By William Opalka

The mild winter that has moderated energy prices in New England shouldn’t lull policy makers into complacence about the region’s infrastructure needs, ISO-NE CEO Gordon van Welie said last week.

In a Jan. 21 presentation to the media on the state of the energy market, van Welie acknowledged that this winter has been warmer than the previous two, resulting in less demand for power and natural gas and a reduction in pipeline constraints.

“But this is New England,” van Welie said. “Winter’s not over yet, and a mild winter or two doesn’t guarantee we won’t have extremely cold winters again.”

The increasing reliance on natural gas-fired generation and retirements of oil- and coal-fired power plants have created “an urgent need for more energy infrastructure,” he said.

ISO-NE began a winter reliability program for 2013-2014 that was essentially repeated for the current season. That supplemental program provided financial incentives for oil-fired generators to store more oil than they otherwise would have. It has encouraged dual-fuel capable generation that can switch from gas to oil.

Although the RTO has added $7 billion in transmission since 2003 and has generation projects totaling about 9,500 MW in its transmission queue, plant retirements are causing localized stresses.

“We’re already seeing worrisome conditions in greater Boston, with the recent retirement of the Salem Harbor station and delays in development of the proposed Footprint natural gas power plant. That area will be short of needed resources as soon as 2016,” van Welie said.

Southeastern Massachusetts and Rhode Island also are areas of concern, with Brayton Point’s planned retirement in 2017.

In addition, the RTO hasn’t been able to add natural gas pipeline capacity fast enough to react to increased power and heating demand.

For each of the last three winters, natural gas prices have risen steeply, showing the effects of increasing pipeline constraints. On Jan. 1, 2014, the spot price for natural gas in New England was nearly $20 higher than the price paid in most of the country.

“They were not only the highest forward prices in the U.S.; at the time, they were the highest on the planet,” van Welie said.

He said ensuring the reliability of the power system will likely require more gas pipelines, more liquefied natural gas storage and more transmission lines.

“The region faces a conundrum: who will be the customer to ensure new gas infrastructure is built? Will it be end-use electricity consumers or electricity producers — that is, generators?” he asked. “Thus far, electric generators have not signed up for additional gas infrastructure and as a result, the New England states have been considering making an investment in additional gas infrastructure on behalf of consumers.

“Until more infrastructure is added, consumers can expect volatile pricing for both natural gas and wholesale power, with price spikes when either the pipeline or power system is operating under stressed conditions,” he said.