NE Electricity Prices hit $341/MWh ($0.34/ kWh) - National Grid to raise RI Electricity Rate 12%.....

This came from Paul Raducha, an energy expert and contributor to RN. . This is a story we need to report on in more detail next year.  

Here's the deal--do we want to bet our energy future on Natural Gas?  Yes, we want energy independence, yes we want off of imported oil, but, a big, but, what do we build our future on?   A complicated subject--global demand for gas will drive high prices.  High fossil fuel prices make renewables more competitive.  Stripping the earth of its resources, deep in its belly, is not always the answer.  

We have important choices to make:  powering transportation, grids, homes, businesses.  The economics will drive our range of choices.  Let's hope the needle continues to move towards clean energy systems, efficiency, smart grids, new technology (deep wave energy, as an example) and a balance for all parts of the world that allows mankind to survive our past excess and appetite for cheap fuel.

"This announcement comes way to soon on the heals of my previous email (see Below) which clearly  demonstrates that Rhode Island and all of New England's electricity prices are adversely hedged with natural gas prices. To cut some of you ( I know who) off at the pass, the story was not leaked to me prior to my first email nor does National Grid run prices increases by me before the they head down to the PUC with the bad news. 

As we have seen the price (@ Henry Hub) of natural gas has increased by over 200%  from the incredibly low in April of 2012 of $1.95 per decatherm, and we must remind ourselves that it was only 5 years ago that Natural Gas was well over $10 a decatherm.    The producers of Shale Natural Gas have alluded that profits at the well head can only be seen when prices are north of $6 / decatherm.  New LNG Plants are in the works, a recovering  economy, and expansion of  end users will also influence the  price of Natural  Gas upwards.  New England's Natural Gas,  due to infrastructure constraints , constantly float at a very significant premium from Henry Hub with large spikes in the winter. 

So you ask yourself  "Ok,  Paul, thanks for bringing us down at the close of this year, where are you going with this, it's friday and clearly you have no Holiday parties to go to." 

Sorry, so let me pull this together before you dive head first into in the Company's  eggnog punch bowl with a NASA issued snorkel.

In New England approximately 60% of our electricity bill is for energy, the other half is mainly distribution and transmission.  Of that 60% that is energy, 40% is produced from Natural Gas of which very little is 'firm" .   With that said we have high exposure to electricity prices and we can potentially see significant increases in electricity prices over the next 5 years, if all stay the same.

So what is the solution, easy,  what is needed..........hey very large receptacle of Eggnog has just  landed on my desk........ have a good holiday ...I will get back to you on this...............Happy Holidays and have a Great New Year!!!"