Natural gas can help lower power prices

The promise of electric deregulation in New York and elsewhere were lower rates and customer choice. For those watching both closely, there is more to the story. The two states with the lowest average electricity rates in the nation (as of April 2017) are Louisiana and Washington, weighing in at 0.09 USD/kWh. Both of these states are still regulated.

Following close behind at .10 USD/kWh are all regulated states, with Oregon the exception: Arkansas, Idaho, Kentucky, Missouri, Nebraska, North Dakota, Oklahoma, Oregon, and West Virginia.

In 2008, average New York rates were $0.1657 cents per kwh. A decade later they dropped to $0.1478 per kwh! Hooray for deregulation and competition – except for the fact that natural gas and its plummeting price – down a whopping 300 percent in that same timeframe, from $8.861 per million Btu to $2.985. That is primarily responsible for the electric commodity price drop, not deregulated competition.

In deregulated states like New York price alone is king, and carbon emissions do not presently factor in at all. In fact, were it not for Gov. Andrew Cuomo’s intervention, zero carbon upstate nuclear generators would have fallen to the low price of natural gas absent recognition of a “zero emission credit” that saved them from the same fate as most New York coal-fired generators. The attribute was cost effectively included in the 2016 Clean Energy Standard, and the void would have been filled for years by standby generators such as the 1800 MW oil fired plant down the street from the nuclear plants in Oswego – not the wind and solar that some environmental groups claim are ready to entirely fill fossil generation voids.

New York has done a terrific job of reducing carbon emissions from power generation through pragmatic leadership. It is time to consider a power market that factors in carbon reductions, and it may be time to consider some re-regulating if utilities can deliver carbon free power cheaper than the current procurement process – given the warped nature of natural gas crushing all other competition.

Well intended yet failed legislation in the past – such as the six-cent law – caused power prices to soar while a few grew rich and the ratepayers suffered. A legislative solution such as the Climate and Community Protection Act should be fully and carefully vetted before enactment, with more nimble policy changes occurring in the regulated process to measure both cost and true carbon impact.

Given the low price of natural gas and experts warnings about being over-dependent on any one fuel for power generation, absent strong policy change we will use up this limited resource even faster. Natural gas is our short-term friend in keeping prices stable, but only if paralleled by aggressive, cost-effective development of sustainable replacements. New York has demonstrated leadership in this approach.

Phil Wilcox is an International Brotherhood of Electrical Workers member and 35-year employee Niagara Mohawk/National Grid.