NH's Electrical Energy Crisis

Your air conditioner may have hummed its way through the hot days of summer, but NH, part of the New England electric energy power grid, is in the midst of an electrical energy crisis. Don’t think so? Consider this:

• The latest report from the U.S. Energy Information Administration once again shows New England has the highest commercial, industrial and residential energy prices in the contiguous U.S.

• The same source reports that NH’s electrical energy prices for residential, commercial and industrial sectors are nearly 60 percent higher than the national average. 

• New Hampshire’s Public Utilities Commission reported recently that the region paid nearly $5 billion more for electrical energy during the winter of 2013-14, and $2 billion more last winter, than during the benchmark winter of 2011-12, so named because supply and demand were roughly in balance that year. (NH makes up about 10 percent of regional numbers).

• Higher costs reduce discretionary income for families. At least one regional electric utility has reported that residential “non-hardship” delinquencies have increased by more than a factor of three.

• Electricity costs are one of advanced manufacturers’ top considerations about where to locate and grow. In NH, advanced manufacturing provides tens of thousands of jobs and is far and away our most important sector by nearly any economic measure. 

How We Got Here

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 nearly 50 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. As a result, 10 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 both homeowners and businesses.

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 energy infrastructure development projects such as wind, hydro and natural gas has significantly contributed to the situation that we are in today—alarmingly expensive energy.

Why Should We Care?

Our economic future depends on a vibrant manufacturing sector and the tens of thousands of NH residents it employs, tax revenue it provides to all levels of government, and economic vitality it generates for our economy. These companies exist in every corner of our state—BAE Systems in Nashua, Graphicast in Jaffrey, Geokon in Lebanon, New England Wire Technologies in Lisbon, Sig Sauer in Portsmouth, Globe Manufacturing in Pittsfield, Vitex Extrusion in Franklin, Velcro in Manchester, Cirtronics in Milford and hundreds of others.

Up to now, the Business & Industry Association—New Hampshire’s statewide chamber of commerce—worried about lost job growth and economic vigor as advanced manufacturers expanded operations elsewhere. Our electrical energy crisis presents a bleaker scenario:  advanced manufacturers moving existing operations and jobs from NH 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 NH’s and the region’s economies at stake, the time for action is now. Lack of urgent attention may well lead to job losses and a lagging economy for decades to come.

Jim Roche is president of the Business and Industry Association, NH’s statewide chamber of commerce. He can be reached at jroche@BIAofNH.com or www.BIAofNH.com.