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Pipeline Opponents Driving America's Electric Bills Higher



A new wave of energy price hikes is now hitting consumers and businesses. This time it's in the form of higher electric bills. The culprits are the opponents of natural gas pipelines and the misguided regulatory policies that empower them. Until this changes, our electric bills will rival the cost of gasoline purchases.

With gasoline prices already sky-high, a double whammy is now arriving, and it's about to get much worse. It's the even faster rising costs that power plants pay for natural gas to produce the electricity that runs our air conditioners and businesses. The reason: fossil fuel opposition groups have stopped key new pipelines, importantly contributing to the tripling of the cost of natural gas over the last 12 months.

The size of consumers' and businesses' electric bills depends in part on the price paid by power plants for the natural gas used to generate electricity to supply the grid. The hit may be harder to see than the tab for a tank of gas, but it's real and it shows up in electric bills mixed in with the cost of electricity produced by other fuels.

To help explain this growing drag on our economy as summer gets warmer, here's a little history.

For the past ten years, electricity has been a bargain because sometime around 2010, the fracking revolution unleashed a new torrent of cheap natural gas from vast, newly discovered shale reserves. More and more power generators switched from coal to gas because it was much less expensive and cleaner.

To meet this new demand, our natural gas production grew in tandem, especially from our largest reserves which are found in the Appalachian Basin - the Marcellus and Utica shales of Pennsylvania, Ohio and West Virginia. This area is crucial to our overall supply picture because it accounts for over 40% of our total national shale gas production. With its ample supplies rising to meet growing demand, the price of natural gas kept going lower, dropping by as much as 75% from pre-shale days, with electricity bills shrinking in tandem.

But then a few years ago, fossil fuel opponents saw this consumer bonanza as a dire threat. Having lost the war against fracking, they turned on pipelines, figuring the next best way to stop production and use of natural gas was to prevent pipelines from being built. They were able to obtain court rulings that stopped construction on three major new high-capacity natural gas pipelines. Together these lines would have allowed Appalachian production to increase nearly 20% to help ease the supply crunch. Even though two of those pipelines' rulings were later reversed by the U.S. Supreme Court, the damage had been done and the projects were cancelled, while the third remains in limbo.

Now, in spite of ample reserves, our producers cannot increase production to supply rapidly growing demand for electricity because there's no way to move any more gas out of the Appalachian Basin through the existing pipeline network, which is operating at full capacity. When supply cannot meet growing demand, markets drive the price higher. As a direct result, over the last year the price of natural gas has tripled. And that is now showing up in the nation's electric bills.

People may be able to cut back on their driving, but this summer and next winter the exorbitant costs of air conditioning and heating, not to mention the threat of rolling blackouts resulting from lack of pipelines, will be more than an inconvenience - they will threaten the health, safety and comfort of millions of Americans.


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