Northeast Electricity Prices High Due to Pipeline Shortage

The recent increase in electricity prices in New Hampshire has sparked debate over whether it's due to the region's reliance on natural gas. Critics claim that using more natural gas drives up costs, but experts argue that this is a misunderstanding.

According to ISO New England, in 2000, natural gas made up just 15% of the region's energy mix, while oil and coal were at 40%. Today, natural gas accounts for 55%, with nuclear power down to 25% and renewables at 13%. As lower-cost natural gas plants replaced older oil and coal plants, wholesale electricity prices actually declined.

A 2015 study found that the shale boom cut natural gas prices by about half, resulting in $74 billion a year in consumer welfare benefits. Using less natural gas wouldn't lower costs; having too little of it does.

The Northeast has an abundance of natural gas reserves, but limited pipeline capacity restricts supply. This shortage pushes electricity prices higher. Texas, which relies on natural gas for 51% of its electricity generation, has lower electricity rates due to its abundant pipeline network.