Power Source

Why Are Natural Gas Prices So High?

Natural Gas Increasingly Powers New England*

Why Are Prices Going Up?

Three pipeline corridors carry natural gas to New England from gas-rich areas in the south and west.

Heading into the winter of 2013/2014, pipeline capacity was scarce.

Most consumers — who don't know about the pipeline squeeze — didn't see rate hikes right away because they had opted into the 'standard offer,' a contract negotiated on their behalf, ahead of time, by the state.

When renegotiating, suppliers assume the pipeline squeeze, combined with cold weather, are raising rates for the coming winter, and build that increase into the new standard offer.

Tight pipeline space is also making it harder for New England to get all the energy it needs on incredibly high-demand days — like the coldest and hottest days of the year, when everyone’s turning on heaters or air conditioners, usually between 30 and 50 days a year.

One way to deal with that could be rolling blackouts.

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How Did We Get Here?

  • First Well

    A man in Fredonia, New York, drills the first well to intentionally obtain natural gas.

  • Federal Regulations

    Congress creates the five-member Federal Energy Regulatory Commission (FERC).

  • Federal Limits

    A federal act limiting the use of natural gas in electric generation is repealed.

  • Deregulation

    The FERC begins to deregulate the wholesale electricity markets in order to increase competition.

  • Regional Regs

    The FERC creates the not-for-profit corporation ISO-New England to administer regional wholesale electricity markets.

  • Sell-offs

    Massachusetts legislation requires utilities to sell off their power generation plants.

  • Late 1990s/Early 2000s
  • More plants

    The number of natural gas-generated power plants increases.

  • Passing the buck

    At the FERC’s request, ISO-New England implements new standards that mean local customers are responsible for the cost of transmission constraints. In Pennsylvania, the first well is drilled into the Marcellus shale.

  • New Source

    The Marsellus shale starts producing gas.


    The FERC approves creation of the New England States Committee on Electricity, the organization through which New England governors coordinate on energy policies.

  • Dependence

    ISO-New England identifies the region’s dependence on natural gas as its top challenge.

  • Merger

    Natural gas fuels 52 percent of the region’s generators. Northeast Utilities completes a merger with NSTAR of Massachusetts, creating one of the nation’s largest utilities.

  • Scarce Alternatives

    9.3 percent of Massachusetts’ net electricity generation comes from renewable energy resources, primarily from biomass and hydroelectricity. Many New England nuclear, coal and oil-generated power plants announce they’ll soon retire.

  • New pipeline?

    January 2017: the proposed construction start date for Kinder Morgan pipeline.