DAN HOWARD
WESTFIELD – The Westfield Gas & Electric Department managers
reported that the utility had a profit in both its gas and electric divisions during May, closing toward the original revenue forecast on which the department’s operating budget is built.
The New England utility industry, as a whole, is still recovering for the exponential increase in the cost of delivering natural gas to the region the past two winters.
Natural gas is plentiful in the nation, but the lack of pipeline access to the Northeast has caused transportation prices to climb tenfold during the coldest days last winter.
The transportation cost is typically between $2 and $3 per MMBTU, but that in January that cost spike to more than $30 on some days and the February average was $15 a day.
That increase in the delivery of natural gas also trickles down, actually gushes, into the cost of electricity because more than half of the natural gas consumed in the region is for gas-fired electrical generation.
Jay Kline, the department’s financial and accounting manager, said to the Municipal Light Board last night that the May financial reports are “good news, both division were above the original forecasts, both had strong performances in May, which is usually a quite month.”
Kline said the department’s use of power and revenue spiked during the coldest period, but the cost of that purchased gas and electricity far outstripped the revenue coming into the department.
The financial report gives figures for month-to-month and annual comparisons. The cost of gas increased by $5,912,240 in 2014 as compared to the cost recorded in 2013. Similarly, the cost to purchase electricity has far outstripped the cost figure for the previous year, climbing by more than $3 million higher than the 2013 numbers.
Kline said the good news, especially for the electric division, is that the cost of natural gas, and gas-driven electricity, has fallen back to typical low-demand summer prices. The May delivered gas cost per MMBTU was $4, compared to the January delivered gas price of $25.
“We’re heading into summer. Hopefully it’s a warm summer and we have a window to make up (lost electrical) revenue,” Kline said.
General Manager Dan Howard said that the general managers of local municipal utilities, Chicopee, Holyoke, South Hadley and Westfield, sponsored a legislative meeting because so many of the current state representatives and senators representing the region in the Legislature are relatively new to those positions.
Howard said the meeting, planned for about 90 minutes, extended to nearly twice that time because of the question and answer exchange on a number of utility issues.
Much of that exchange focused on the dire lack of gas pipeline capacity into the region, and in particular, the economic impediment that lack of capacity is to the New England economy.
Howard said that while several pipeline projects are proposed to increase natural gas delivery into the region, the regulatory and environmental review of those proposals will takes years.
“I think what the legislators came away with is that natural gas delivery is a regional issue,” Howard said, “how it effects the economic development of the region because we can’t get gas in here, how far reaching that effect is, how it puts pressure on development, that it’s driving businesses out of New England.”
“The other thing they recognized after the presentation that the solution, more pipeline capacity, is driven by the federal government. It’s not a state issue,” Howard said. “New England governors, legislatures and officials can continue to put pressure on the federal officials to keep moving this forward.”
