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New Englanders Could Lose $5M by 2020 if Energy Infrastructure Is Not Upgraded

September 2, 2015 By Cheryl Kaften

New England ratepayers are facing significant economic consequences, if electricity and natural gas infrastructure is not built over the next five years, according to a study released on August 27.

Indeed, without upgrades, consumers and businesses could pay $5.4 million more in energy costs between 2016 and 2020, the researchers state – resulting in an estimated reduction in disposable income of over $12 billion, and 167,600 fewer jobs. In addition, similar or greater outcomes are expected beyond that timeframe, if infrastructure is not added.

Those assessments are based on the findings of research commissioned by the recently established New England Coalition for Affordable Energy (NECAE) – a business and labor group advocating for more affordable energy for the region’s utility customers. The research was conducted by Boston-based consulting firms La Capra Associates and Economic Development Research Group.

They point out that the consequences would supplement the reported $7.5 billion in higher energy costs the region already has incurred over the past three winters, when the natural gas pipeline system reached maximum capacity during winter months to meet both electricity generation and space heating demands.

The large number of job losses quantified in the study [can be attributed to] the combination of higher energy costs and the loss of additional infrastructure investment,” commented NECAE spokesperson Carl Gustin. “Specifically, higher energy costs, alone, would cause the region’s economy to lose 52,000 private-sector jobs by 2020. Job losses in 2020 would negate 80 percent of the private-sector job growth projected for that year. And the loss of additional infrastructure investment would result in another 115,600 temporary or permanent job losses.”

According to Alvaro Pereira, principal consultant at La Capra Associates, arriving at these numbers involved “sophisticated and multifaceted modeling,” coupled with the use of realistic assumptions to capture the interactions among natural gas and electricity infrastructure systems in New England.”

The energy price impacts of the constrained energy infrastructure system were then analyzed using a dynamic, economic impact model developed by Regional Economic Models (REMI) to determine broader effects on the economy, jobs, personal income and regional competitiveness. The focus of the study was to review infrastructure investment primarily for economic purposes – to reduce prices – rather than as an investment deemed to be needed solely for reliability purposes.

“The positive news is that infrastructure projects have been proposed – and some are underway that would mitigate or eliminate these adverse consequences,” said NECAE’s Gustin. “It’s clear that energy infrastructure is needed to provide New England households and businesses with more affordable energy, but timely decision-making by regulatory and permitting agencies is necessary if the region is to achieve more affordable prices for consumers and improved competitiveness for employers.”

The study marks the first publicly issued statement by the New England Coalition for Affordable Energy, which aims to deliver credible research and analyses to policymakers, elected officials and the public on the need for energy infrastructure. The Coalition also advocates for the importance of timely decision-making and highlights the consequences of inaction.

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