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Experts Raise Concerns of Heating Oil Rationing in New England Amid Supply Shortage

In the worst-case scenario, some Granite Staters could run out of heating oil or electricity this winter as the nation grapples with the current energy crisis, experts warn.

ISO New England, the region’s power grid operator, warned last week the tight supply of natural gas could result in rolling blackouts this winter if the weather turns unusually cold.

“The most challenging aspect of this winter is what’s happening around the world and the extreme volatility in the markets,” said Vamsi Chadalavada, chief operating officer for ISO New England. “If you are in the commercial sector, at what point do you buy fuel?”

Then came a Bloomberg report that New England heating oil suppliers are already seeing supply rationing before the winter heating season starts as supply runs short free to high wholesale prices.

“The facts are this, supplies of heating oil are historically low,” said Michael Ferrante with the Massachusetts Energy Marketers Association.

New England heating oil suppliers are trying to hedge their bets, Ferrante explained. The wholesale market is anticipating higher prices through the next few months at least with prices possibly dropping in early spring. The suppliers are responding by not buying extra oil at the current high prices.

“They’re buying ‘just in time’ inventory, just enough to meet the needs right now,” Ferrante said. But what happens if there is a surge in demand during another blast of brutal arctic cold like in 2018

“During the two weeks of Arctic cold, New England generators burned through about 2 million barrels of oil,” noted ISO New England CEO Gordon van Welie in an after-action report. “That’s about 84 million gallons, more than twice as much as all the oil used by New England power plants during the entire year of 2016.”

If there is a surge in demand, larger oil distributors would have more access to the limited supply. But what about small heating oil suppliers around New Hampshire, the one-truck operators? Ferrante conceded they might get left out in the cold.

“The smaller companies might have a more difficult time finding supply,” Ferrante said.

The current average cost of heating oil in New Hampshire is more than $5.60 per gallon. That is expected to climb higher as the weather turns colder in the coming months. With smaller suppliers frozen out of the market, Granite Staters will have a tougher time keeping their homes warm.

Spikes in the cost of natural gas, which provides the fuel for much of New England’s electric grid, have already resulted in the doubling of electricity rates for New Hampshire ratepayers. Those same ratepayers face the prospect of shelling out double for electricity and not being able to buy oil for their furnaces.

Karoline Leavitt, the GOP congressional candidate running neck and neck with incumbent Democrat Rep. Chris Pappas, blames President Joe Biden’s administration for sky-high energy costs.

“As if the $600 being stolen from families every month because of inflation wasn’t bad enough, we are all living a nightmare as we watch our energy bills soar as the weather gets colder,” Leavitt said. “We were informed that this would happen months ago. And rather than develop a solution to solve this crisis, Chris Pappas continued to vote with Nancy Pelosi and Joe Biden 100 percent of the time, exacerbating this problem to its breaking point. With families being forced to decide between heating and eating, we cannot afford another term of Chris Pappas’ partisan leadership that leaves Granite Staters hanging out to dry.”

GOP U.S. Senate candidate Don Bolduc sees a lack of leadership.

“Less than two years into the Biden presidency, we’re having discussions about rationing here in the United States of America. New Hampshire is facing a major energy crisis all due to Sen. Maggie Hassan and President Biden’s failed leadership. Not only are Granite Staters having to choose between heating and eating, but they also now must worry about energy shortages that could leave them out in the cold with no way to heat their homes. Sen. Hassan has failed New Hampshire,” said campaign spokeswoman Kate Constantini.

Both Hassan and Pappas had been pushing Biden to release more oil from the nation’s Strategic Petroleum Reserve. Though Biden announced last week he was putting more of the nation’s stockpile on the market, it is unlikely to be enough to counter the high energy prices caused by Russia’s war on Ukraine and the decision by Saudi Arabia to pump less oil to raise prices.

“It’s a short-term Band-Aid, and it doesn’t solve the long-term problem,” said Phil Flynn, an energy market analyst with the PRICE Futures Group.

