The Economic Impacts of Inadequate
Energy Infrastructure
New Hampshire Leadership Summit
November 16, 2015

 Energy Prices: Taking a Toll on Consumers and
Employers

“Businesses may well be forced to
move facilities to another region with
lower electricity prices, taking jobs and
income away from New Hampshire.”
- Val Zanchuk, President, Graphicast
– BIA chair-elect

2

 Mixed Price Signals: Low Gasoline and Heating Oil
Prices Mask the Problem
Bloomberg (10/27): “Gas deliveries into New England are trading at triple the level of the
benchmark futures in New York…. ‘New England is in its own world in the gas market,’ said
Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.”
WSJ (9/30): “Natural gas is so abundant and cheap in much of the U.S. that producers want to
send it overseas—except in New England, where gas is so hard to get that it is being imported
from as far away as Yemen. The U.S. shale boom that has produced a glut of gas has largely
bypassed the energy-starved New England….”

3

 Study: The Economic Impacts of
Failing to Build Energy Infrastructure
in New England
Prepared by: La Capra Associates and Economic
Development Research Group
Sponsored by: New England Coalition for Affordable Energy
August 2015
Available at www.NEaffordableenergy.org
4

 Study Assumptions: Conservative But Realistic
Summary of Study Infrastructure Assumptions
(2016-2020)
Two Cases: Constrained and
UnconstrainedConstrained
Infrastructure
Type

Case

(No New

Unconstrained Case

Infrastructure)

(New Infrastructure Added)

No pipeline
additions (3.9
Natural Gas
BCF/day
1.7 Bcf/day from
Pipeline Additions constant)
new/expanded pipeline(s)
Transmission
Imports
None
500 MW in June 2018
Renewable
1,360 MW of new wind
Generation
None
generation
Non-Renewable
Electric
920 MW of natural gas in June
Demand forecast incorporates aggressive energy efficiency and solar development
Generation
None
2019

5

  

All-Resource Approach, Unconstrained Infrastructure
Expansion

 

3000 1.8

I
2500
2000
1500
1000

500

2016 201? 2018 2019 2020

 

MW

(November)

 



Generation (MW) (MW Nameplate}

'l'ransmission lmporls (MW) +Pipeline Expangion (Bc?'day) 6

Infrastructure Constraints Drive Natural Gas and
Electric Energy Costs Higher

Natural gas

Electric energy

7

 Infrastructure Constraints also Drive Electric
Capacity and Renewable Energy Costs Higher

Electric capacity

Renewables

8

 Summary Impacts Without New Infrastructure Total
$5.4 billion

 






$2.50)

 - I I
$0411?
Z319 202)

$1.51)


 
   

Millions201A$
13


 

$0.500)

2016 2017 2018

- Pipeline Expansion -- Natural Gas - Pipeline Expansion -- Electric Energy
-Transmi ssion Expansion -- Electric Energy Generation Expansion -- Capacity
- Renewable Market - Pipeline Costs

- Transmission Costs -0- Cost Impact

Higher Energy Costs Lead to Job Losses Across Multiple
Sectors of the Economy
New England Jobs Lost in 2020

10

 Value of Assumed Infrastructure Investment -- $9 Billion

 

$4,000.0
500.0
$3,000.0
$25000

$20000

$10000

$500.0
$0.0 -

2016 2017 2018 2019 2020

Million 2014$

{79

U1
8


I Pipeline I Gas Generation I Transm'ssion Wind Generation

11

Failing to Invest Hits Construction Hardest – But Other
Sectors Don’t Escape
Private Sector Jobs Lost by Sector
from Lower Investment Activity

12

 Clear Consequences Without New Energy Infrastructure






Energy impacts:


Energy cost increases by $5.4B



52,000 private sector jobs lost* (in ‘20 80% of projected job growth negated)



$4B in lost disposable income

Construction impacts:


$9B in pipeline construction investment lost



115,600 construction and other jobs lost*



$8.5B in lost disposable income

TOTAL IMPACTS:


$5.4B in energy cost increases



167,600 private sector and construction (and other related) jobs lost*



$12.5B in lost disposable income

* Existing or new jobs are either temporarily or permanently lost

13

 Making Energy in New England More Affordable Is
Achievable


An all-resource strategy is the key










Greater access to low cost natural gas to the west
Greater access to low cost hydro to the north
Greater access to wind generation from remote areas of New England
More natural gas plants to replace growing number of retiring coal,
oil and nuclear units
Continue emphasis on efficiency and solar

Strong leadership and timely actions are needed
There is no “silver bullet”

14

 Lesson from California
In 2001, gas constraints cost CA $19.4 billion. Utilities were
ordered to overbuild pipeline capacity. In 2009, the CA Energy
Commission said this “insurance policy” helped shield the state
from the “brunt of price volatility.” The result is clear, even
today.

15