Liquified natural gas prices soar, and electricity consumers see double

TILTON — When talk turns to electricity bills, fear sparks and eyes roll. Consumers here and across New Hampshire feel squeezed, and some are choosing whether to postpone making essential payments.

“A 112% increase is ridiculous. It’s either pay this on time or that on time,” said a waitress in Tilton, a town of 3,800 on the Winnipesaukee River. Because her earnings are unpredictable and her job is not guaranteed, she is nervous about rocketing costs. The price of powering her home recently jumped from $225 to $500 a month, she said. It’s tough to decide: “Do I make my car payments, or pay my electric bill?”

Sharon Kordas has owned and operated Kor Bell’s salon downtown for 15 years, but it’s her home electricity costs that worry her now.

“It’s absolutely insane,” Kordas said. “I have three people in my household, and it’s been almost $500. I’m thinking of getting rid of cable TV and things we don’t really use. I don’t know if this is politics-driven or what.” When it comes to groceries and electricity, “There’s not much more you can cut out.”

“Very high, electricity is too high,” said Palo Patel, who works behind the counter at the Tetal Gas and convenience store on Main Street. “Four hundred dollars for my house. That’s too much.”

According to data from ISO–New England, which operates New England’s electric grid, electricity prices nationwide have jumped 15.8% so far this year — the largest uptick in over four decades. Since 2020, wholesale prices for electricity have nearly tripled in this region. Winter electricity cost $105 per megawatt earlier this year, up from $51 per megawatt last winter. Electricity prices in July were 153% higher than last July. The ISO predicts that demand for electricity in New England will rise 14% by 2031, pushing prices upward unless supply expands.

Meanwhile, as energy costs rise, they tighten the vise on consumers.

Mark Tribble, a senior, said he lives in subsidized housing and shops at Market Basket to save money, but didn’t buy eggs on a recent trip when the cost of his weekly groceries exceeded his wallet. Where Tribble lives, electricity is included in the rent. But he said the property manager told him the housing complex will be “in the red for the next two years” because it’s locked into a government contract and can’t hike rents or charge tenants for electricity.

“We got a notice from the big kahuna that said there’s a slight chance we’ll have to pay for electricity and heat,” which has never happened before, Tribble said.

“Is this the calm before the storm?” asked his neighbor, Richard Wolfenden, waiting for a ride home from the grocery store, which he is grateful to have nearby. He said he worries what will happen after Nov. 8, when elected officials feel less compelled to please voters by doing what they can to keep energy costs down. “Eversource and all — everything’s going to go through the roof.”

A season of worry and belt-tightening

Most consumers think of summer as the peak season for electricity demand, with roving brownouts in cities and air conditioners chugging when heat is blistering and humidity is wilting. But winter is the most challenging time for the electric grid, said Eric Johnson, director of external affairs for ISO-New England, which also administers the wholesale markets for electric power and plans New England’s transmission systems. Johnson spoke at the New Hampshire Energy Summit on Sept. 20, when legislators, energy experts and advocates for renewable power sources convened to discuss regional energy’s future.

As a result of the current administration’s suspension of new oil and gas production in the U.S., the war in Ukraine and the shutdown of the Nord Stream 2 gas pipeline from Russia to Germany, the sacrifice of energy independence for America has come at a serious cost, some panelists and participants agreed.

New England determines its own energy mix, and the mix changes daily, depending on price and availability.  During the week of the event, 61% of the region's electricity was generated by natural gas-fired power plants, and 26% was produced by nuclear reactors, which emit no carbon. Hydroelectric power, a renewable energy source that is also carbon-emission free, kicked in 6%, and renewables, including wind, solar and wood, accounted for 7%, according to online data from ISO–New England. But at the end of the week on Saturday, a sunny day with high winds from a hurricane offshore, the mix flipped to 38% natural gas, 34% nuclear, 20% renewables and 8% hydro.

New Hampshire contributes electricity generated here to the region's grid, and power companies that supply consumers purchase from the grid. New Hampshire's generators include the Seabrook Nuclear Power Plant, which accounts for about 56% of what NH makes, Granite Ridge Energy (a natural gas plant in Londonderry), biomass plants in Berlin and Bridgewater, a coal-fired plant in Bow, and roughly 35 hydro-electric stations.

Last year, 16% of the state's power generation came from renewables, including hydro, wood (biomass), wind and solar, according to the U.S. Energy Administration. 

Prices to consumers are set by local utilities, including Eversource, Liberty, Unitil and the New Hampshire Electric Co-Op.

The Inflation Reduction Act signed into law in August includes significant subsidies for the development of solar and wind, and that money will come from higher taxes on individuals and businesses, economists predict. President Joe Biden signed an order to make the subsidies permanent. It’s intended to stimulate carbon-free energy production, and jumpstart the transition to a greener U.S.

But unlike fossil fuels, such as oil and natural gas (which has very low carbon emissions compared to coal and oil), and nuclear power (which produces none), electricity output from solar panels and wind turbines is variable, intermittent and dependent on the weather. Wind turbines don’t produce electricity when there’s no wind, and they shut down or shear off when there’s too much — which happened at the end of last month at a large wind park in northern Norway. Solar panels require full sun and optimal temperatures to be maximally efficient. In contrast, natural gas and nuclear furnish a constant  flow, regardless of the time of day, season or weather.

In 1990, nuclear energy, oil and coal dominated New England’s electrical grid and natural gas contributed only 6%, according to ISO-NE. Until the next generation of smaller, waste-free nuclear plants can come online in 10 years or more, and the process for harnessing hydrogen from water becomes less expensive, natural gas will remain New Hampshire’s main power source, according to state and regional energy authorities.

