Nova Scotia Power warns winter natural gas price spikes will continue

Nova Scotia Power says the region's natural gas shortage that led to record prices this winter is likely to continue for another three or four years.

This past winter natural gas consumers were hit with record high prices in the midst of record cold temperatures.

"There appears to be both public policy and commercial interest in solving the region’s supply issues, but creating long-term solutions will take time. Potential solutions appear to be three to four years away," the utility wrote in report filed this month with regulators.

The problem is a lack of pipeline capacity into New England where prices are set. The report to the Nova Scotia Utility and Review Board says Spectra Energy and Tennessee Gas Pipeline both came out with open seasons for new capacity into the region. Companies issue an "open season" to evaluate market interest in a project.

"Unfortunately, both pipeline additions and production increases tend to have very long lead times, so the volatility experienced this winter could continue for several years to come," Nova Scotia Power concluded.

Spot natural gas prices set in Boston were averaging $22 British thermal units (mmBtu) in January and February according to the U.S. Energy Information Administration.

The soaring price in New England was largely responsible for a $45-million profit made by Nova Scotia Power's sister company Emera Energy Services in the first quarter.

The New England bottleneck negated the fact that this winter had the highest flow of natural gas from offshore Nova Scotia in many years.

Nova Scotia Power reduced its consumption of natural gas by 30% by switching to heavy fuel oil.