PUC: Ratepayers would pay up to $75M for expanded gas pipeline
The Maine Public Utilities Commission on Tuesday unanimously approved a plan in which electricity customers would pay up to $75 million annually to expand natural gas pipeline capacity in New England.
The action is seen as a way to lower Maine’s electricity costs by ensuring more reliable supply of natural gas, which generates half of New England’s electricity.
The PUC’s approval, however, comes with the condition that Massachusetts, Connecticut, Rhode Island and New Hampshire adopt similar plans for electricity ratepayers to underwrite the cost of expanding the region’s natural gas capacity.
PUC Chairman Mark Vannoy told the Portland Press Herald that it could take as long as 18 months for the other New England states to follow suit.
“We’re going to be dependent on the other states and their regulatory processes,” Vannoy told the newspaper.
The Bangor Daily News reported that commissioners were split on which natural gas pipeline project to support.
The BDN reported that Commissioners Bruce Williamson and Vannoy supported negotiating with Texas-based Spectra Energy, whose Access Northeast project includes the expansion of approximately 125 miles of the existing Algonquin pipeline system that currently connects directly to 60% of the region’s gas-fired electric generation along its existing corridors. Commissioner Carlisle McLean dissented, advocating instead for the Portland Natural Gas Transmission System’s Continent to Coast expansion project, which would connect Atlantic Canada natural gas supplies with the Maritimes & Northeast Pipeline in Westbrook.
The Maine Public Broadcasting Network reported that the three commissioners, however, agreed both projects met the criteria of the 2013 Energy Cost Reduction Act, the measure adopted by the Legislature in an effort to reduce both electricity and natural gas heating costs by increasing the region’s natural gas pipeline capacity and thereby keep prices from spiking during peak demand in the winter months. That agreement is significant because it effectively keeps the PUC’s options open if a legal challenge of Spectra’s project before the Massachusetts Supreme Court, as well as opposition filed with the Federal Energy Regulatory Commission, prove successful.
Ruling praised and panned
Anthony Buxton, partner and chairman of the energy and utilities practice at Preti Flaherty, said in a written statement provided to Mainebiz that Tuesday’s PUC decision “is historic for Maine and New England and a tremendous step forward for New England’s electricity consumers.”
“The significance of this decision is that the Maine PUC, after more than two years of consideration, voted to authorize its electric utilities to buy natural gas pipeline capacity so that electric rates could go down,” he wrote.
“Natural gas is coming out of the ground 400 miles from Maine in northern Pennsylvania equivalent on a BTU basis to gasoline in your car at 10 to 20 cents a gallon,” he wrote. “With the exception of New England, all of the United States has access to that gas. New England does not have access exactly when we need it most during the cold of winter.”
In a June 22 written filing with PUC, Buxton outlined the high stakes of the “Energy Cost Reduction Contract,” or ECRC, to some of Maine’s largest employers who belong to the Industrial Energy Consumer Group. Characterizing the proposed contract as “conservative” in its analysis of how the benefits would outweigh costs, IECG argued that committing $75 million per year or less of pipeline capacity costs would reduce existing energy costs by about $200 million per year.
“Most important, however, is the economic effect of eliminating the risk to businesses, including manufacturers, that electricity prices will spike uncontrollably in New England,” IECG wrote in its June 22 filing. “This risk is the reality that has helped shut down five Maine paper mills in three years. When stratospheric prices have occurred and the cause has not been remediated, businesses cannot predict their energy costs. Their estimates for production costs inflate to account for this risk. Capital to be more efficient and to innovate goes elsewhere, where the risks are more limited and predictable. Mills close. Hundreds of Maine workers lose their jobs. The social fabric of whole communities is disrupted with devastating human consequences”
But Ben Tettlebaum, a lawyer with the Conservation Law Foundation, strongly disagreed with the PUC’s decision.
“Today, the fossil fuel industry hoodwinked the PUC into gambling $1 billion of Mainers’ hard-earned money on a massive new gas pipeline,” he said in a written statement sent to Mainebiz. “From Day 1, this LePage-appointed commission has been desperate to find any way to justify overwhelming concessions for ‘Big Gas,’ no matter the cost. From helping kill the solar bill, to reopening wind contracts, to squashing energy efficiency programs and more, these commissioners have exhibited a troubling pattern of failed leadership, regressive policies and unlawful behavior, and today’s decision is no exception.”
CLF is one of the parties challenging Massachusetts Department of Public Utilities’ right to require electricity ratepayers to help finance multi-million-dollar investments in new natural gas pipelines and other infrastructure through surcharges on our electricity bills. That case is now before the Massachusetts Supreme Judicial Court.
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