At this point, “We don’t have anything to replace it,” said New Hampshire State Rep. Michael Vose (R-Epping), chair of the Science, Technology and Energy Committee. “The Biden administration put in regulations designed to decrease the production of fossil fuel, but demand is still there. When the supply goes down, prices go up.”

Regulation changes at the federal level have made it difficult to get financing to drill new oil and tap new natural gas deposits, Vose said. “The result is fuel scarcity and increased costs. When the cost of fuel goes up, the cost of everything goes up.”

Many Democrat leaders and advocates for green energy say it’s critical to switch to carbon-free energy sources, like wind and solar, as much as possible, as soon as possible, to combat global warming, which they believe is tied to carbon levels rising in the atmosphere.  

State Sen. Tom Sherman (D-Rye), a physician and Democrat candidate for governor, said health concerns also make green energy a priority.

Rep. Chris Pappas, who represents New Hampshire District 1 in Congress, votes in sync with Democrat leadership in the U.S. House and Senate, but said at the summit that he believes the Biden administration should cut off exports of crude oil and gas to make sure domestic energy needs are met.

Like the rest of New England, the Granite State is dependent on liquified natural gas, which is currently imported from Trinidad and Tobago at steep,  fluctuating prices, Vose said.

According to natural gas advocates, Pennsylvania’s Marcellus Shale deposit contains enough to supply the Northeast and New Hampshire with natural gas for more than 300 years. But there’s a significant stumbling block. New York State officials will not permit natural gas pipelines to cross that state into New England.

“The communities involved said no, we don’t want natural gas pipeline expansion,” said Johnson at ISO. “It would be a practical solution, but it wouldn’t be feasible.”

Bill Ohm, a retired engineer and former three-term state representative from Nashua who attended the summit, said a federal solution may be needed.

"It's clear from ISO-New England that natural gas will remain an important energy source of generating electricity for all of New England, at least for the intermediate term. Instead of importing very expensive liquified natural gas from other countries, why don't we simply add capacity to existing pipelines from nearby Pennsylvania?” Ohm said. “We need members of Congress who will be willing to stand up for New Hampshire, not bow to Chuck Schumer,” the U.S. Senate leader who represents New York.

Practical and political solutions

Pipeline constraints and dependence on liquified natural gas, or LNG imports, result in volatile natural gas and electricity prices and higher oil usage, ISO–NE’s Johnson said at the conference. With electricity production ebbing and flowing, and an exchange of fuel and power between states and nations, the grid remains a tangled web of competing players. For instance, New England imports hydro-electric power from Hydro Quebec, but also sells hydro-electric power to New York.

A big risk looms for New England, Johnson said: This region has no strategic energy reserves, and more transmission lines will be required to meet the deepening and widening demand for power. By 2050, the move toward electrified transportation plus a rising call for electric heat will overload existing lines by 50%, he said.

Johnson said New England needs to have a plan to decrease its reliance on imported and expensive liquid natural gas.

Until nuclear fusion and hydrogen-based power become widely available and cost-effective, New Hampshire should develop multiple energy sources, and have a nimble system where one form of power can step up when another is absent or lagging, according to energy authorities here.

Right now, “The biggest focus of working families is price and getting through the next six months,” said Sen. Jeb Bradley (R-Wolfeboro). “While we want to move to a cleaner, renewable future, we can’t sacrifice the present by going too fast, too quickly with policies that may seem good, but in the real world don’t work.”

“We could have done better if we had not turned down our oil and gas production,” said Dick Swett, who served as a Democrat in Congress from New Hampshire and the U.S. ambassador to Denmark. He said offshore wind generators now provide 30% of Denmark’s electricity, in a landscape that includes a tapestry of islands and topographical and seasonal advantages. In contrast, the large-scale investment in wind was disappointing for Germany, where offshore and land turbines were more expensive to install and less efficient than anticipated. Swett said 70% of the electricity in France currently comes from nuclear power, and Germany buys nuclear power from France.

Making electricity cheaper

Vose, who is running for a fifth term in the state House, said the state’s 10-year energy strategy requires using every source that’s available, including biomass, which generates electricity from burning wood chips that are the byproducts of forest management and timber harvesting.

“This is the year for biomass,” and New Hampshire has a renewable supply, Vose said. Although not a major player in power generation, “It exists already and there is no reason to discount it or limit its use as long as it’s cost effective.” Four biomass plants in central and northern New Hampshire are currently sitting idle, he said, and biomass can be an attractive provider in high-priced markets.

Vose said New Hampshire’s power plant site evaluation process needs to be streamlined and made less time consuming, which will drop the cost of bringing new sources online and ultimately lower electric bills. The New Hampshire Department of Energy should handle site certification, enforcement and compliance after construction, he said, and the Public Utilities Commission, because of its expertise, should be the final arbiter of site selection.

New Hampshire’s energy mix is a work in progress, he added.

“Natural gas will continue to be the predominant fuel source for at least the next three years” while the demand for renewables ratchets higher, said Carol Holahan, a partner at the Foley Hoag law firm in Boston, and co-chair of its energy and climate practice group.

Holahan said 60% of the new sources seeking connection to New England’s grid are now wind-based, 21% are derived from lithium batteries, and 15% are solar. The goal is to dispatch a variety of resources to guarantee a consistent supply.

“Whether it’s Northern Pass or additional pipelines, all come with contentious siting procedures,” but the region will need more power plants and transmission lines, Holahan said.

“This year has been like no other year we’ve seen. The natural gas market had done nothing but soar,” said Maureen Callahan of USource, which helps businesses obtain electricity at lower prices.