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KeySpan vows there'll be no shortages of gas for heat

The head of New England's biggest natural gas utility promised yesterday that homes and businesses across the region will face no shortage of gas for heating this winter.

For weeks, regional energy officials have been expressing concern about the possibility of gas shortages this winter leading to rolling blackouts if gas-fired electric plants fail to get fuel or opt to shut down because gas is too expensive.
But Nick Stavropoulos, chief executive of KeySpan Energy Delivery New England, said that issue is completely separate from the issue of whether KeySpan's 800,000 customers can count on fuel supplies.
Speaking at an energy forum at the Federal Reserve Bank of Boston, Stavropoulos stressed that unlike power plants, gas utilities have rock-solid contracts to get all the gas they need to serve customers this winter, barring some catastrophic supply disruption.
''There is no gas-supply shortage for the natural gas distribution customer," Stavropoulos said, only ''a problem for electric generators that aren't willing to pay for firm supply contracts."
Stavropoulos expressed frustration with the rolling-blackout warnings coming from power grid officials. ''Every time they start talking about the possibility of rolling blackouts because of gas-supply issues, our call centers get flooded with calls from customers asking if they... more [truncated due to possible copyright]  
For weeks, regional energy officials have been expressing concern about the possibility of gas shortages this winter leading to rolling blackouts if gas-fired electric plants fail to get fuel or opt to shut down because gas is too expensive.
But Nick Stavropoulos, chief executive of KeySpan Energy Delivery New England, said that issue is completely separate from the issue of whether KeySpan's 800,000 customers can count on fuel supplies.
Speaking at an energy forum at the Federal Reserve Bank of Boston, Stavropoulos stressed that unlike power plants, gas utilities have rock-solid contracts to get all the gas they need to serve customers this winter, barring some catastrophic supply disruption.
''There is no gas-supply shortage for the natural gas distribution customer," Stavropoulos said, only ''a problem for electric generators that aren't willing to pay for firm supply contracts."
Stavropoulos expressed frustration with the rolling-blackout warnings coming from power grid officials. ''Every time they start talking about the possibility of rolling blackouts because of gas-supply issues, our call centers get flooded with calls from customers asking if they should revert back to using imported oil. We have to assure them," said Stavropoulos, whose firm owns the former Boston Gas Co. and other Eastern Massachusetts gas utilities.
Independent System Operator New England, the Holyoke organization that runs the six-state electric grid and wholesale power markets, confirmed KeySpan's view.
''We agree completely," ISO spokesman Ken McDonnell said. ''If there is a natural gas supply problem this winter, it should affect only electric generators. It's our understanding that anybody with firm supply and transportation commitments for gas should not have any problems."
After more than a dozen gas-fired power plants were constructed in the past decade, New England now relies on natural gas to produce more than one-third of its electricity.
Because of continued disruptions to gas supplies because of hurricane damage in the Gulf of Mexico, and still near-record-high prices, many ISO and state energy officials fear a severe cold snap could lead to serious problems with electric reliability. In a worst-case scenario, gas utilities would get priority to take all available supplies, leaving power plants with none.
Alternatively, if gas prices soar, power plants might shut down because they can make more money selling their gas than using it to make electricity. During a record-breaking January 2004 cold snap, a total of 7,200 megawatts worth of gas-fired generating capacity -- equal to nearly one-quarter of New England's electric demand -- shut down, and the region barely escaped blackouts.
During yesterday's Fed forum, top energy specialists lamented the regulatory and financial-markets gridlock that has thwarted construction of badly needed power plants, liquefied natural gas depots, and electric transmission lines in New England.
''We are stuck on a lot of issues," said consultant Susan F. Tierney, a former US assistant energy secretary and Massachusetts environmental affairs secretary.
Mindy Lubber, a former regional administrator for the Environmental Protection Agency who is now president of Ceres Inc., which promotes business-led environmentalism, said, ''We have no choice but to look at how we do energy project siting, streamline it, and move projects forward." Lubber cited the four years that developers of a 130-tower Nantucket Sound wind-turbine project have spent trying to get government approvals.
But other specialists said government policy is too focused on promoting energy infrastructure instead of encouraging more conservation, which is a far cheaper way to match supply and demand.
''The cheapest source we have in New England is energy efficiency," said Henry Lee of Harvard University's Kennedy School of Government. ''If we are really going to have a serious impact, we have got to put more of an effort on addressing energy efficiency."
Currently, ISO New England has signed up businesses and institutions with total demand of 400 megawatts -- equal to about 300,000 homes -- for a program that pays them bonuses to cut electric use during potential crisis periods.
The ISO is trying to get 450 more megawatts of capacity for its ''demand response" program.
Peter J. Howe can be reached at howe@globe.com.


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Source: http://www.boston.com/busin...

DEC 3 2005
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