Paul Markwardt: More energy needed to power NHPAUL MARKWARDT
May 09. 2015 7:52PM
MOST NEW HAMPSHIRE citizens are aware of a troubling fact regarding energy costs: they are going up. The reason for this is a classic case of supply and demand. Our region's ability to produce reliable, affordable power is diminishing, and efforts to replace it are not keeping up with the need.
Energy markets are incredibly complex, and New Hampshire's is no exception. Oversimplifying these dynamics is perilous; however, the undeniable fact is that without a major focus on bringing more power supply to the grid, the cost of electricity - essentially, the cost of doing business - will continue to increase, harming the competitiveness of New Hampshire businesses in U.S. and global markets.
BAE Systems is the state's largest manufacturer and a major consumer of energy. In addition to our 4,500 employees in New Hampshire, the company has many locations and thousands of employees across the country. This gives us an informed perspective on the cost of energy throughout the nation.
This allows us to make two stark observations: The first is that the cost of doing business in our state is not competitive with other regions of the country, largely because of our highest-in-the-nation cost of electricity. The second is that this cost disadvantage is addressable - if the right steps are taken quickly.
New Hampshire is not in this situation by accident. For more than a decade, energy policy has focused on eliminating traditional sources in New England - oil, coal and nuclear - while promoting energy efficiency and renewable sources of energy. While alternate sources of energy hold significant promise, and manufacturers like us have made large strides in energy efficiency, it is clear that overall energy consumption continues to increase year after year.
As a result, these policies have put downward pressure on the overall supply, created an over-reliance on natural gas, and driven prices upward. If we place a renewed focus on increasing supply in our region, the road back to competitiveness becomes clear.
An important issue highlighting the need to shift our energy focus is unfolding now in Concord. State officials and Eversource (formerly PSNH) have announced an agreement to sell Eversource's power plants. This agreement would also refinance long-time cost issues associated with past investments in the energy infrastructure - also known as stranded costs. There is a strong rationale for this agreement to move forward, despite an understandable debate over who should bear the burden of the stranded costs.
However, for manufacturers like BAE Systems, this issue underscores concerns over the diminishing supply of energy. The Eversource agreement provides no guarantee that the power plants being divested will continue to operate beyond 18 months from the deal's completion. Once sold, each could be closed down after that time, adding to the already steep decline in energy supplying our region.
According to ISO New England, the operator of our power grid, by 2020 the grid will have lost 6,000 megawatts of generation capacity, an alarming 1/5 of its total. The proposed state/Eversource agreement has the potential to put another 1,000 megawatts at risk. For the sake of New Hampshire's economy, the state should take steps to increase our supply by adding sources of power before securing an agreement that could eliminate existing resources.
There is no single answer to this problem, although our inadequate infrastructure is certainly the primary culprit. There is an abundant natural gas supply available to New England, but no sufficient pipeline to deliver it. There is abundant hydropower north of New England, but not the power lines needed to deliver it. Projects have been proposed to address these issues, namely Northeast Direct/Kinder Morgan and Northern Pass. Other project proposals exist as well. When it comes to restoring our supply capability, an "all of the above strategy" is certainly merited.
These projects would be huge steps in the right direction, although still not enough to replace the power currently planned for exit from the grid. While opposition to such projects is understandable, opposition must be accompanied by real, power-producing alternatives. Doing nothing is no longer a valid option.Policies are about priorities. For too long, our policy choices have eroded our ability to power the state's economy. This must change. Policy leaders in New Hampshire and New England should take immediate steps to secure an increase in the region's energy supply. Failure to do so will only deepen and extend our energy crisis, stifling economic growth.
Paul Markwardt is the vice president and deputy general manager of the BAE Systems Electronic Systems Sector, headquartered in Nashua.