FERC And The Connecticut Governor Lamont’s Shortsighted Decision To Block A Natural Gas Plant

Earlier this month the Federal Energy Regulatory Commission, or FERC, acquiesced to protests by activists and government officials and officially terminated a contract involving a natural gas plant slated to be built in Connecticut that would improve reliability of the region’s energy grid. 

The objections of Connecticut Governor Ned Lamont’s administration, as well as the Sierra Club and a bevy of other environmental groups, are that the gas plant would deter the region’s efforts to get away from burning fossil fuels and arrive at a post-carbon future. Connecticut has enacted a law pledging its intent to reduce greenhouse gas emissions 45 percent below 2001 levels by 2030, and 80 percent below 2001 levels by 2050. 

Setting emissions reduction targets is fine, but achieving them in a politically viable way requires the political class to do more than merely reject any new building, road, or power plant that increases emissions by itself. 

The coordinated action by FERC and Governor Lamont’s administration is emblematic of a troubling perspective held by not a few federal and state officials who take energy reliability for granted. The Killingly Energy Center in Connecticut would have helped to keep the lights on in the Northeast region. Terminating this plant’s contract effectively prioritizes unrealistic environmental goals over ensuring grid reliability. 

The reality is that our post-carbon future remains decades away, and using regulatory fiat to prevent a sorely needed natural gas plant from opening will not hasten its arrival. For the earth to achieve significant reductions in carbon emissions we will need some sort of comprehensive strategy—such as an economy-wide carbon price—that can be agreed upon by virtually every single country. 

For Connecticut to achieve its own stringent emissions targets it too should adopt one of these policies. Its government has not done so yet because—I suspect—it realizes that the voters would balk at the costs it would impose on filling their gas tanks and heating their homes. 

Instead, they have adopted a well-sounding but incoherent strategy: rather than overtly raising prices on energy-intensive activities to deter them, the state will simply direct its utilities to effectively reduce their capacity, and hope that the state’s citizens can get by with less power. 

But it is a risky bet that could backfire. Its reflexive opposition to new natural gas power plants—which burns much cleaner than coal or oil—will serve to reduce reliability while ultimately increasing how much households have to pay for energy. 

If residents in the Northeast find themselves dealing with rolling blackouts during a heatwave next summer—something that’s looking increasingly likely—it would inevitably dampen enthusiasm amongst the people inconvenienced by the power shortage for a transition to a greener economy. Asking them to pay more for less reliable energy delivery would be political suicide, and it’s doubtful that any governor or legislature would attempt to do so. 

Grid operators across the country have been struggling to keep the lights on across their states in recent years, and the closure of numerous base load plants that run on fossil fuel have created new vulnerabilities. In some states natural gas plants have increased to serve as dependable base load power, but wind and solar energy have also increased their share of energy production in the last decade, abetted by healthy subsidies as well as a steady improvement in their efficacy, to the point where they are cost-competitive with other power sources.

The main drawback of wind and solar energy, of course, is that their intermittent nature makes planning somewhat complex for grid operators. To ensure that there is enough power at all times they depend on natural gas plants; when it is sunny and the wind is blowing they may be unused, but during periods of peak demand or when wind and solar energy wane they are necessary to meet demand. 

One way to reduce the need for additional baseline power would be to have dynamic energy prices that go up when demand spikes, which would encourage people to shift energy consumption to low-use periods. 

However, peak load pricing has significant opposition as well—for it to work it can’t exempt anyone, so it would necessitate that low-income households will see their energy bills rise in a high-cost month if they fail to conserve energy at peak prices. 

Setting a heady goal to reduce carbon without a plan to achieve it and fixing the deadline so that it arrives on the desk of a future governor and legislature does not win any profiles in courage, and it’s likely to fail. A durable strategy that could potentially achieve real emissions reductions would take significant steps to change the relative prices of energy to encourage people and firms to reduce their carbon footprint. 

Reflexively rejecting a natural gas plant that’s needed to keep an energy grid functioning in the name of combating climate change could very well backfire, leaving a bevy of angry constituents largely unwilling to put up with any more inconveniences to reduce emissions.   

Killingly’s operator NTE Energy appealed FERC’s decision and asked a federal appeals court to issue an emergency stay of FERC’s approval to terminate the plant’s contract on the basis of “irreparable injury” for the plant’s cancellation. FERC and Governor Lamont’s administration should reconsider their decision to diminish electricity reliability instead of handing a victory to the Sierra Club.