Thursday, September 24, 2015
New Englanders could have saved about $3.7 billion in wholesale electricity costs during the 2013-2014 Polar Vortex winter had the proposed Northeast Energy District Project (NED) been in service, according to a study by ICF International (Fairfax, Va.) commissioned by Tennessee Gas Pipeline Co. LLC, a Kinder Morgan Inc. (Houston) company. The study concluded that the additional gas capacity that NED would provide could generate $2.1 billion to $2.8 billion in annual savings going forward for New England electric consumers under normal weather conditions.
The study examined the impact of Tennessee Gas Pipeline’s NED project on the region’s natural gas and power markets and its need for new natural gas supplies. In addition, it assessed the cost savings from the increased natural gas capacity NED would make available to New England, which pays some of the highest electricity costs in the U.S., in part due to inadequate gas supplies and infrastructure.
Further analysis by Kinder Morgan finds that the estimated energy cost savings for 2013-2014 would equate to $578 if spread across each of New England’s 6.4 million households, and average $437-per-household savings over the next 10 years assuming normal weather conditions. “The ICF study supports NED’s potential contribution to reducing and stabilizing prices, and improving reliability through increased gas availability,” said Kimberly S. Watson, president of Kinder Morgan’s East Region Gas Pipelines. “New England needs more natural gas capacity, and NED would provide the region with direct access to abundant, reasonably priced supplies of gas. Additional gas supplies will bring down energy costs in New England and benefit consumers who now bear the burden of paying some of the highest energy costs—if not the highest—in the country.”
Kinder Morgan comments that as coal and nuclear capacity are retired and replaced by natural gas-fired power generation, New England power sector gas demand will grow. Local distribution companies in New England project that residential and commercial gas demand will also grow, increasing by 8% over the next three years and continue rising at a steady rate thereafter. The growing natural gas consumption for heating and electric generation will contribute to increases in the frequency and magnitude of daily natural gas pipeline capacity deficits over the course of a winter season.
ICF International projects that the deficit between supply and demand in both New England’s gas-fired electric generation and residential/commercial heating loads during normal winter weather conditions on a peak day in 2020 could approach 1.5 Bcfd and be as high as 1.7 Bcfd, even with the several gas pipeline expansion projects expected to be in-service by the end of 2017. ICF estimates that the duration of such deficits for electric generation during the winter could extend to 63 days, which is more than 41% of winter days. During 2012-2014, Tennessee Gas Pipeline Co. transported 52% of the total gas consumed by New England’s natural gas-fired power generators. With the additional NED capacity, the company will be able to transport gas supplies for the vast majority of New England’s gas-fired generators.
The study examined the impact of Tennessee Gas Pipeline’s NED project on the region’s natural gas and power markets and its need for new natural gas supplies. In addition, it assessed the cost savings from the increased natural gas capacity NED would make available to New England, which pays some of the highest electricity costs in the U.S., in part due to inadequate gas supplies and infrastructure.
Further analysis by Kinder Morgan finds that the estimated energy cost savings for 2013-2014 would equate to $578 if spread across each of New England’s 6.4 million households, and average $437-per-household savings over the next 10 years assuming normal weather conditions. “The ICF study supports NED’s potential contribution to reducing and stabilizing prices, and improving reliability through increased gas availability,” said Kimberly S. Watson, president of Kinder Morgan’s East Region Gas Pipelines. “New England needs more natural gas capacity, and NED would provide the region with direct access to abundant, reasonably priced supplies of gas. Additional gas supplies will bring down energy costs in New England and benefit consumers who now bear the burden of paying some of the highest energy costs—if not the highest—in the country.”
Kinder Morgan comments that as coal and nuclear capacity are retired and replaced by natural gas-fired power generation, New England power sector gas demand will grow. Local distribution companies in New England project that residential and commercial gas demand will also grow, increasing by 8% over the next three years and continue rising at a steady rate thereafter. The growing natural gas consumption for heating and electric generation will contribute to increases in the frequency and magnitude of daily natural gas pipeline capacity deficits over the course of a winter season.
ICF International projects that the deficit between supply and demand in both New England’s gas-fired electric generation and residential/commercial heating loads during normal winter weather conditions on a peak day in 2020 could approach 1.5 Bcfd and be as high as 1.7 Bcfd, even with the several gas pipeline expansion projects expected to be in-service by the end of 2017. ICF estimates that the duration of such deficits for electric generation during the winter could extend to 63 days, which is more than 41% of winter days. During 2012-2014, Tennessee Gas Pipeline Co. transported 52% of the total gas consumed by New England’s natural gas-fired power generators. With the additional NED capacity, the company will be able to transport gas supplies for the vast majority of New England’s gas-fired generators.
