Power to the People is a column by Donald M. Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere.
By DONALD M. KREIS, Power to the People
Jennifer Granholm is a Harvard Law School graduate who served as Michigan’s attorney general and then as its governor before becoming President Biden’s energy secretary in 2021. So, she doesn’t need me to translate her incoming correspondence – even when the material in the inbox gets obfuscatory.
According to Merriam Webster, synonyms for “obfuscatory” are “bleary, blurry, dim, faint, foggy, fuzzy, gauzy, gauzy, hazy, indefinite, indistinct, indistinguishable, misty, murky, nebulous, obscure, opaque, pale, shadowy, unclear, undefined, undetermined, [and] vague.” I suppose using the word “obfuscatory” here is itself obfuscatory. But I digress.
Granholm received a letter on August 29 from the eternally Sphynx-like Gordon van Welie, president and CEO of ISO New England. That’s the very powerful nonprofit organization that runs the region’s bulk power transmission system and the wholesale markets through which electricity is bought and sold in all six New England states.
With a four-page attachment labeled a “draft . . . problem statement,” van Welie’s missive runs to nine single-spaced pages. The “problem statement” is ostensibly a pitch to the public meeting to be held on September 8 at a hotel ballroom in Burlington, Vermont by members of the Federal Energy Regulatory Commission (FERC).
Why this meeting, so far from Washington? Why this letter from van Welie, which was actually responding to an earlier letter to Granholm, dated July 27, signed by all six New England governors?
Winter is coming. As a region, we rely on natural gas for the bulk of our electricity generation. ISO New England is nervous, yet again, about whether the electricity grid will hold up if an extended cold snap stresses the available supply of natural gas. Meanwhile, electricity prices have gone haywire, as evidenced by the 22.6 cents per kilowatt-hour that Eversource has recently started charging its default energy service customers in New Hampshire.
Much of van Welie’s letter is taken up with references to the region’s only terminal for receiving liquified natural gas (LNG) by tanker – that would be the Everett Terminal, just north of Boston – and the Jones Act, which is a federal statute prohibiting LNG from being shipped via foreign vessels between U.S. ports.
I’m good with the Jones Act waiver that van Welie, and the governors, want from the Biden Administration. The interstate pipeline network does not have enough capacity to supply the region with all of the natural gas it needs to heat all the homes and businesses reliant on that fuel while supplying all of the national gas generators that would need to fire up in an extended cold snap.
But here’s where I might be of some help to Secretary Granholm, and others, when it comes to understanding what the Grand Poobah of ISO New England is really saying to the U.S. Department of Energy and its regulatory subsidiary, FERC.
“The electricity markets are not designed to spur investments in supporting infrastructure needed to ensure a reliable clean energy transition,” says the Problem Statement van Welie appended to his letter. “Fuel suppliers, including LNG providers, will not maintain and invest in infrastructure and fuel supplies without a long-term financial commitment.
“However, the counter-party for such a long-term financial commitment does not exist in New England, particularly for fuel to supply electric generators.” Translation: the electric industry restructuring, adopted at both the wholesale and retail levels in New Hampshire more than two decades ago, is a failure.
Not a complete failure, mind you. Lots of big industrial users of electricity have saved lots of money by no longer being captive customers of vertically integrated, generation-owning electric utilities. But residential customers have received few if any benefits, they have paid dearly for the privilege of choice (via hundreds of millions of dollars in stranded cost charges), and now they can’t even count on the lights staying on when there is an extended deep freeze.
Remember what happened in Texas last year, when a monumental cold snap descended on the Lone Star State beginning on Valentine’s Day and a week’s worth of miserable rolling blackouts ensued? That’s what I am talking about. That’s what van Welie is talking about too.
Regrettably, van Welie – like other apologists for the interests of the legacy owners of generation and transmission infrastructure – is still whining about what went down in 2016. That’s when Eversource cooked up a plan to force their electric customers to pay for natural gas pipeline infrastructure but were, according to the Problem Statement, “stymied” by the Massachusetts Supreme Judicial Court.
What that court actually said – again, translating here – is that you can’t square such an idea with a state restructuring statute that frees ratepayers from the obligation to pay, as captive customers, for generation facilities and their business needs. What van Welie omitted was that exactly the same question arose two years later under New Hampshire’s restructuring statute.
Our state Supreme Court reached the exact opposite result in 2018. Perhaps van Welie overlooked that because he knows the high court in Massachusetts was right and the high court in New Hampshire was wrong.
Regardless, the pitch from van Welie is now mutating in an intriguing and noteworthy fashion.
ISO New England is no longer trying to convince anyone to double down on natural gas by building more pipelines. Now the grid operator is looking to technologies like battery storage or even hydrogen fuel as the likely providers of what the Problem Statement describes as “clean, long-duration balancing energy providers with high capital and/or carrying costs.”
Translation: the assets that will keep the lights on when the natural gas runs out, where sun doesn’t shine, and everyone turns on their lights and their heat for extended periods.
The solutions van Welie is touting in advance of that September 8 meeting in Burlington amount to either “cost-of-service infrastructure investments” or “FERC regulated cost-of-service rates.” “Cost-of-service” is regulatory jargon for walking back restructuring and making us captive customers of generation providers once more.
Consistent with the Ten-Year Energy Strategy recently released by the state’s Department of Energy, I think we should move forward – embracing market-based solutions creatively — rather than marching backward into business models from the 1950s. Along with the emerging technologies we need a new “transactive energy” paradigm so that we can trade energy resources locally, at retail, just like the big players do regionally, at wholesale. We have a lot to discuss in Burlington on September 8.