Ferrante said there is no relief coming in the short term, as the war in Ukraine continues driving the energy market in Europe and beyond.

“There are no guarantees it will get better. It’s a global economy,” Ferrante said. “Prices of crude oil are affected by what’s happening around the world.”

New Net Metering Bill Could Mean Headaches for NH Electric Grid

Subsidizing green energy is easy. Subsidizing it using the electric grid is hard.

That was the message from Eversource and some state officials regarding SB 321, which came before the House Science, Technology and Energy Committee on Tuesday. The bill would allow local electricity producers generating between 1 and 5 megawatts– mostly solar power plants — to use the existing power grid to sell and distribute power within the state directly to users and not via the existing utilities.

Under the pilot program, small generators could enter direct intrastate contracts with users and, because it is premised on the claim those transactions avoid any use of transmission infrastructure, it would create savings that would be returned to the generator. Those savings would help make the renewable power price competitive.

“The proposal allows pilot projects to test the feasibility of electricity sales between two parties that do not involve the current market managed by the independent system operator (ISO-NE),” committee chairman Rep. Michael Vose (R-Epping) told NHJournal. “Such sales would use utility-owned distribution facilities and would pay distribution costs. The final legislation will limit such sales for 15 years until their value has been determined.”

The problem, critics say, is that the theory just isn’t true.

According to energy experts who spoke to NHJournal, the proposal runs afoul of existing agreements between the utilities and the ISO. And most energy transactions will still use the transmission infrastructure, cutting into projected savings.

“Eversource covers large portions of New Hampshire, and some of their areas are only interconnected via transmission lines, like Nashua and Coos County,” said state Rep. Michael Harrington (R-Stafford), a former member of the Public Utility Commission who now serves on the energy committee. “This means even if the transaction was limited to players in a single utilities area, it could still involve transmitting the power over transmission lines where FERC has jurisdiction.

“It is a very complicated issue and is only made more complicated by jurisdictional issues,” Harrington added.

And the premise of a pilot program that lasts 15 years flies in the face of the meaning of the word. “Fifteen years isn’t a ‘pilot,'” one energy utility source said. “That’s a full season.”

Advocates like Lebanon Assistant Mayor Clifton Below say the proposal brings market-priced solutions to the renewable energy sector.

The City of Lebanon could potentially become an energy producer. The Lebanon Solid Waste Facility is in the process of building a power plant to burn greenhouse gasses created by decomposing trash in order to power microturbines. The current plan is to use that power for city properties.

“It’s a baby step. It’s something that could prove to be more economically and technologically efficient,” Below said during Tuesday’s hearing.

The problem, said Eversource Director of Governmental Affairs Donna Gamache, is the proposal both violates agreements regulating the utility’s transmission lines and would force one group of customers to subsidize another.

“We want to make sure everyone using the transition system pays their fair share, and that Eversource can maintain reliability,” Gamache said. “We fear this would violate ISO New England agreements.”

In her testimony to the committee, Gamache said, “These types of transactions are not permissible under the ISO-NE Open Access Transmission Tariff or the Transmission Owners Operators Agreement Changing this would require ISO-NE to file for and FERC to approve a new tariff provision that would allow intrastate sales as the transmission system would need to be used to move the power.”

Director of Legislative & Regulatory Affairs for Clean Energy NH, Kelly Buchanan, said the state’s PUC can regulate the pilot program. Bringing in a new way to sell renewable energy would help the industry grow while it shifts to cleaner power.

“This bill expands the marketplace for renewable energy in the 1-to-5-megawatt range,” she said.

Griffin Roberge with the New Hampshire Department of Energy said the state is not taking a position on the bill, citing many of Gamache’s concerns about potentially running afoul of the ISO New England agreements. The matter was subject to a state study, which cautioned about proceeding with selling power.

“The report found this was a complex issue, and warned of unintended consequences,” Roberge said.

Harrington agreed. “My recommendation would be to give the issue more study.”