For more than 200 years, New Hampshire’s economy has been deeply rooted in the manufacturing industry. Our state’s cities and towns grew as a result of the many river-powered paper and textile mills built during the Industrial Revolution. These mills gave way to high-tech firms that are cleaner and more efficient than the factories of years ago. New Hampshire’s manufacturing sector has seen many success stories, but when it comes to the long-term view of the industry, there are some challenges.
We are in the midst of a new energy era, driven by a desire to increase efficiency on all business fronts. Reducing energy consumption is something the region’s businesses are invested in. New England has long had high energy prices. The price of electricity declined slightly between 2010 and 2012, but New England customers still paid 40 percent above the national average for its power. Early analysis of 2013’s energy costs indicates energy prices are on the rise again and New Englanders can expect to pay more to power their homes and businesses.
This continued rise in costs affects the region’s industrial sector the most. In New England, electricity prices in the industrial sector are 77 percent higher than the national average. No other region in the Continental U.S. comes close to paying this much to keep the lights on in their factories. Paying this much for electricity puts New England businesses at a competitive disadvantage that could put future expansion into the region at risk.
Then there is the natural gas supply issue, driving up electricity prices and causing insecurity in the industry. Because New England is so dependent on natural gas for electricity generation, periods of high demand cause price spikes not only on the natural gas spot market, but on the electricity wholesale market as well. We recently saw this play out in Gorham, where the newly upgraded paper mill was temporarily shut down because of the high price of natural gas needed to keep operations running. The mill owners later announced they would lay off up to 50 workers as a way to adjust to increased energy costs. Although price spikes are usually limited to the coldest and hottest days of the year, overall high prices and market volatility have been substantial enough to cause job losses. For those who were laid off from the Gorham plant, the energy market is directly impacting their lives.
Stabilizing New England’s energy prices is a major policy challenge facing the region in the coming years. Businesses will be less likely to invest in new or improved facilities if there’s a chance energy prices could double. New England has an opportunity to lower energy costs by diversifying its sources of energy and building new infrastructure to support it. Importing hydroelectricity from Canada with projects like Northern Pass and expanding the capacity of the natural gas pipeline are both ways to meet this need.
The New England governors took a step in the right direction when they announced they would work together to expand energy infrastructure, yet there are simultaneous efforts in New Hampshire to slow down or altogether stop new projects. Instead of finding ways to accelerate the process of bringing much-needed projects to fruition, New Hampshire is talking about additional regulations.
New Hampshire has long been a leader in industry and technological development, yet our efforts to build up our manufacturing sector will be made more difficult unless the state does something to address our high energy costs. Investing in new energy infrastructure — and doing so sooner rather than later — is the best way to reduce energy costs over the long-term. If New England wants a cleaner, cheaper, safer energy system, we need to make it easier to get there.
David Atkinson of Lancaster is a former vice president of operations at the Wausau Paper Mill, which was closed in 2008.