Polar Vortex pushes power grid to its limit, utility bills climb

The Polar Vortex caused America to shiver like never before. Temperatures from Chicago to Buffalo were lower than the South Pole, leading to unprecedented health and safety risks and shutting down transit operations and schools across the northeast. While it was cold outside, energy markets heated up as demand skyrocketed, pushing some systems to their limit.

According to the Montreal Gazette, Hydro-Quebec was nearly unable to meet its demand and required some New York-generated electricity to rescue its ratepayers from rolling blackouts during the deep freeze. At the same time, the New York Independent System Operator (NYISO), New York’s non-profit, federally regulated grid operator, reported that New York set a new winter electric demand record of 25,738 megawatts (MW) of electricity on January 7, 2014, eclipsing the 2004 record of 25,541 MW. New York not only sent power north of the border, but southwest to Pennsylvania as well, proving that the Empire State could and should become a net energy exporter.

The Arctic temperatures were followed by a nasty set of sudden snow storms. These weather events complicate travel, diminish regional economic activity, and strain our energy infrastructure. The cold snap and snow combo caused an unusual price spike in ratepayer bills that prompted the NYS Public Service Commission to freeze National Grid’s rates in upstate New York. Con Edison estimates that the average residential customer downstate will see a $55 increase (16.5 percent) in their gas heating bill and a $27 increase (21.8 percent) in their electric bill for January and February. Con Ed also reminded customers that they can spread the increased costs over a 12 month period.

No matter how hard the state tries, energy prices cannot be frozen, and while the effort of the utility companies to defer costs is welcome, doing so can still hurt consumers and the economy. Moreover, our energy system cannot operate without making upgrades or conducting maintenance. That is why, especially in light of these recent challenges, we must address the root causes of our energy crunch.

For instance, the state should eliminate needless energy taxes that make up 26.7 percent of New Yorkers’ utility bills. In a November 2013 article, City & State NY estimated that New York ratepayers pay 31 percent in government taxes plus 33 percent in “delivery costs,” extra government regulated expenses, that weigh down the state’s economic recovery.

Another step requires finally approving fracking and allowing sensible infrastructure upgrades, especially for projects that expand access to natural gas. The U.S. Energy Information Administration (EIA) revealed that we have had record withdrawals from the Northeast’s natural gas reserves, causing the price per MMBtu to eclipse $72, well over the typical commodity price average of under $5. The EIA attributed the price spike and supply shortage to “critical pipeline constraints” that compelled NYISO to order dual-fuel power generators to come online and share inventory levels to meet system demand.