Virginia’s climate has been setting record low temperatures in the past few days, and state newspapers have been full of stories about poor people shivering in the cold, traffic accidents caused by black ice, and the defects of Virginia Department of Transportation snow removal. But I have seen nothing about the impact of the deep freeze on business and industry. That’s not to say that no one has written about it, rather to say that the topic hasn’t surfaced in any of the newspapers and Internet news feeds that I peruse every day.
Here follows the untold story. Or at least part of the untold story. I publish here a communication from Aaron Ruby, spokesman for Dominion Energy and the Atlantic Coast Pipeline, who notes that the bitter cold caused a spike in natural gas prices and curtailment of service to major industrial customers. Bottom line: The disruptive Polar Vortex of 2014 was not a fluke. As the economy grows and natural gas supplies become even more constrained, we can expect more of the same in the future.
I fully acknowledge that Ruby’s remarks represent a corporate point of view and that there may be other ways to spin the economic repercussions of the recent cold wave. But, to be perfectly frank, given my other commitments, I don’t have time to flesh out a fully reported article. Instead, I post Ruby’s remarks with the idea of letting readers respond in the comments.
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As our region recovers from the recent cold spell, I wanted to draw your attention to the significant challenges it posed for consumers who depend on natural gas for electricity, home heating and power for their businesses. The extreme cold and spikes in natural gas usage across the Mid-Atlantic over the last two weeks demonstrated in dramatic fashion the real and urgent need for the Atlantic Coast Pipeline.
Severely limited capacity on the pipelines serving Virginia and North Carolina forced some utilities to curtail service to major industrial customers and raised consumer prices to historic highs. The reason is simple: our region’s pipelines are too constrained, and we don’t have enough access to lower-cost supplies from the Appalachian region. In response to urgent requests from utilities, we proposed the Atlantic Coast Pipeline more than three years ago to relieve those constraints and bring these lower-cost supplies to consumers in Virginia and North Carolina. The Atlantic Coast Pipeline would significantly lower the risk of this kind of volatility in the future.
Virginia Natural Gas, which serves homes and businesses in the Hampton Roads region of Virginia, reported service interruptions to 11 major industrial customers over the last two weeks, some lasting for as long as 4 days. Piedmont Natural Gas, which serves homes and businesses in North Carolina, reported that it too interrupted service to several industrial customers. In fact, Piedmont alerted federal regulators this week that it urgently needs new infrastructure by the end of 2019 to serve customers’ growing needs.
Constraints on the Transco pipeline in Virginia and North Carolina also sent natural gas prices soaring from $3 per dekatherm in late December to an all-time record high of $175 at the end of last week. Those higher costs will ultimately be reflected in higher electric and natural gas bills for consumers. Dominion Energy Virginia relied on the Transco pipeline for about 75 percent of its natural gas supply during the cold spell, while public utilities in North Carolina depended on this single pipeline for 100 percent of the state’s supply. Transco is currently the only natural gas transmission pipeline serving all of North Carolina, leaving the state particularly vulnerable to shortages and price volatility.
In contrast, prices in the Appalachian region where the Atlantic Coast Pipeline would originate remained low, trading between $4 and $6 per dekatherm during the cold spell. The problem is we don’t have the pipeline infrastructure to deliver these lower-cost supplies to consumers in Virginia and North Carolina. While we’re still calculating the impact, having access to a lower-cost source would have saved consumers in our region hundreds of millions of dollars in fuel costs over just the last couple weeks.
We’ve said for a long time that the pipelines serving our region are stretched too thin and cannot handle the coldest winter days. Our economy isn’t going to grow if we have to curtail our industries whenever it gets cold, or if consumer prices skyrocket when our pipelines are overstrained.
New infrastructure is the only way to solve these challenges. The Atlantic Coast Pipeline will open up access to lower-cost supplies in Virginia and North Carolina – access we currently do not have – and it will make service more reliable for consumers, especially when they need it the most on the coldest winter days.