Energy Policy in 2017
A tumultuous political season and a consequential election day at both the state and federal levels are only adding to an already uncertain forecast of where energy policy is headed in Connecticut.
Below are a few of the important energy policy issues raising concerns in our state as we approach 2017.
Natural gas and oil prices have fallen significantly in the past year, and there is reason to believe they will stay relatively low given the incoming Trump administration’s intentions to increase domestic production of natural gas and oil.
Yet, the state Department of Energy and Environmental Protection recently withdrew a request for proposals for natural gas pipeline expansion and storage projects due to a variety of hurdles that developed in other nearby states expected to help pay for these projects.
With New England generating roughly half its electricity from natural gas fired power plants, continued limitations on the ability of those plants to get the gas they need—especially during the colder winter months—likely means our state and region will continue to pay a premium for natural gas and could run short, causing economic mayhem.
At the same time, many other states and regions in our country can expect increasing supplies of natural gas at cheaper prices given the likelihood of increased production and infrastructure expansion.
DEEP also recently announced that winning bids in a second RFP focusing on medium- and large-scale renewable power projects, did not include any large-scale hydropower—produced predominantly in eastern Canada.
This means that at least for the time being, Connecticut will not be taking increased advantage of this cost-effective, environmentally clean energy.
Additionally, projects powered by fuel cells—a largely Connecticut-based industry that produces power from converting hydrogen to electricity with no combustion—were also not selected in the RFP process.
DEEP picked mostly solar and wind projects, technologies with significant reliability challenges.
Yet another unsettling development is that the Regional Greenhouse Gas Initiative—a nine-state regional organization currently focused on reducing greenhouse gases from power plants—is considering two measures that would further raise the cost of electricity in Connecticut.
The first would be to reduce the number of allowances available to power generators. Generators must purchase an allowance for each ton of GHG emitted. These allowances are purchased through auctions held several times each year. With a smaller supply of allowances, the price for each will go up, and those costs will be passed on to ratepayers.
Second, RGGI is considering expanding the universe of entities it regulates beyond just power plants. Large industrial users could wind up having to purchase their own allowances, further driving up costs.
Also on the subject of greenhouse gases, Gov. Malloy’s Council on Climate Change is preparing recommendations expected to include new goals for further reducing GHG emissions by 2030.
Without an increased commitment to large-scale hydropower and allowing zero-carbon in-state nuclear power to compete with other fuels in the RFP process, such goals would further push the state away from using affordable and abundant natural gas, oil, and fuel cells (which for the most part, rely on natural gas as their source of hydrogen), in favor of more expensive, less reliable wind and solar generated electricity.
Again, this would come at a time when most of the rest of the country will see falling energy costs due to increased gas, oil, and clean coal production and energy infrastructure expansion.
DEEP’s Energy Strategy
DEEP is expected to release its draft 2017–2019 Comprehensive Energy Strategy before the end of the year. The strategy will outline the agency’s energy policy agenda for 2017 and beyond.
We hope that in finalizing its strategy, DEEP will recognize the economic realities of both the present and the near future and give the highest priority to making Connecticut a more affordable, economically competitive state.
For more information, contact CBIA’s Eric Brown (860.244.1926) | @CBIAericb
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