Six New England senators, including New Hampshire Democrat Jeanne Shaheen, have called on federal regulators to investigate this winter’s high natural gas prices to ensure that markets functioned properly and that prices were not increased by speculation or manipulation.
In a letter sent Tuesday night to the Federal Energy Regulatory Commission (FERC), Shaheen joined senators Ed Markey (D-Mass), Jack Reed (D-R.I)., Sheldon Whitehouse (D-R.I.), Richard Blumenthal (D-Conn.) and Angus King (I-Maine) in urging the commission to investigate what happened and suggest remedies.
“Severe price increases like those we have seen in New England can hurt families and cripple businesses, especially manufacturers that rely on natural gas for power generation,” the senators wrote. “As these businesses plan for the future, we must ensure that the price for natural gas and electricity is transparent and reflects market fundamentals.”
In their letter, the senators noted that New England’s average spot price for natural gas for early 2014 was more than 50 percent higher than what it was for the same time-frame a year ago and far above the national average.
The senators expressed their concern that the wild rollercoaster ride of natural gas prices has “eroded end-users’ confidence in these markets.”
Natural gas has become an increasingly important method of power generation in New England, according to the U.S. Energy Information Administration. Natural gas use for electricity generation in the region increased from less than 20 percent in 2001 to over 50 percent in 2012.
“This shift, coupled with limited pipeline capacity, has contributed in part to the recent increases in spot prices for businesses. Recognizing this trend, New England’s governors recently committed to cooperate on the need to increase natural gas pipeline capacity in the region,” states the letter.
“While such efforts are critical for New England’s long-term energy future, we must ensure that the current natural gas markets are functioning properly.”
The Independent System Operator of the New England power grid, ISO-NE, manages the wholesale market for electricity, and would be in a good position to observe any market manipulation, if it occurred.
“ISO does have a robust and well-established oversight mechanism, with both internal and external market monitors keeping an eye on the wholesale power markets to ensure they are operating fairly and competitively given input fuel costs,” said Marcia Bloomberg, an ISO spokesperson.
“If the market monitors were to find any activity that appears to be other than competitive, it would be referred to the Federal Energy Regulatory Commission for investigation,” she said. “Any referrals to FERC would be confidential, and the ISO does not discuss market enforcement activities.”
Even before the senators wrote their letter, FERC was concerned about electricity prices this winter, and scheduled an April 1 technical session to explore the impact the cold weather has had on grid operations and regional market performance.
ISO-NE will be participating, along with representatives from the California ISO, Midwest ISO, New York ISO, PJM (the ISO for the mid-Atlantic states), and Southwest Power Pool, as well as email@example.com