New England utilities struggle with lack of gas infrastructure

Dive Brief:

Electric utilities in New England and other parts of the Northeast could see higher power prices this winter as natural gas pipeline constraints struggle to fuel the region's generation.
In Boston, the U.S. Energy Information Administration says forward gas prices this winter are expected to be $13.70/MMBtu, significantly higher than previous winter seasons despite being below last year's levels.
New England had some of the largest power price increases from 2012 to 2013, due to very cold weather and gas constraints, and utility leaders say pipeline infrastructure has made little headway.

Dive Insight:

"New England states have several reasons to further limit their use of electricity generated from fossil fuels," according to the EIA, citing both pipeline constraints and renewable mandates. But as the region increasingly switches to gas-figured generation — it could be 87% of capacity by 2037, the Concord-Monitor reports, that's not such an easy task.

“A big part of the solution here is additional gas infrastructure into the region. It’s irrefutable,” the Concord-Monitor quoted Bill Quinlan, president of PSNH, the state’s largest utility. “What’s driving the prices you’re seeing is that as a region, we’ve become hugely dependent on gas for home heating and (electricity) generation, and the infrastructure hasn’t been built to support that. You’re fundamentally looking at scarcity pricing.”

Other areas of the Northeast are also facing the problem, but pipeline expansions have alleviated some constraints. New York City, however, could face issues this winter if demand spikes on very cold weather.

“Because of the pipeline constraints which haven't expanded too much into the actual city, New York City will remain constrained in extreme cold weather,” said Jordan Grimes, a senior analyst with Morningstar. The city has a total gas supply of 4,364 MMBtu/d, and approximately 3,279 MMcf/day of the capacity has firm gas contracts into the city, with the remaining capacity for interruptible gas generators and incremental local distribution company demand.