The Massachusetts House of Representatives is considering a bill that would enact sweeping changes in the state’s energy mix, among them a tax to support construction of new natural gas pipelines.
The bill is being pushed by legislators and business interests alarmed by the state’s rapid loss of coal and nuclear generation, and equally rapid shift toward natural gas. The swift increase in dependence on gas—all of which must be imported through a few highly constrained pipelines—has caused electricity rates to rise and created large spikes in natural gas and wholesale electricity prices, especially during the winter.
Outgoing governor Deval Patrick released a study in January arguing that the state needs substantial investments in gas pipeline infrastructure to avoid shortages in the next few decades, with a potential 900 Bcf/d shortfall by 2030. The region will not see significant expansion of its interstate pipeline capacity before the end of 2016, when Spectra Energy’s Algonquin Incremental Market project comes online. Meanwhile, ISO-New England has warned that generation shortfalls could begin as soon as 2016 because of the early retirements of older plants such as Brayton Point and Vermont Yankee.
The tax proposal is similar to an idea floated by the six governors in the region last year. That initiative failed to gain traction, in part because of opposition from environmental groups that have vowed to block any expansion in the area’s fossil fuel capacity. Those groups have argued that the region is already too dependent on gas.
The bill also includes a grab bag of other provisions supporting a variety of generation resources, among them a proposal to require the state’s utilities to sign power purchase agreements (PPAs) with offshore wind developers.
This proposal would address one of the biggest obstacles to such generation, the inability of offshore wind projects to sell their power competitively on the ISO-New England market. Massachusetts was the setting for the dramatic collapse of what would have been the nation’s first offshore wind project, Cape Wind, which lost its PPAs with utilities NStar and National Grid after it failed to begin construction by Jan. 1 of this year. The utilities were originally forced to sign the PPAs at rates approximately double that of onshore wind, but the contracts included a provision allowing them to withdraw if construction did not begin on time.
A federal auction for offshore wind leases off Massachusetts on Jan. 29 drew only limited participation, with only two of 12 qualified firms bidding and only two out of the four parcels drawing bids. The average bid was about $1.50 per acre, far below some previous auctions.
The bill would also offer assistance for new transmission lines from Canada, which would connect to that country’s extensive hydroelectric generation. This provision is opposed by many generators in New England as subsidizing foreign competition for their electricity.
—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).