Staring down the possibility of fuel shortages this winter, New England’s governors are asking the Biden administration for help, including a possible waiver of the Jones Act for LNG deliveries to the region.
In a letter to Energy Secretary Jennifer Granholm dated July 27, the six governors in the region warned that price volatility because of the war in Ukraine will have “have significant implications for our region’s electric and natural gas customers and raises reliability concerns if the region suffers a severe winter.”
New England relies on LNG for both electricity generation and heating in the winter, as domestic natural gas capacity is constrained.
The new letter follows increasingly vocal warnings from ISO-NE and a back-and-forth between it and the states over how to prepare for the possibility of extreme cold that could strain the electric grid.
Despite its alerts about the precarious state of the grid in winter, ISO-NE recently determined that no out-of-market solutions to make sure that generators stockpile fuel would be appropriate for this winter because of their cost and unclear benefits. (See ISO-NE Says No Extra Winter Programs Make Sense this Year.)
The states are turning to the federal government with three distinct asks.
First, they request that the administration begin “to explore the conditions under which it might be appropriate to suspend the Jones Act for the delivery of LNG for a portion or all of the winter of 2022-2023.”
The letter notes that the law, which requires that ships hauling cargo between U.S. ports be built in the U.S., “effectively precludes all U.S.-exported LNG from being delivered into New England.”
The governors also asked that the Biden administration consider utilizing the Northeast Home Heating Oil Reserve and consider developing a “new or modernized strategic energy reserve to protect against low-probability weather events to ensure energy system reliability.”
And third, the letter asks that the federal government and the states “commence coordinating immediately to monitor the developments as winter approaches.”
The issues facing New England’s system aren’t likely to disappear overnight, the states acknowledged.
“While our immediate focus is on this upcoming winter, the ramifications of Russia’s invasion and the realignment of natural gas supplies will have long-term global consequences and could have adverse impacts in New England,” the letter says, calling for an expanded energy strategy and construction of new critical infrastructure.
“It’s really important that we have active and direct collaboration and communication going on among all of the entities that have a role to play in ensuring our grid is reliable for consumers in New England,” Katie Dykes, commissioner of Connecticut’s Department of Energy and Environmental Protection, told RTO Insider on Wednesday.
“We’re in a really unprecedented time with the war in Ukraine and supply chain disruptions and volatile commodity prices falling out of the pandemic,” Dykes said. “We know how this is affecting consumers already in terms of energy costs, and we’re keenly aware of the unique vulnerability of the New England electric grid.”
FERC is holding a forum in Vermont in September to examine the challenges facing New England’s grid reliability in winter.