Over the past 12 months, unfortunately our Massachusetts customers have not shared the pleasant, low-price experience of those in New York, New Jersey, and other parts of the country. Instead, they have been bearing the brunt of a spike in both electricity and gas prices that have afflicted the entire New England region, particularly in the winter.1 These high gas prices in New England have been persistent now for several years, and may even be getting worse.
The fact is, it’s cheaper for Great Eastern, or any utility, to deliver to New York than to ship to New England. In New England, prices are 300 to 400 percent higher based upon shipping alone compared to the five-year average. This contributes to the retail customer’s cost.
This is because of transport constraints to New England. Most of New England’s gas is piped via New York from points south and west through a limited number of pipelines. The transport system is not built up to meet consumption levels in New England. The constraints are now becoming evident, particularly in the high-use winter season. On cold days, the “spot”, or daily market price, can go through the roof: On some days over the past few winters, it was twice as high in Boston as in New York.2
In the New York market, the trend is the exact opposite. It’s closer to the shale gas plays–where much of our gas is produced—in the Appalachians and Alleghenies. Also, pipeline capacity to the New York area has increased as consumption has gone up, whereas New England hasn’t built up its pipelines yet for a number of economic and environmental reasons. On top of that, there are other reasons that have widened the New York-New England price gap. First, New England recently retired two big old power plants, which have been replaced with new gas-fired power, raising demand on gas overall.3 Second, New England doesn’t have a “retail demand curtailment” policy that switches gas customers to other fuels when demand is high, like New York does. And lastly, for these reasons, market speculators drive up New England’s future prices for the coming winter, expecting more shortages, which means longer-term high prices.4
The silver lining for Massachusetts customers: High prices means Great Eastern’s fixed-price options and support services to help you use gas and power more efficiently can really pay off fast. Check them out.
1New York Times, “Even Before Long Winter Begins, Energy Bills Send Shivers in New England”, Katharine Seelye, December 14, 2014. http://www.nytimes.com/2014/12/14/us/even-before-long-winter-begins-energy-bills-send-shivers-in-new-england.html.
2U.S. Energy Information Administration. August 11, 2014. http://www.eia.gov/todayinenergy/detail.cfm?id=17491.
3U.S. Energy Information Administration, January 28, 2015. http://www.eia.gov/naturalgas/weekly/.
4U.S. Energy Information Administration. http://www.eia.gov/naturalgas/review/deliverysystem/2013/pdf/newengland_natgas.pdf.