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The Economic Impacts of Failing to Build Energy Infrastructure in New England

Posted by Content Coordinator on Friday, September 18th, 2015


1. Introduction and Overview

The New England Coalition for Affordable Energy (“the Coalition”) retained La Capra Associates, Inc. (“La Capra”) and Economic Development Research Group (“EDR Group”) to conduct an independent, objective study of the economic consequences of constrained investment in natural gas and electricity infrastructure to serve New England’s energy needs over the next five years.

New England has among the highest natural gas and electricity prices in the U.S., a distinction that is being driven by inadequate energy infrastructure. In fact, energy infrastructure constraints have reportedly cost the region at least $7.5 billion over the past three winters alone.

Since 2000, New England’s reliance on natural gas to generate electricity has increased dramatically and is now used to fuel more than 40% of the region’s generation; more importantly, natural gas prices determine electricity prices a majority of the time. In addition, of the 12,000 MW of new generation proposed for the region, 66% is natural gas and 33% is wind. Pipeline infrastructure has not kept pace with this increased demand and is reaching maximum capacity, especially during the winter months, to meet both electricity generation and space heating demands.

Regional environmental policies and federal environmental requirements are contributing to decisions to retire older generating plants. At least ten percent of the region’s generating fleet has retired or is expected to retire over the 2013-2018 time period including major nuclear, coal, and oil resources. Other oil- and coal-fired generating facilities have also been identified to be at risk of retiring. These expected and potential retirements will require replacement generation, which will in turn require expanded natural gas pipeline capacity and new transmission lines to move electricity to and within the region.

Constrained infrastructure investment ensures persistently high and increasing energy prices for the region. High energy costs make businesses less competitive, undermining the region’s ability to retain and attract businesses, thereby hurting the job market. In addition, higher costs reduce disposable income for families affecting their quality of life. The study found the potential impacts of constraints on infrastructure investment could, over the next five years (2016 to 2020), lead to higher energy costs in the range of $5.4 billion (2014 dollars), lower personal income that could likely top $12 billion and job losses – temporary and permanent – that could be in the range of 167,000 over the same period.


Download full version (PDF): The Economic Impacts of Failing to Build Energy Infrastructure in New England

About the New England Coalition for Affordable Energy
The New England Coalition for Affordable Energy advocates for the expansion of the region’s natural gas and electricity infrastructure – to make these vital energy commodities more affordable…While the Coalition does not take positions on individual projects, its mission is to provide factual information, credible research and analyses underscoring the need for energy infrastructure, to policymakers, elected officials and the public. The Coalition also advocates for the importance of timely decision-making and the consequences of inaction…Sponsored by the American Petroleum Institute and America’s Natural Gas Alliance, the Coalition’s membership is open to all – including employers, business groups and consumers who are most affected by the region’s high energy prices.

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