Cool summer softened demand for power

NEW ENGLAND - Electricity use dropped nearly 6 percent in New England in the summer of 2009, a result of cool temperatures and an economic recession that drove down demand, the power grid operator ISO said.

An ISO executive, however, warns that consumers should not be complacent about conservation, because costs come at the whim of a volatile commodities market.

The region's heavy dependence on fossil fuels to generate electricity leaves it vulnerable to such volatility," said Vamsi Chadalavada, chief operating officer of Holyoke, Mass.-based ISO-New England, in a conference call with reporters.

"Since air conditioning is the driver of peak demand in New England, electricity consumption in the region soars when the weather is hot," he said. "So it's no surprise that demand plummeted this past June and July when it was unusually cold and damp."

ISO, a not-for-profit company, manages the bulk power system and wholesale electricity markets in the six-state region, whose gas and oil-powered plants generate more than 40 percent of the electricity about double the national average.

And while cheaper coal generates 50 percent of electricity in the U.S. on average, New England gets only about 15 percent of its power from coal.

The dependence on oil and natural gas to generate electricity makes New England prone to sharp price hikes, he said, such as in 2005 when Hurricanes Katrina and Rita temporarily crippled production facilities in the Gulf of Mexico.

It struck again much of last year when market pressures drove oil and natural gas prices to record highs before taking a dive in the fall.

Investing in renewable energy production is the rage, but challenges remain, said Robert Ethier, the company's vice president of market development.

"I guess I would personally anticipate more of that activity in the future, especially as we move toward a world where we are relying more on wind power," he said "You need a way to bridge that gap."