Reliance on natural gas unlikely to ease in region

BOSTON – New England’s electricity market will continue to rely heavily on natural gas as a fuel source over the next two decades, even if the region invests more in alternative sources, the operator of the region’s power grid says.

A study released Thursday from ISO New England Inc. said unless the price of natural gas falls sharply, there will be no significant drop in electricity rates, according to The Boston Globe. Few energy investors are forecasting such a decline.

“Given the region’s lack of indigenous fuel supplies, its dependence on imported fossil fuels, and its tightening environmental policies, substantially reducing regional electricity costs will be difficult,” the study says.

The report from ISO New England, which runs the six-state power grid and the region’s $10 billion wholesale power market, highlights the region’s growing reliance in recent years on natural gas to produce electricity.

Natural gas was cheap and plentiful a few years ago, which led to the region’s growing investment this decade in gas-fired generating plants.

But natural gas has since become prone to winter price spikes that have led to sharp increases in the region’s electricity rates, which are among the nation’s highest.

The ISO report examines 52 approaches to meeting demand for electricity through 2025, including massive conservation efforts, building nuclear generators at existing nuclear plants, and a regional campaign to push for cleaner-burning coal plants.

Regardless of which approach is taken, gas prices will determine the price of electricity for 90 percent of the time between 2020 and 2025, the report says.

Even if most or all of the region’s growing appetite for electricity is met with other technologies, “it’s not going to significantly alter our dependency on natural gas,” said Gordon van Welie, chief executive of ISO. “And diversification away from natural gas will have a cost associated with it.”