2008, ISO-NE, the electric grid operator for New England, and others warned that the region was becoming heavily reliant on natural gas for electricity generation.
That’s because New England states and the federal government enacted policies that promote development of renewable generation, which put previously lower-cost, fossil-fuel generation at a disadvantage. Ten percent of New England’s electric generation capacity was recently retired or soon will be retired.
Because natural gas is used as a heating fuel in the winter, the region’s growing reliance has led to high electricity costs during cold months, when natural gas is used by homeowners and businesses. Due to winter approaching and not enough space on regional natural gas pipelines, as well as closures of the Vermont Yankee nuclear power plant and several coal plants, ratepayers will see massive increases in winter electricity rates.
Last winter, New England residents and businesses almost doubled their spending on energy, going from $3.6 billion during the 2012-2013 heating season to $6.8 billion last season.
The success of well-intended programs like the Renewable Portfolio Standard (RPS) and the Regional Greenhouse Gas Initiative (RGGI), which were enacted to help address climate change, depends on rapid development of renewable resources and ample natural gas supply to make up for the retirement of traditional fuel sources. Unfortunately, strong local opposition to significant energy infrastructure development projects such as wind, hydro and natural gas has led us to the place we are today – alarmingly expensive energy.
The Business and Industry Association has long worked to make policymakers aware of the cost pressures businesses face as they compete in the national and global economies. Up to now, we worried about lost job growth and economic activity as advanced manufacturers and technology companies expanded operations elsewhere. Given the current price spikes in energy, we now face a bleaker scenario: employers moving existing jobs in New Hampshire and throughout New England to lower-cost places around the country or world.
New Hampshire and New England policymakers need to allow for development of energy infrastructure projects while working through local concerns.
With New Hampshire and the region’s economies at stake, the time for action is now. Lack of urgent attention may well lead to higher unemployment and a lagging economy for years to come.
Jim Roche is president of the Business and Industry Association of New Hampshire.