Answer Desk: Why are energy prices higher in CT than across the country?
(WFSB) - According to energy experts, customers in Connecticut pay more for electricity than the national average electric bill.
Why are prices more expensive here in the Nutmeg state, and New England in general?
The two main reasons we see higher electric bills is our location and the war in Ukraine.
LOCATION, LOCATION, LOCATION:
”The biggest reason comes down to the fact that in the winter we’re pipeline constrained,” says Kenneth Gillingham, Professor of Economics at Yale University.Because of this, Gillingham says, we have a harder time getting it.
“We import natural gas from the Midwest, from PA where there’s a lot of natural gas production, and it’s difficult in the winter to get the amount of natural gas we demand to New England, across New York and New Jersey and Pennsylvania. Meaning less supply and higher prices to transport.
This region is dependent on natural gas to meet our power needs, it’s used to generate electricity.
Natural gas accounts for about 50% of our electricity in New England, that number drops to 38% across the country.
“Other places have greater pipeline capacity, to allow them to get natural gas or they produce the natural gas in the location itself, for example, in Texas,” says Gillingham.
And when it’s liquified, which has become more common, that’s even more expensive.
AVERAGE CT BILL HIGHER THAN NATIONAL AVERAGE:
According to Energysage.com, on average electricity users in CT spend about $272 per month on electricity.
That adds up to $3,264 per year, 47 % higher than the national average electric bill.
In Rhode Island, customers spend about $179 per month on electricity, adding up to $2,148. That’s 4 % lower than the national average.
Why the difference? Rhode Island has more generators of electricity.
“The issue there comes down to the fact that there are a set of lower cost generating facilities in the Rhode Island area that allow Rhode Island to have lower prices on average,” says Gillingham. “One way to think about it is - there is a lot of demand in NY, a lot of demand in MA and CT doesn’t have as much generation itself. So the generation is all kinds of NY and north of MA and MA and we have faced those capacity constraints.”
WAR IN UKRAINE:
The war in Ukraine is the biggest driver behind high prices. Russia is the largest exporter of natural gas in the world, and when the pipelines running through Ukraine shut down, prices skyrocketed.
In some cases, went from 2 dollars per unit to 70 dollars, says Gillingham.
The US sent some of our gas to help.
“We’re facing a little head wind from that. With all of the natural gas being sent to Europe, the prices are much higher,” says Gillingham.
NEXT STEPS? THE WHITE HOUSE:
So what happens now? Earlier this month, the CEO of Eversource asked the president to waive something called the Jones Act.
If that happens, we could send ships down to the Gulf of Mexico to import our own liquified natural gas.
Right now, all of that gas is going to foreign countries, the CEO says, and then we have to buy it from them.
He says that makes no sense.We’ve reached out to the White House, no response yet.
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