July 10, 2017

Natural gas infrastructure critical to keeping CT businesses competitive

James King

Last month, groups around the country participated in National Infrastructure Week, a bipartisan effort to focus attention on the need to invest in essential infrastructure assets.

Among the most critically important infrastructure projects are interstate natural gas pipelines. The maintenance and expansion of interstate gas capacity is necessary to both enhance energy reliability and affordability and to achieve many of the state's energy efficiency initiatives.

Specifically, increasing the availability of such capacity will, among other things: help to alleviate recurrences of price spikes during winter periods; increase reliability and availability of pipeline capacity for Connecticut's growing reliance on gas-fired, electric-generation plants; increase availability of gas service to all customers, including commercial and industrial customers in pipeline-constrained Connecticut; and assist the state in furthering policies of increasing availability of gas service to all of its citizens.

Recent winter periods have included numerous multi-day cold snaps that significantly challenged the capabilities of the gas and electric systems to provide affordable and reliable service. As has been repeatedly observed, the resulting high prices and tight supply were not necessarily the result of an inadequate supply of natural gas. Instead, those problems were caused by the lack of adequate pipeline capacity to transport natural gas from its production sources to where gas was needed.

This inadequate transport capability resulted not only in astounding levels of interruptions in constrained areas, but also historically high electricity prices. According to ISO New England, the independent, not-for-profit entity that manages New England's electricity grid, "this situation has severely limited the delivery of fuel for much of the region's generating capacity, which, in turn, threatened the reliable supply of electricity and drove up wholesale electricity prices and air emissions."

As a result, estimates show that New England homeowners and businesses paid $7 billion in extra electricity costs than neighboring regions during the 2013-2015 winters.

The increased demand for natural gas caused by the severe cold weather events, combined with inadequate natural gas pipeline capacity in different regions of the state, also has resulted in a significant increase in the number of service interruptions.

These substantial levels of interruptions cause major problems for Connecticut's energy-intensive large commercial and industrial customers. Customers currently receiving interruptible service and otherwise unable to obtain firm service or adequate alternative fuel supplies experienced frequent and prolonged interruptions.

In some instances, the frequency and duration of interruptions forced businesses in Connecticut to curtail operations costing millions of dollars in lost production and wages.

The problem in Connecticut has been, and continues to be, that retail energy prices are too high. Indeed, Connecticut's price for industrial electric energy is 75 percent higher than the national average and the price of industrial natural gas is nearly 70 percent higher than the same average.

Businesses utilizing natural gas are the backbone of the state's economy. They need lower-priced energy now. The large commercial and industrial sector accounts for over 12 percent of our state's economy, employ more than 190,000 residents and pay over $460 million in property taxes to local cities and towns.

These high energy costs create competitive hardships for customers and impact the decisions of businesses to locate or expand in Connecticut.

It is clear that the development of solutions to address the availability of interstate pipeline capacity in the state is essential to the maintenance of reliable electric and gas service, as well as the improving the economics of conducting business in Connecticut.

James King represents the Connecticut Industrial Energy Consumers, a coalition of large industrial energy users that collectively employ thousands of Connecticut workers at locations across the state.

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