NATURAL GAS PRICES RISING; OFFICIALS WANT IT TO STOP
A variety of factors has exponentially driven up the price consumers pay if they use natural gas in their homes and U.S. Sen. Richard Blumenthal, D-Conn., and a group of his colleagues want the Biden administration to take steps to reduce the cost of the fuel.
Blumenthal said the amount that Southern Connecticut Gas, Connecticut Natural Gas and Eversource Energy pay for natural gas has increased by 100 percent. Because the utilities cannot mark up the cost of supplying the fuel, that amount is passed along directly to more than 600,000 customers of the state’s three natural gas companies, according to Frank Reynolds, president and chief executive officer who oversees the operations of Orange-based Avangrid’s utilities in Connecticut and Massachusetts.
“We want to make sure natural gas remains affordable, reliable,” Reynolds said during a media conference lasts week with Blumenthal at a CNG facility in East Hartford. “Making sure we take care of this energy supply chain issue that currently exists in New England that impacts our region is critically important to reducing the cost and affordability of natural gas.”
A typical homeowner is paying 10-15 percent more for gas service to their home in the past year than the previous 12 months, according to Gage Frank, a spokesman for SCG and CNG.
“That’s about, on average, an additional $15 per month,” Frank said. The 100 percent increase in the cost of the supply of natural gas cited by Blumenthal is then spread across every natural gas consumer in the state, he said.
Mitch Gross, a spokesman for Eversource Energy, said residential gas customers pay 66.02 cents per 100 cubic feet and their gas bill, on average, was about $77 per month between July and December 2021.
“Natural gas costs are reviewed monthly and customers should expect to see fluctuations during the heating season,” Gross said. “Just like electricity, Eversource purchases natural gas from suppliers on behalf of its customers and passes the cost directly to them with no profit to the company.”
Reynolds said the Avangrid companies, which include United Illuminating, support the efforts of Blumenthal and his fellow senators.
“Right now, it’s a supply and demand issue,” he said. “Right now the supply is not meeting the demand.”
Eversouce Energy has 246,000 natural gas customers in 74 Connecticut communities. Southern Connecticut Gas has
“Natural gas costs are reviewed monthly and customers should expect to see fluctuations during the heating season. Just like electricity, Eversource purchases natural gas from suppliers on behalf of its customers and passes the cost directly to them with no profit to the company.”
Mitch Gross, Eversource Energy spokesman
206,096 customers and Connecticut Natural Gas has 183,446.
Gross said Eversource officials “share the senator’s concerns, that’s why we’ve been sounding the alarm on rising global energy prices and the effects they have on customer bills since early last fall.”
“As an energy distribution company, we have no control over fluctuating energy prices, but we always want to help our customers better manage their energy use,” he said.
Even though three interstate natural gas transmission pipelines run though Connecticut, they are often at full capacity during periods of peak demand of energy. The three pipelines are:
Algonquin Gas Transmission, which originates in New Jersey where it connects to Texas Eastern and runs from Danbury northeasterly to Thompson, with major spurs to North Haven and New London.
Iroquois Gas Transmission System, which starts at the Canadian border, enters Connecticut in Sherman and runs southeast through Milford, then offshore to Long Island.
Tennessee Gas Transmission starts in the Gulf of Mexico, enters Connecticut in Greenwich and runs northeasterly leaving Connecticut in Suffield, with a spur from Massachusetts to Torrington.
But efforts to expand the existing transmission lines or build new ones have failed. Pipeline constraints, combined with the emergence of the United States as the world’s largest exporter of natural gas, are “producing rising home heating costs,” Blumenthal said.
“We owe it to the American people to make sure we continue our energy independence and keep natural gas affordable to America families,” he said. “This issue is monumental. I’m going to continue pummeling these agencies do the right thing: This has to stop.”
Blumenthal and his Senate colleagues have sent a letter to U.S. Energy Secretary Jennifer Granholm to take the necessary steps to curtail natural gas exports. The
senators also want the Federal Energy Regulatory Commission to control the costs associated with the pipelines that bring natural gas to Connecticut and the rest of New England.
“Stop the natural gas exports until you have a plan to lower the costs of natural gas to American families,” Blumenthal said. “If the Biden administration does its job ... exports can continue. But not until American families pay less for natural gas.”
In a letter to FERC Chairman Richard Glick, Blumenthal and his colleagues wrote that “the Federal Energy Regulatory Commission has a significant role to play in promoting energy justice and protecting United States residents from unfairly high energy costs.”
“Under its statutory authority, FERC has the power to influence retail rates for natural gas and electricity, including by preventing market manipulation in wholesale natural gas and electricity markets and enforcing gas spot market transparency,” the letter to Glick said in part. “We urge the commission to use its existing regulatory authority to ensure that households’ energy bills are not driven up by manipulation, obfuscation, or other malfeasance from regulated entities, and to work collaboratively with other agencies to address energy debt. Disparate energy debt burdens are a serious economic, racial, and health justice issue.”
In the letter to Granholm, the lawmakers wrote that “despite the heavy burden rising natural gas prices has placed on American families, the U.S. is exporting record levels of natural gas to other countries, a trend that is only expected to continue.”
“Reports indicate that in December, U.S. liquefied natural gas (LNG) exports topped 7.7 million tons, for the first time making the U.S. the world’s leading LNG exporter,” the letter said in part. “And on December 9, the EIA (Energy Information Administration) issued a report indicating that the U.S. is on track to have the largest LNG export capacity in the world by the end of 2022.”
Blumenthal said Granholm “has the power to curtail imports by stopping permits for new liquid natural gas facilities.” Natural gas is converted to a liquid form to make it safer and easier to transport.
But according to Charles Crews, president and chief executive officer of the Northeast Gas Association, one of the reasons natural gas prices are so high is because the region lacks adequate storage and pipeline capability, leaving users of the fuel to buy LNG on the volatile spot market. NGA is a Massachusetts trade group whose members represent natural gas companies in the region as well as transmission pipeline operators.
“There is enough natural gas out there,” Crews said. “We are just constrained in the ability to deliver it here.”
As an example, western New England is just a few hundred miles from the northernmost section of the Marcellus Shale Deposit, “one of the most prolific supplies of natural gas basins anywhere,” he said.
The Marcellus Shale is a geological formation that stretches beneath 575 miles of West Virginia, Pennsylvania, Ohio and New York. While some of its supply eventually makes its way to New England, there are no direct pipelines to bring more to the six-state region.
Other regions of the country are able to store large reserves of natural gas in underground tanks, Crews said. But because of New England’s geology, those facilities are not feasible in the region, he said, resulting in aboveground LNG tanks like the one Eversource has in Waterbury.
“It’s hard to site anything in New England,” Crews said of energy infrastructure. As an example, he cited the 2008 rejection of a floating liquefied natural gas terminal and pipeline in Long Island Sound between Connecticut and New York.
Massachusetts is responsible for two of the largest entry points for liquified natural gas in the region, he said.
In Everett, Mass., LNG has the longest-operating import facility of its kind in the United States. The terminal, which is adjacent to Boston Harbor, connects to two interstate pipeline systems.
The second is the Northeast Gateway facility, a terminal that is 18 miles offshore, near Cape Ann, Mass., which started commercial operations in May 2008.
Ships off-load their LNG cargo at the Northeast Gateway terminal, which is capable of injecting vaporized natural gas into the existing offshore HubLine natural gas pipeline system, according to NGA officials.
“I think the industry has seen ups and down of having blame cast its way” Crews said. “The industry has been doing a lot to transition to a clean energy economy. I don’t think the industry is getting the credit it deserves.”