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Posted on December 15, 2022
By Bob Rio
When temperatures drop and darkness comes earlier, New Englanders know it’s time to prepare for the heating season. This year, however, consumers might be wise to keep an extra layer of clothing handy and businesses will want to leave room in budgets for cost overruns, because the price of energy – natural gas, gasoline/diesel, and heating oil – will be volatile as we head into the crucial winter months.
The larger cause is a lingering war in Europe. The effect is that families and employers will have to make hard decisions about how to handle these increased costs and make sacrifices as a result.
Massachusetts in this situation for a variety of reasons. As we have shifted our preferred energy sources over time, we have become more reliant on natural gas. Natural gas and liquified natural gas (LNG) currently fuel most of our electric power generation. While natural gas is transported through pipelines, there are constraints in the supply, and LNG is purchased from abroad and traded worldwide, which makes it subject to the price spikes that have shaken the global energy markets this year.
Cost and availability are both problems we are watching this winter. An extended cold snap could produce natural gas supply shortages and force brownouts. That could mean increased costs for consumers as well as businesses, and the real possibility of unexpected power outages.
When factories cannot operate, and retailers cannot open, and employers have to send workers home because there’s no power – the economic impacts can be catastrophic.
Adding stress to the system is the fact that greenhouse-gas policies have pushed residents and businesses away from gas and oil towards electric heating, putting more strain on our electric system in winter than ever before.
The electric system was not built to handle these winter loads. Unlike a summer brownout when you lose your air conditioning, a winter outage means losing your heat, possibly for days if the gas supply is interrupted, a scenario far more serious and harmful.
The deeper economic concern is that this is not a short-term problem. Even if this winter is warmer than normal, no significant new clean energy projects – except one offshore wind farm being built now – are expected to come online soon, leaving Massachusetts vulnerable for potentially the next decade.
And it’s not just new sources of clean power that Massachusetts needs to keep energy costs low and reliability stable. The state’s aging energy infrastructure – including transmission lines, substations, and storage – need massive investments to keep running reliably. These projects require billions of dollars in funding and need the support of policy makers to make them a priority.
Energy reliability and cost controls are necessary if Massachusetts wants to remain an attractive place for people to live and raise a family and for businesses to locate and grow. If families can’t afford to heat their homes, they won’t live here. If businesses face higher energy costs they will make different decisions about wages, promotions and even their ability to continue to operate. And if the lights go out, so too does our economic health.
Massachusetts needs to make the transition to cleaner sources of energy without breaking the backs of businesses either through higher prices or unreliable service. That means supporting an all-in approach to the diversity of our electric system.
Electricity will be the highest cost on record this winter. Let’s cross our fingers that it’s a mild winter without any major cold snaps.
But rolling the dice and hoping we are lucky is not an effective and successful long-term energy strategy. Getting the state’s energy policy right will be a direct determinant of our future economic strength and competitiveness.