Welcome, Secretary Moniz and thank you Senator Reed for ensuring that Department of Energy hears from Rhode Island. On behalf of Rhode Island, I would like to thank you (Secretary Moniz) and President Obama for your focus on and attention to this issue. I commend President Obama for launching the Quadrennial Energy Review to take a national look at energy infrastructure challenges.
It is an issue of tremendous importance to our economy, our environment and our quality of life. And, it is one that we are working hard on here in Rhode Island. As you well know New England, and Rhode Island are facing significant challenges in the energy sector. New England has some of the highest energy costs in the nation, and here in Rhode Island we are continuing to see rate increases. Our high electric rates put the state at a competitive disadvantage, and place additional strain on family budgets when times are already tough. Our rate increases are primarily being driven by pipeline capacity constraints.
We hear it all the time -- Rhode Island is at the end of the pipeline.
However, the problem has become more pronounced in recent years as New England has increasingly transitioned over to natural gas for home heating and electricity generation. Unfortunately our pipeline capacity has not kept pace with demand. So, when the temperature drops, and we all turn up our heat there is less transmission capacity for natural gas, the wholesale price for natural gas spikes, and it shows up in our electric rate increases.
Last December we saw 12% residential and 23% commercial rate increases primarily driven by pipeline capacity constraint. Without intervention we can expect this price volatility to get worse not better. The regions' coal fired power plants and aging nuclear generators are entering retirement which is expected to increase our use of natural gas rather than reduce it. To put it simply, we cannot expect our economy to recover and grow with energy costs continuing to skyrocket.
This is a regional problem that requires a regional solution. And it is one that is so pronounced that it has brought together Democratic and Republican Governors from across the New England to take a holistic look at regional energy infrastructure, and available energy resources to determine an environmentally and economically sustainable path forward. Along with my New England counterparts laid out a vision in the Regional Energy Infrastructure Initiative.
In addition to in state energy efficiency and local renewable energy programs it is critically important that we make strategic investments energy infrastructure such as natural gas pipeline to alleviate pipeline constraint, reduce price volatility and stabilize electric rates. It is equally important that we simultaneously capitalize on the low to no carbon resources to our north such as hydropower and other renewable energy resources which will improve energy diversity and ensure that we are making appropriate investments today to secure a clean energy future for the state.
I am deeply committed to working with the other New England states to make these strategic investments in our regional energy resources and energy infrastructure that will facilitate the development of cleaner, resilient, more affordable and reliable energy system. I have introduced legislation that will position Rhode Island to fully participate in this effort, by empowering the utility in collaboration with the appropriate state agencies to advance regional natural gas pipeline and north south electric transmission. It will allow also allow Rhode Island to fully engage in regional procurement of clean energy resources such as hydropower and wind allowing our small state to maximize our purchasing power and achieve economies of scale.
This is not an easy path, and we appreciate the support of our Congressional delegation, the Department of Energy and the Obama Administration as we work to achieve this vision.