Natural gas regulations could be cause for NH electric supplier suspension

A supplier of electricity to nearly 6,000 New Hampshire residents has had its access to the New England power grid suspended, the Union Leader reported late last week:

A company that sells electricity to 5,700 New Hampshire customers has been unable to meet its commitments to provide that power, and those customers will end up back with Public Service of New Hampshire by today, the state’s largest utility announced on Thursday.

PSNH said it was notified on Tuesday that People’s Power and Gas’ access to the New England power grid had been suspended. Another company, Easy Energy of Massachusetts, also defaulted, but its customers are not in New Hampshire, PSNH said.

“These suppliers, they’re essentially walking away from their customers,” PSNH spokesman Michael Skelton said.

While the initial report did not make clear the specific reason why People’s Power and Gas’ access was suspended, it appears that the company may have failed to maintain the requisite amount of natural gas supply to meet its commitments to customers. Another supplier, PNE Energy Supply, experienced the same difficulty with its customers also winding up back with PSNH.
 
Maintaining access to adequate supply at a stable price can be a challenge for electricity suppliers who rely on natural gas to fulfill power-generation requirements. In February 2013, the New York Times noted: 
 
On Feb. 7, ISO New England told the Federal Energy Regulatory Commission that it was concerned about “increasing reliance on natural gas-fueled generators at times when there is an increasingly tight availability of pipeline capacity to deliver natural gas from the south and west to New England.”
Additionally, experts say that the natural gas market and the electric market mesh poorly, because while the electric market runs around the clock, the gas market closes down at night.
During the storm last week, with transmission lines being knocked out by snow and high winds, ISO asked some gas-fired generators to start running in the middle of the night, Dr. Chadalavada said, and found they could not. “We were sitting here, 3 in the morning, trying to get gas generators to start up, and we started seeing where they couldn’t access that market in the overnight hours,” he said.
Natural gas is subject to price volatility that can increase pressure on suppliers, as well as customers. Also according to the New York Times:
 
A megawatt-hour cost about $150 early this month, according to weekly reports from ISO New England, the independent operator that maintains the region’s electricity market. A year ago, the price was around $30.
 
Natural gas is the primary method of generating electricity throughout New England, a region that experiences high seasonal demand for electricity due to harsher winters than much of the country experiences.
 
The problem of price volatility, and inadequate supply being available to natural gas-dependent suppliers to enable them to meet commitments to customers, could be worsened by President Obama’s climate change rules, which experts say would effectively ban the construction of all future coal-fired power plants, and thereby promote an even greater dependence by suppliers on natural gas as a source. 
 
Even where such commitments are fulfilled by an entity like PSNH, consumers in parts of the country where a significant shift towards natural gas as a single generation source has not already occurred could still see increased and harsher spikes in electricity prices as well as more disruptions in electricity supply, as a result of decreased source diversification. 
 
According to Jay Apt, executive director of the Electricity Industry Center at Carnegie Mellon University, “It is certainly true that a region like New England that relies on a single fuel source like natural gas for the bulk of its power does leave itself open for more disruptions than a region with a more diverse fuel mix. It’s not a knock against natural gas; it’s a knock against a single fuel source.”

Author: Staff Reporter

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