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Op-ed:Don Quixote and Energy Prices
 
Published Thursday, April 6, 2017
by Jim Roche

The fictional character Don Quixote maintained a staunchly hopeful attitude in his gallant adventures. His comportment reminds me of those who think NH and New England can solve our electrical energy cost crisis by simply investing more in energy efficiency and renewable energy like wind and solar. Like Don Quixote, they are tilting at windmills.

New Hampshire’s electrical energy prices are consistently 50 to 60 percent higher than the rest of the contiguous United States. Year-round, not just during the winter months. This is a fact. On top of high costs, “existing natural gas pipelines are inadequate to serve growing peak demand for heating and power generation needs in the winter,” according to the New England’s Independent System Operator (ISO New England), a not-for-profit, independent agency charged with ensuring availability of competitively-priced wholesale electricity by the Federal Energy Regulatory Commission. New England is increasingly dependent upon natural gas for electric generation. In 2000, 15 percent of electricity production came from burning natural gas. Today that figure is close to 50%. Our situation becomes more precarious over the next few years. That’s because over 30 percent of the region’s other, traditional sources of electric power (burning coal and oil, and nuclear generation) are retiring or at risk of retiring.

The Business & Industry Association, NH’s statewide chamber of commerce, supports an “all of the above” approach to meeting our energy needs. This includes energy efficiency and renewables like wind and solar. Our manufacturing members (and businesses from all sectors of our economy) have long recognized cost-savings associated with energy efficiency. They’ve invested millions of dollars to tighten building envelopes (windows, doors, wall and roof insulation, etc.); streamlined processes and systems for economies of scale; installed efficient HVAC and lighting systems; used efficient motors and machinery in production; and much more. The fact is, businesses have a very strong incentive to invest in every method of efficiency to make their operations more cost-effective and competitive. They’ve been doing this for years.

A growing number of BIA members are also investing in renewable energy. But the fact is, wind and solar account for just 3% of the region’s generating capacity in spite of strong federal and state financial incentives. Until cost-effective battery storage technology advances, or the sun never sets and wind always blows, it will be a very long time before these kinds of renewables are able to meet our energy needs. Energy efficiency and renewables by themselves are woefully inadequate to meet our near-term electrical energy needs. In the meantime, businesses are making decisions affecting our economy.

With 400 leading employers in our membership, we hear from businesses all the time about plans for growth outside New Hampshire. To be sure, high electricity bills alone are not the only factor in determining where companies grow, but it is a factor, and a big one for manufacturers. Manufacturing is our most important economic sector by nearly all economic measures—contribution to gross state product, employee compensation, exports, subcontracts, jobs, and more. Manufacturers use lots of electricity to make their products. It’s one of their biggest inputs. Many other states, often where NH manufacturers have sister locations, boast electrical energy prices that are half or less those in New Hampshire. When our manufacturers grow elsewhere, or worse, shift jobs elsewhere, NH loses.

The near-term solution to our state’s and region’s electrical energy cost crisis is adding new energy infrastructure. While BIA has not endorsed any specific project, there is no question we need more electricity for our regional grid in order to lower prices. There is simply no way to energy-efficiency-and-renewable-energy our way out of this crisis. At least not before thousands of jobs are lost to more competitive areas of the country. Policy makers need to look beyond fantastical scenarios espoused by some and act to bring more energy into our region now.

Jim Roche is president of the  Business and Industry Association in Concord. The BIA represents more than 400 members in a variety of industries. Member firms employ 86,000 people throughout the state, which represents one in eight jobs, and contribute $4.5 billion annually to the state’s economy. Through advocacy with state legislators and regulators, the BIA works to promote a healthy business climate and robust economic future for NH.

 


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