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October 7th, 2015:

State Allows Utilities to Charge Mass. Ratepayers for Pipeline Construction

American Energy Coalition - October 7th, 2015

Electric ratepayers in Massachusetts will be on the hook for the cost of new natural gas pipelines even though the additional natural gas capacity might be needed for only a few days each winter, if that.

MassLive.com reported recently that the Massachusetts Department of Public Utilities has ruled that electric distribution companies in the state may sign contracts for natural gas capacity to fuel power generation, and pass the cost on to consumers. "The order hands a victory to advocates of natural gas pipeline expansion in the state, and disappointment to environmentalists battling Northeast Energy Direct, the interstate line proposed by Kinder Morgan subsidiary Tennessee Gas Pipeline Co.", the article states.

GDF Suez, which owns a liquefied natural gas (LNG) terminal in Everett, had opposed the proposed contracts, arguing that electrical generation needs can be met with LNG during peak winter months. Also arguing against the contracts were environmental groups such as Pipe Line Awareness Network for the Northeast (PLAN-NE) and the office of Attorney General Maura Healey, which issued a statement on Monday: "The Attorney General's Office is concerned that the Department of Public Utilities' (DPU) order for the first time authorizes electric distribution utilities to enter into long-term capacity agreements to facilitate gas pipeline expansion - and shift the substantial costs and risks of such long-term investment in pipeline infrastructure to electricity ratepayers. "Because of legal concerns with the DPU's proposal and the risk to ratepayers, throughout this proceeding, our office urged the Department to fully and carefully analyze the need for additional gas capacity before moving forward with any proposal that requires customers to bear the risk of a large infrastructure project," said Chloe Gotsis, spokeswoman for the Attorney General's office.

Katy Eiseman, president of PLAN-NE, said. "The entire framing of the DPU proceeding presupposed that additional gas pipeline capacity is necessary." She said regulators instead should inquire of "the best means to align energy supply and energy demand in the region, given 21st century policy goals and realities."

Eisesman said her group believes the Attorney General presented a "compelling case for why a full adjudicatory proceeding should have been conducted, to resolve the numerous questions of fact and law raised by multiple commenters in this proceeding."

Northeast Energy Direct stands to benefit from the order, according to the industry publication Natural Gas Intelligencer. The Federal Energy Regulatory Commission looks at financial viability and market need when it considers whether to grant certificates for interstate pipelines, according to the MassLive.com article. Kinder Morgan will apply for a FERC certificate this fall.

Northeast Energy Direct is not the only pipeline expansion proposed for Massachusetts. Access Northeast would expand an existing line entering eastern Massachusetts from Connecticut and Rhode Island. It is planned by Spectra Energy, Eversource and National Grid. An application will be submitted to FERC by the end of the year, said Eversource spokeswoman Priscilla Ress.

To read the MassLive.com article, click here.

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