Sharp increase in electric and natural gas prices
Eversource and UI announced that electric supply rates would be up nearly 50% for the first six months of 2023. Click HERE to read the Eversource press release. Natural gas prices for home heating have also increased by 25% in the last month and are expected to go up further. Below are the reasons behind the increases and the measures needed to protect our constituents.
Natural gas price spike is the driver behind these price spikes: Over half of all electricity in CT is produced using natural gas. As natural gas prices spike, electricity prices follow. There is a one-to-one linkage between natural gas and electricity prices.
CT Natural gas prices are spiking because of a lack of pipeline capacity: We have abundant natural gas production in Texas, Pennsylvania, and other states in the United States. The PA shale reserves (Marcellus natural gas deposits) are among the world's largest. Please click HERE to see a graphic showing the shale deposits and the pipelines which move the natural gas to our state. However, there needs to be more pipeline capacity to transport natural gas from the gas fields in Pennsylvania and Texas to Connecticut during winter high-demand months.
Winter price spikes due to reliance on global gas: During summer months, when demand is lower, and there is enough pipeline capacity, natural gas prices in CT and PA are about the same - around $6 per MMBtu. However, in the upcoming winter months, prices in PA will continue to be around $6 per MMBtu, but prices in CT are $25 per MMBtu - an increase of 400%. In winter, the only source of additional natural gas in CT is the global LNG market, which is priced at $40 per MMBtu. Since the pipe capacity is sufficient for summer demand, prices will return to normal in the summer.
Why have we not built additional pipeline capacity? The industry has proposed several pipeline projects to bring natural gas into CT, RI, and MA. Click HERE to see the list of these projects. These projects have been opposed by many in the legislature and administration who are against investing in ANY hydrocarbon related project. These projects would be funded by the private sector and do NOT require any public funds; they require regulatory approvals. Due to the lack of government support, CT consumers will pay $1.5 billion in higher costs this winter; without such projects, spikes will continue for a decade.
Strategies to help residents manage this energy crisis: We must address this crisis in the short and long terms. There are three strategies to help residents in our state navigate this crisis:
We need to find some immediate relief for consumers. The General Assembly will have a special session next week to discuss energy prices.
We must provide consumers with information and resources to improve efficiency and reduce usage.
The legislature and administration need to work with the industry to approve the pipeline required to address the structural bottleneck.
Please email me to provide your input on this issue.
Member - Energy & Technology committee