AUGUSTA, Maine — The six New England states are requesting that the region’s power grid operator take action to diversify the region’s clean electricity portfolio and increase natural gas supply.
ISO-New England administers the region’s energy market, including operation and maintenance of the physical infrastructure necessary to carry electricity to customers.
Patrick Woodcock, director of Gov. Paul LePage’s energy office, said the request by the states is about making New England more competitive. The region pays some of the highest energy costs in the country.
He said New England has been at a disadvantage in the past because it was far from traditional sources of energy. But today, with hydro power emanating from Quebec and natural gas flowing from the Marcellus and Utica shales in Pennsylvania and Ohio, Maine and New England are in a crossroads of reliable, cheap energy.
But there’s a problem, Woodcock said Wednesday.
“We don’t have the infrastructure to access it. This is proposing that New England collectively come together to invest in those key arteries that will bring this power to Maine, to New England, and lower the cost of energy.”
In December, Maine Gov. Paul LePage, a Republican, joined the five other New England governors to launch a cooperative effort to bring cheaper, cleaner power into the states. The request of ISO-New England is the next step in that process.
Woodcock said it would be a historic feat, and something the utility has never been asked to do. ISO-New England’s only concern, historically, has been ensuring that the power supply in New England is reliable. But now, the states want more.
“We’re doing a public policy initiative to make New England more competitive, not just keep the lights on,” he said.
The letter, dated Jan. 21 and made public Thursday, was signed by the six representatives to the New England States Committee on Energy. Maine’s representative is Public Utilities Commission Chairman Tom Welch.
In the letter, they request ISO-New England’s help with two massive projects. Both would be funded proportionately by all six states through increases in ISO-New England’s service fees — think of it like a membership charge — and both would require federal approval.
The first is development of new electricity transmission infrastructure to get low- and no-carbon power into New England. The two major sources of that supply are the booming hydropower generation industry in Quebec and Maine’s burgeoning wind energy sector. ISO-New England would provide technical and logistic support to that states, which would request proposals for the massive project and decide collective which bid, if any, would be the best fit.
Second is an expansion of natural gas capacity into the region, up to 1 billion cubic feet per day. That’s 600 million cubic feet per day more than expected to be produced by two expansion projects in southern New England. ISO-New England would be responsible for securing the construction or expansion of pipeline, and the states want the extra capacity available by winter 2018.
The demand for natural gas in New England is outpacing the capacity to get gas into the states, creating a bottleneck in the system and high costs for consumers, especially when the temperature is as low as its been this winter.
On Wednesday, the Maine PUC approved increases in the standard offer, the rate most consumers pay for the energy used to generate electricity, separate from transmission and delivery cost. The increase was fueled by rising natural gas costs as a result of the limited capacity, Welch said. The standard offer price for most customers in the Central Maine Power and Emera Maine services areas will jump more than 10 percent, to roughly 7.6 cents per kilowatt-hour.
Welch said in an interview Wednesday that without spreading the cost fairly throughout the entire region through ISO-New England’s fee structure, the project will likely never happen.
That’s because the people who would benefit most from pipeline expansion are the end consumers, none of which have the kind of capital necessary to undertake such a massive project.
“For a variety of good reasons, these are things that are unlikely to be done by the market, by basic private interests,” Welch said. “So the states are recognizing there are issues we need to address, and ways we could do this in a collective way.”
The Industrial Energy Consumer Group, which represents some of Maine’s biggest energy consumers, said the proposals don’t go far enough. They say the region needs 2 billion cubic feet of natural gas per day — twice the amount called for by the states in its letter to ISO-New England.
Tony Buxton, the group’s general counsel, said businesses in Maine and New Hampshire have had to shut down temporarily this winter because of the high cost of natural gas. Large consumers such as paper mills use natural gas not only for heat but to generate electricity.
Still, the group is encouraged by the moves from the governors and NESCOE, and specifically thanked Woodcock and Welch for their work.
“We look forward to working with the governors to expand the amount of natural gas pipeline capacity called for in this agreement to ensure that it effectively helps New England and its people,” Buxton said.
Follow Mario Moretto on Twitter at @riocarmine.