Killing offshore wind will raise utility bills

OPINION:

This winter, families across the Northeast confronted a familiar anxiety: opening the utility bill.

For millions of households, energy is more than an abstract policy debate. It’s the difference between staying current on rent, buying groceries or filling a prescription. In a region where electricity prices are already among the highest in the country, with residents in states such as Connecticut, Massachusetts and Rhode Island paying electricity rates close to 30 cents per kilowatt-hour, even small shocks rip through monthly budgets.

So when the federal government issues stop-work orders that stall five large-scale, nearly completed offshore wind projects, we should be honest about what that means for everyday people: It makes the problem of rising electricity bills worse.

In December, the Department of the Interior announced a halt to five offshore wind projects under construction along the East Coast, citing national security concerns. These energy projects, the equivalent of about three nuclear power plants coming online, are years in the making and have already completed a permitting process to address any national security issues. Some are already delivering power, while others are set to begin supplying the grid within weeks.

A new analysis of the five affected offshore wind projects under construction — Coastal Virginia Offshore Wind, Vineyard Wind 1, Revolution Wind, Sunrise Wind, and Empire Wind — finds that canceling or significantly delaying these projects could cost customers across the East Coast up to $45 billion over the next decade. That is not a rounding error.

In the mid-Atlantic and Northeast, we operate in competitive wholesale markets where regional electricity prices for dispatched generators are set by the “marginal” generator, the last and most expensive resource needed to meet demand at any given moment. Under market rules, lower-bidding market participants receive the same price as the marginal generator, driving up costs for ratepayers. In the Northeast, that marginal unit is often a natural gas plant, exposing ratepayers to volatile prices, as we saw with the winter storm last month, when New York’s regional benchmark price skyrocketed from around $6 to about $45 per million British thermal units.

Offshore wind changes the equation. Adding large-scale offshore wind farms increases electricity supply at a fixed 20-year price with no fuel cost, providing a helpful balance against higher-cost “peaking” plants. By reducing the need for electricity procured from competitive wholesale markets, offshore wind displaces the need for power from the most expensive marginal generators on a daily basis, bringing down the clearing price paid by ratepayers to power plants across New England. The result is fewer price spikes and lower prices across many hours of the year, the kind of broad, systemwide effect that matters for ratepayers.

When those offshore wind projects are removed from the picture, the modeling shows the opposite. The region relies more on the sources that are most expensive when we need them most: peaking thermal units and imports from neighboring regions.

The report from the American Clean Power Association also highlights a key point that too many debates gloss over: Offshore wind is a winter-peaking resource. That matters because winter is when the Northeast is most vulnerable. Gas can fill gaps when wind output is lower, but offshore wind can meaningfully reduce the number of hours that gas is pushed to the edge because of scarce fuel supplies, limiting the associated shortages and price spikes.

The administration’s “pause first, figure it out later” approach is not a strategy that prioritizes energy affordability. These projects are, on average, more than 70% complete and are projected to provide enough electricity to power 2.5 million homes. Halting them doesn’t undo sunk costs. Every day a project sits idle, costs continue to accrue, with the consequences ultimately falling on ratepayers.

The Northeast has real energy constraints: limited land for large-scale onshore generation, transmission bottlenecks and a power plant fleet that can be stretched thin during extreme weather. Blocking one of the region’s few near-term, scalable new resources is a decision ratepayers will feel.

Energy affordability is not political. It is foundational. Families can’t build stable lives when essential bills behave like a roller coaster. A region can’t attract and retain businesses when power costs are unpredictable. We can’t tell the public we care about affordability while knowingly removing large amounts of supply from the grid.

If leaders in Washington want to be serious about affordability, then the answer is not to block infrastructure that is already built and paid for. The answer is to get these projects safely, responsibly and promptly across the finish line so that the next time a family opens their utility bill, it doesn’t come with a punch in the gut.

• Sarah E. Hunt is CEO of the Joseph Rainey Center for Public Policy, a think tank and leadership community in Washington.