Study Confirms Action Needed to Reduce Maine's High Electricity Prices

Governor's Energy Office

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For Immediate Release: Monday, March 3, 2014

Contact: Patrick Woodcock, Energy Office Director (207) 624-7405

Contact: Harry Lanphear, Maine PUC (207) 287-3831


Study Indicates Economic Imperative for Natural Gas Infrastructure to Lower Maine’s High Electricity Prices

AUGUSTA – The Governor’s Energy Office, the Public Utilities Commission, and the Office of Public Advocate released a study today confirming the urgent need for additional natural gas pipeline capacity into New England, in order to lower Maine’s, and the region’s, escalating electricity prices.

“A Review of Natural Gas Capacity Options” was commissioned pursuant to the Omnibus Energy Act passed last year. The omnibus bill directed the Maine PUC to evaluate the costs and benefits of additional natural gas pipeline capacity into New England.  The study’s release is very timely, particularly in light of the extraordinarily high prices for natural gas delivered to New England (including Maine) this winter, prices which continue to drive high electricity prices throughout the region.  Patrick Woodcock, Director of the Governor's Energy Office, commented on the study: “This report highlights the imperative to move forward with basic infrastructure to access the domestic and world-class natural gas supplies in our backyard.  It is critical that we cost-effectively manage New England’s reliance on natural gas by expanding our infrastructure to improve our employers’ competitiveness, reduce the use of petroleum for electricity generation, and finally lower Mainers’ electric bills.” 

In the report, consultant Sussex Economic Advisors describes the dramatic impact that New England’s inadequate pipeline capacity has on electricity prices, and concludes that “incremental natural gas pipeline capacity into the New England region would place downward pressure on the regional natural gas price indices and, therefore, benefit customers who use those price signals in transactions (e.g., electricity generators).”  In particular, the study shows that a reduction of the “basis differential” by 75% (i.e., the price difference between the Marcellus shale, where gas is produced, and gas delivered to New England) would save New England electricity customers more than $1.5 billion a year, and would save Maine electricity customers more than $120 million a year.  The study also observes that, in areas where new pipeline has been built or proposed to alleviate congestion, the projected basis differential has fallen substantially.

Maine PUC chairman Tom Welch provided the following comments regarding the report's conclusions: “The Sussex report shows the regional and Maine-specific cost – in the form of higher electricity prices – of the current shortage of natural gas pipeline capacity into New England, and shows that substantial net savings can be achieved by increasing that capacity.  The report reinforces the need for Maine, and the region, to act quickly to address this vital infrastructure issue.” Maine Public Advocate Timothy Schneider agrees. “The Sussex report shows that the dramatic spikes in New England natural gas and electricity prices we have seen this winter and last will only get worse, and the costs to electricity customers will be enormous, unless the underlying pipeline capacity issues are addressed. The analysis in the report should give renewed urgency to regional efforts to address the problem.”

The Governor’s Energy Office, the Public Advocate, and the Public Utilities Commission continue to work towards reducing the cost of natural gas delivered into New England and Maine, in order to avoid prolonging the current price impacts on electricity.  The Sussex study will help inform those involved in the regional initiative announced by the New England governors in December 2013, and in evaluating actions that Maine might take under the Omnibus Energy Act.

The report may be found on the Maine PUC's home page:


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