Despite a marked decrease in the price of both natural gas and oil-based fuels over the past year in the US Northeast, energy consumers in New England still are strongly supportive of plans to build out new interstate pipelines infrastructure to bring natural gas into the region.
The price New Englanders pay for natural gas in the winter "tends to spike when it gets really cold," Peter Bottomley, sales and marketing manager for Brunswick-based Maine Natural Gas, said in an interview Monday.
Most customers of the local distribution company, which serves a handful of towns in Maine, agree on the need for more pipelines into the region.
"Talking to the homeowners and property owners, they all want to get gas service," Bottomley said.
He noted that in more recent months, with low prices for both oil and gas resulting in record-low wholesale power prices, "we have seen a decrease of interest from residential customers," in new gas pipeline construction.
However, Bottomley said the interest in the construction of new natural gas infrastructure remained high among the company's commercial customers.
New England has seen record-low natural gas prices this past spring and summer, resulting in record-low wholesale power prices, Marcia Blomberg, a spokeswoman for the New England Independent System Operator, said in an email Monday.
In July the ISO reported that "mild weather, low demand, and the lowest average natural gas price since 2003 brought June's wholesale power price to under $20 per megawatt-hour, by far the lowest monthly price in the 12 years New England has had competitive power markets in their current form."
At the same time, end-users in the region are also enjoying low prices for other heating fuels. The NYMEX price for ultra low-sulfur diesel, used for home heating in many New England homes, settled Monday at $1.45/gal -- more than $1.00 below the average of $2.50/gal seen around this time last year, according to Platts data.
According to the Federal Energy Regulatory Commission 2015-2016 Winter Energy Market Assessment, the natural gas price spread "is poised to decline between Appalachian producing area prices -- primarily the Marcellus Shale -- and Mid-Atlantic and Northeast market area prices."
FERC's models "show that the spread could be more than halved since last year. Further convergence of producer and consumer prices should narrow the spread to under $2 by winter 2016-17 and to under $1 in the following winters."
STATES MOVE TOWARD ALLOWING DISTRIBUTION COMPANIES TO HELP PAY
Nevertheless, electric distribution companies (EDCs), state officials in the region and big power and gas consumers are continuing to push for a way to move gas from the producing fields in the Appalachian Basin into New England.
James Daly, vice president for energy supply with Eversource Energy, said New England state officials have responded positively to a plan developed by the EDCs in the region, in which the local power distributors would take on some of the cost of building new pipeline infrastructure into the region.
The status of the plan "varies by state, but the momentum is that the states are passing legislation or enacting rules to allow the electric distribution companies to enter into these contracts and to recover the cost," Daly said on the sidelines of the Platts Appalachian Oil and Gas conference in Pittsburgh on Thursday.
"So each of the New England states, other than Vermont, have proceedings or regulations or laws in place that would allow this or procedures to allow it," he said.
Daly said that earlier this month Massachusetts issued a regulation to approve the EDCs' plan.
"Connecticut has a law passed already, so has Maine, and New Hampshire has an investigation going on. Each of them have taken steps to implement this total solution," he said.
He added that there still are many steps to undertake before the EDCs can begin to subscribe for capacity on proposed interstate pipelines into the region.
"We have to get through all the regulatory processes, we have to identify which projects and we have to file agreements for cost recovery," he said.
In addition, FERC must approve the pipeline tariffs, "so there's quite a ways to go on the regulatory side of things but the momentum to support this EDC model is advancing," he said.
