Hartford Business Journal

28 Hartford Business Journal • December 22, 2014 www.HartfordBusiness.com Industry Focus E c o n o m i c F o r E c a s t Watch List Natural gas supply, power plant retirements, renewables top 2015 issues By Brad Kane bkane@HartfordBusiness.com N ew England's natu- ral gas constraints will continue to be a concern in 2015, as demand increases from power plants and Connecticut's plan to turn natu- ral gas into the home heating fuel of choice. Organi- zations like power grid administrator ISO New England and the Connecti- cut Department of Energy & Environmental Protection will help mitigate the problem by offering vari- ous alternatives, but the real relief won't come until 2017 when the expansion of pipe- lines transmitting natural gas into New England will be complete. Even though natu- ral gas pipeline constraints will be a concern in the colder months, the increased use of the fuel will continue to spell problems for the region's power plants that don't run on natural gas. The relatively low cost of the com- modity means wholesale power prices are dropping, making power generators that run on coal, oil, and uranium less economically viable. New England already has seen power plant retire- ments in Bridgeport, Ver- mont, and Massachusetts, and the shifting market dynam- ics could lead to further closures. The nuclear Millstone Power Station in Water- ford still appears to be operating without difficul- ty, but the poten- tial loss of the region's biggest power generator would have significant impacts on elec- tricity pricing and reliability. Connecticut's increas- ing requirements calling for renewable energy to make up a greater portion of the state's electricity profile — moving toward 20 percent by 2020 — will put upward pres- sure on electricity rates. The situation also creates more opportunity for solar install- ers, fuel cell makers, bio- mass plants, wind develop- ers, and hydroelectric dam revitalizers to make money. Meanwhile, as more of these systems come online, Con- necticut Light & Power and United Illuminating will have to figure out new pric- ing models to sustain the grid even as more businesses and residents produce their own onsite power. n ExpErts cornEr Power grid faces pivotal infrastructure year By Dan Dolan C onnecticut's current energy market is at an important inflection point. Driving this market transition are announcements that some local power plants are retiring, new replace- ment plant and merchant transmission investments are being proposed, and increased development of renewable and low-carbon energy continues. On the fuel side, abundant supplies of nearby, domestic natural gas now exist with pend- ing proposals to bring increased supplies into New England. As these projects move forward, how- ever, Connecticut businesses and residents remain understandably focused going into 2015 on the rising cost of electricity. With some recent power plant retire- ments and replacement capacity current- ly under development, the electricity sup- ply across New England has tightened, which will lead to higher winter energy prices. This tightened electricity supply, as well as the 2014 winter Polar Vortex that had widespread impacts across the country, resulted in short-term winter energy price increases. Impor- tantly, however, even with higher winter energy costs, the New England grid is anticipated to provide reliable service demonstrating its continued diversity and resiliency. That means there will be enough supply to meet the demands of businesses and consumers. For several years Connecticut and other New England states have benefit- ted from historically low wholesale elec- tricity prices generated out of the region's power plants. As tightening power gener- ation and fuel supply/demand dynamics have led to higher energy prices during the winter, a significant market response is occurring; 2015 looks to be a pivotal year as the market responds to today's investment signals. Right now, more than 50 generation projects have applications pending to connect to the New England grid. Among these, two major new plant proposals have been announced here in Connecticut representing more than 1,200 megawatts (enough to power more than 1 million homes) of potential elec- tric supply coming from Bridgeport and Oxford. Merchant transmission line developers have proposals pending, with in-service dates ranging from late 2016 to 2019. Pipelines have announced pro- posals to bring large-scale new natural Continued Brad Kane Dan Dolan Energy The power plant owned by New Jersey conglomerate NRG Energy runs on natural gas, which costs sig- nificantly less than other power plant fuels. P H O T O | H B J F i l e W a t c h L i s t

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