Customers Could Pay for More Miles of Massachusetts Pipeline
October 8, 2015
While pipeline companies and politicians insist that bringing more natural gas to New England will lower energy prices, Massachusetts is considering a plan backed by Gov. Charlie Baker that would put the cost for that gas on electricity customers.
The Massachusetts Department of Public Utilities (DPU) endorsed the concept that allows electric companies to enter into natural gas contracts. Pipeline companies, of course, were pleased. In an Oct. 2 press release, Kinder Morgan Inc., owner of the Tennessee Gas Pipeline Co.’s proposed Northeast Energy Direct pipeline, called the ruling “an important step in ensuring that electric generators have reliable access to the fuel needed to generate electricity within the [New England] transmission grid.”
Gas contracts help companies like Kinder Morgan fund pipelines and other infrastructure projects. The pipeline giant promises that the $3.3 billion project will save customers hundreds of dollars annually on their energy bills.
But environmental groups are crying foul. The Boston-based Conservation Law Foundation (CLF) called the decision “outrageous, unprecedented and illegal.”
“It’s clearly intended to enable new pipelines to be built on the backs of electric customers,” said Caitlin Peale Sloan, CLF staff attorney.
Peale Sloan is dismayed that the DPU didn’t allow public hearings on the proposal. What makes the concept risky, she said, is that the ruling allows electric companies to manage price swings by passing the costs on to electric customers, even those who don’t heat with natural gas.
“The [utilities] are speculating in the gas market without the risk,” she said.
Attorney General Maura Healey opposed the idea and has been cautious of Baker’s natural gas expansion ambitions. Healey has requested that more state and regional solutions, such as renewable energy and energy efficiency, be given further scrutiny to help reduce natural-gas price spikes. Pipeline supply shortages typically last a few weeks each winter, Healey said, therefore new pipelines and infrastructure is inefficient if it’s not used for most of the year.
“Reducing winter demand for pipeline gas through a variety of methods may turn out to be far more economic than obligating Massachusetts ratepayers to pay for long-term contracts for firm transportation on a new pipeline and/or additional expanded pipelines,” Healey said in submitted testimony.
Houston-based Spectra Energy has three natural pipeline projects in the works in southern New England. The company favored the DPU decision, saying consumers stand to lose $1 billion in natural gas each winter without the added capacity.
“The region would continue to roll the dice on electric reliability if the natural gas-fired generation fleet upon which [New England] relies continues to itself spin the wheel hoping that natural gas pipeline capacity will be available at the plants needed on any given day,” according to the Texas company.
The regional energy approach that all New England governors are endorsing received a procedural approval in Rhode Island. A recent ruling by the Rhode Island Public Utilities Commission (PUC) allows power companies in Rhode Island, such as National Grid, to partner with utilities in Massachusetts and Connecticut to contract for hydropower and other renewable-generated electricity from across the region and Canada.
Environmental groups were skeptical of the 2014 legislation that enabled the multi-state partnerships because of fears that it might slow local renewable energy development. Hydropower from state-owned Hydro Quebec was singled out for possibly requiring new and potentially environmentally damaging power lines and infrastructure and for bringing in cheap electricity that may undercut wind and solar power.
The CLF was one of the most vocal opponents of the 2014 Affordable Clean Energy Security Act (ACES) but didn’t oppose the PUC decision. CLF senior attorney Jerry Elmer said the PUC was only complying with a mandate from the General Assembly.
However, the legal advocacy group plans to scrutinize the regional renewable energy proposals that may go before the PUC. “We didn’t like the law but that wasn’t the question before the PUC in this docket,” Elmer said.
The Rhode Island Office of Energy Resources supported ACES and the PUC decision, saying regional renewable energy proposals will offset winter natural-gas fuel shortages. The state used 5.4 million gallons of fuel oil during the last two winters to make up for the lack of natural gas, according to the agency.
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ecoRI is doing a great job covering this and related energy issues. However, Massachusetts regulators have not given a green light to charging electricity ratepayers for the gas pipeline. The DPU has merely said they have the authority to do so. The process still has a long way to go. Advocates for consumers and the environment need to stay engaged throughout.