By: Larry Rulison |
Was it the extreme cold? Rogue commodities traders? Or just a shortage of fuel?
Finding someone to blame for your skyrocketing electric bill this winter is going to require some detective skills.
The cold weather that pushed natural gas demand and prices higher, making the electricity produced with that fuel more expensive, has been the standard explanation.
But the real reason is more complicated, according to what local regulators are telling federal officials.
In a letter Wednesday to U.S. Sen. Chuck Schumer, Audrey Zibelman, chairwoman of the New York State Public Service Commission, said “insufficient pipeline capacity” for natural gas in the state and across the Northeast was a major factor.
But she added that suspicious natural gas trading also may have been a factor.
“We have also expressed concern about potential trading behaviors in the markets that may have exacerbated the problem,” Zibelman wrote Schumer. “In that regard, we have asked FERC (the Federal Energy Regulatory Commission) to look into the trading that occurred in natural gas markets.”
Such an explanation — that energy trading firms may have played a role — goes beyond assertions that it was merely a case of supply and demand that shocked the electricity markets.
Schumer asked the Federal Trade Commission to investigate the issue as well, although he specifically singled out utilities for their role. National Grid, which serves the Capital Region, doesn’t make money on wholesale electric supply, a spokesman said, only for “delivering” the power to your house and charging a rate that is set by the PSC and actually went down last year.
The New York Independent System Operator, which oversees the state’s wholesale electric markets and the high voltage electrical grid, said the cold snap in January knocked transmission lines out of service, which caused wholesale prices to rise, and made it difficult for some power plants to run at full capacity, another factor that would lead to price spikes.
And during the coldest days, oil became cheaper than natural gas, so some power plants, which can use either fuel, switched to oil to help drive down prices. But there is no oil pipeline system like there is for natural gas, and power plants ran low when oil couldn’t be barged in on frozen rivers or due to shipping restrictions on highways.
“One of the most significant challenges faced by the NYISO has been managing the availability of fuel supplies to the generation fleet,” NYISO CEO Stephen Whitley wrote FERC’s acting chairman Cheryl LaFleur on Feb. 20.