Ratepayers on the Hook for Fossil Fuel Expansion
August 1, 2016
If National Grid and other electric delivery companies have their way, pipeline expansions, compressor stations, and natural gas projects across southern New England will be paid in part by a new fee, or tariff, on electric bills.
Dubbed the “pipeline tax,” the fee is being considered for the first time in an expedited docket before the Rhode Island Public Utilities Commission (PUC), to be heard Aug. 2. Two members of the three-member board will decide if it’s OK for National Grid to buy 20-year contracts for natural gas that flows through the Algonquin pipeline.
National Grid argues that buying the contracts will lessen natural-gas price spikes, especially in the winter when demand for heating fuel is typically strongest. The contracts also help Spectra Energy, the Houston-based owner of the Algonquin pipeline, fund its Access Northeast buildout, which includes two upgrades to the compressor station in Burrillville, a new compressor station in Rehoboth, Mass., and a liquefied natural gas storage facility in Acushnet, Mass.
Complicating matters is the fact that a division of National Grid is a partner in the Access Northeast project, along with divisions of Spectra and Eversource Energy, an electricity supplier in Massachusetts. Thus, the companies are, in part, buying the contracts from themselves.
Opponents say the pipeline tax is bad for the environment, because it pays for long-term fossil fuel infrastructure at a time when the energy sector should be moving away from carbon-based power.
Since the new tariff applies to all Nation Grid electric customers, it means that ratepayers who don’t heat with natural gas will be paying a fee for a fuel they don’t use.
The justification for the pipeline tax began in 2013, when all six New England governors agreed in principal to allow electric companies to pass the cost for natural gas contracts, as well as the projects themselves, to ratepayers. In 2014, Rhode Island even passed a law, the Affordable Clean Energy Security Act, to give it validity.
Massachusetts, however, didn’t approve the tariff in the Legislature. A bill opposing the pipeline tax passed the Senate but never received a vote in the House before it wrapped up the legislative session July 31. The Massachusetts Department of Public Utilities (DPU), however, ruled that the tariff is justified. Cases before the DPU have been on hold while the state Supreme Judicial Court rules on the validity of the tariff.
Massachusetts Gov. Charlie Baker is considered a proponent of the tariff and the pipeline infrastructure projects. Attorney General Maura Healey opposes the tariff and the pipeline expansion projects.
A survey by the Massachusetts Energy Consumer Alliance shows strong public opposition to funding the pipelines through a tariff.
The public hearing for the Rhode Island tariff will be held at the PUC office in Warwick, 89 Jefferson Blvd., starting at 6 p.m.
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