These days, inflation is everywhere. At the grocery store, the gas pump, and most especially, utility bills. New England in particular is facing record-high energy prices, but the spikes are not consistent across the region. If you want to understand why residents in New Hampshire are paying $70 more while those in Massachusetts only $11, read on. Hint: it has to do with the region’s reliance on fossil fuels.
About 53% of New England’s power supply comes from fossil fuels. In the past, it was primarily coal and oil, but since the“fracking boom” in the early 2000s, most of the region’s power plants have switched to natural gas. Originally, this kept prices low because there was plenty of supply, but things changed once the U.S. started exporting liquefied natural gas (LNG). More demand meant higher prices until the COVID-19 pandemic hit in 2020. For a year, both demand and production of LNG slowed. Now that we’re climbing out of the pandemic, demand has recovered only supplies have not. This has resulted in increased prices across the region. “And then Russia invaded Ukraine and the world changed,” shared Dan Dolan, president of the New England Power Generators Association.
The U.S. previously imported natural gas from Russia as it is the second largest producer, but this past March, President Biden signed an executive order banning the import of Russian oil, liquefied natural gas, and coal to the U.S. As a result, the price of natural gas has had its biggest 30-day swing of the last two decades. This has affected New England greatly because of their reliance on fossil fuels, but also their location.
Location, Location, Location
New England is at the tail end of the gas system pipeline. It is also nowhere near any fossil fuel reserves. For these reasons, the region has a hard time procuring LNG, and when supplies get low, it faces steeper demand charges. “We just have a physical constraint of how much gas we can deliver through the pipeline system to New England,” said Ben Butterworth, director of climate, energy & equity analysis at the Acadia Center.
During the winter, this predicament is particularly challenging. People need energy to heat their homes, especially in New England. To cover demand, the region imports LNG from other parts of the country which usually works, however, it's expensive. New England’s reliance on fossil fuels is one of the main reasons electricity prices are rising. But to understand why rates are rising unevenly, you need to look at supply charges.
While New England shares an electricity grid, each utility acts independently. They hold competitive auctions to procure energy for their customers and determine supply rates based on the rates they can get in each area. Some areas are simply easier to power and therefore have lower supply charges. Massachusetts is a prime example. Eversource customers in the east pay slightly more than those in the west.
Another determining factor is the timing of these auctions. Before the war started in Ukraine, gas prices were much lower. So, if your utility held an auction after, you’re probably experiencing higher rates than a customer whose utility held its auction before.
But if you’re in Massachusetts or Connecticut, there is another reason your prices are lower. Your state’s policies require utilities to hold multiple auctions. Meaning, the supply rate you’re paying is an average of those prices. New Hampshire does not have this buffer, but once the price of natural gas stabilizes, their bills will likely decline faster. Either way, electricity prices are high across the region. Luckily, every state in New England is doing something to help.
Did you know the energy burden of a low-income resident is three times higher than their high-income counterpart? These rate increases, along with climate change, are hitting these communities the hardest. And New Hampshire’s Gov., Chris Sununu is doing something about it. He signed an emergency energy assistance plan into law which states all Granite Staters making 60 to 75% of the state’s median income are eligible for $450 in fuel assistance and $200 in electricity assistance. Also, $7 million was directed toward electric assistance programs supporting low-income residents, like LIHEAP and the Electric Assistance Program.
In Rhode Island, an additional $1.5 million in funding was approved to help vulnerable residents pay their utility bills. The state also launched a website to spotlight federal and nonprofit energy assistance programs. It details funding for the upcoming winter season and touts free home energy assessments. Similarly, Massachusetts launched a campaign informing its residents about the programs they can use to lower their electricity usage and bills. If you live in Connecticut, Vermont, or Maine, don’t worry, these states have energy assistance programs as well.
Moving Forward with Renewables
In addition to financial assistance, each state in New England is participating in the clean energy transition. Solar plus storage, onshore and offshore wind, hydropower, and energy efficiencies are all being explored. Starting with Vermont, the state is committed to having 90% of its power renewable by 2050. And already, it has made great strides. In both 2020 and 2021, Vermont’s in-state energy generation was nearly 100% renewable. Amazing progress is also being made in Rhode Island. In July of this year, Governor McKee signed historic legislation officially requiring utilities to obtain 100% of the state’s power from renewables by 2033. To date, no other state has made a goal so aggressive. Although Maine’s goal of using 80% renewable energy by 2030 and 100% by 2050 is also pretty impressive.
Moving over to Connecticut, the state is focused on getting all of its energy from zero-carbon sources by 2040. It’s true that only 5% of the state’s energy came from renewables in 2021, but this past summer, about 1,000 megawatts of utility-scale and small-scale solar power generating capacity was installed, so they are heading in the right direction. Meanwhile, Massachusetts has been steadfast in its commitment to the clean energy transition. The state just signed a big contract for onshore wind and established the Solar Massachusetts Renewable Target(SMART) program back in 2018. This program promotes cost-effective solar development and supports the state’s goal of reaching net-zero emissions by 2050. Commonwealth residents are incentivized to install rooftop solar panels and they receive additional funds for adding battery storage systems. This brings us to the last state in New England, New Hampshire. Unfortunately, progress is going a bit slower in this state as its renewable energy goals are based on acquiring renewable energy certificates (RECs), rather than producing clean energy in-state. However, New Hampshire is committed to lowering its resident’s utility bills through energy efficiencies.
Once New England is no longer reliant on fossil fuels, everything will change. The price of energy will be more consistent, and residents will no longer be subjected to these record-high prices. And of course, everyone will benefit from a healthier environment and a brighter future. But for now, residents of New England are heading into an expensive winter. If you live in this area and want to explore other ways to get your electricity costs down, see if you’re eligible for a Nexamp community solar farm. You could save 10-20% annually and there are no sign-up fees, credit checks, long-term commitments, or rooftop panel installations! Let’s work together to better the future.