On November 20, just two days after Massachusetts Attorney General, Maura Healey, sent the Federal Energy Regulatory Commission (FERC) a report concluding that there is no need for a natural gas pipeline in New England for at least the next 15 years, Kinder-Morgan subsidiary, Tennessee Gas Pipeline Company, filed its application with FERC for a Certificate of Public Convenience and Necessity to construct the 400-mile Northeast Energy Direct (NED) pipeline.
The AG’s report squarely refutes the need for natural gas infrastructure. Titled “Power System Reliability in New England -– Meeting Electric Resource Needs in an Era of Growing Dependence on Natural Gas,” the report was developed by the Analysis Group, Inc. to determine whether the region is facing energy challenges through 2030, and, if so, the most cost-effective and clean ways to meet them.
In a November 18 press release, AG Healey said, “As we make long-term decisions about our energy future, it’s imperative we have the facts. This study demonstrates that we do not need increased gas capacity to meet electric reliability needs, and that electric ratepayers shouldn’t foot the bill for additional pipelines.”
“The study demonstrates that a much more cost-effective solution is to embrace energy efficiency and demand response programs that protect ratepayers and significantly reduce greenhouse gas emissions,” the AG said.
Massachusetts, Connecticut, Maine and New Hampshire have been evaluating whether electric distribution companies, usually called utilities, should be allowed to enter into long-term capacity contracts for natural gas that are funded directly by electric ratepayers through a “cost recovery” amount on their monthly electric bills. The New England States Committee on Electricity (NESCOE) also reviewed this issue and supported ratepayer financing of a pipeline.
A scheme of utility contracting/ratepayer financing for a pipeline is a sharp departure from past practices and many believe it conflicts with existing laws. For example, the Massachusetts Electric Utility Restructuring Act, which mandates competition in the energy industry, arguably allows only energy generators, rather than electric utilities, to enter into and finance fuel-supply contracts.
Kinder-Morgan’s NED project, however, appears to be counting on the New England states’ utilities to be market participants contracting for gas.
The company’s press release following the FERC filing says, “TGP is confident it will secure additional contractual commitments as a result of the initiatives underway with five of the six states in New England to facilitate the ability of electric distribution companies to contract for pipeline capacity and recover the costs in their rates.”
In a press availability call held in conjunction with the AG’s report, George Bachrach, president of the Environmental League of Massachusetts, said that, “the Attorney General has a fiduciary obligation to the ratepayers of Massachusetts, and sought the advice of the Analysis Group.”
Peter Shattuck, the Acadia Center’s Massachusetts Director, said in the call that there were several “key takeaways” from the report. First, he said, “We’re in a different place from two years ago – the winter of 2013-2014 – because of market reforms and clean energy alternatives.” ISO-NE, administrator of the regional power grid, has put “pay for performance” plans into effect for electric generators. “There are now punishments and incentives for performance,” Mr. Shattuck said.
“Facts on the ground back up the AG report,” he also stated. “Specifically, improved planning and market reforms have resulted in lower electricity prices – Eversource’s winter rate is 27 percent than last year.”
A key finding of the AG’s report is that, under the base case analysis of New England’s existing market structure, power system reliability can and will be maintained over time, with or without additional new interstate natural gas pipeline capacity. According to the report, “this result “reflects both the declining long-term forecast [by ISO-NE] of peak winter demand and the increasing availability of new non-gas resources, including dual-fuel capable units that can generate on oil during peak winter periods.”
The report also analyzed what would happen if the region used significantly more natural gas over the same time period than the amounts assumed in the base case. The Analysis Group found that, if this “stressed” electricity situation were to happen, by 2024, there would be a deficiency in natural gas supply amounting to only 26 hours spread over nine days, or two full days and two hours. This deficiency could be addressed by several “solution sets,” including:
- No state action, with electricity markets meeting the deficiency through the addition of dual-fuel capability and/or Liquid Natural Gas contracts
- Additional natural gas pipeline capacity
- Energy Efficiency (EE), Demand Response (DR), and Renewable Energy (RE) investments
- EE, DR, and RE investments combined with imports of hydroelectricity on existing transmission lines
The report concludes that, in the hypothetical “stressed” scenario, only the EE/DR/RE solution and the EE/DR/RE combined with imports of hydroelectricity on existing transmission lines can insure grid reliability while, at the same time, reducing total ratepayer costs and reducing greenhouse gas emissions as required by the Massachusetts Global Warming Solutions Act.
Increases in natural gas burning plus pipeline leakage of methane, a greenhouse gas 28 times more potent than CO2, would result in significant increases in greenhouse gas emissions, according to the report. – making it virtually impossible for the state to meet the legally mandated goal of reducing total greenhouse gas emissions by 25 percent below 1990 levels by 2020 and 80 percent below 1990 levels by 2050.
Meanwhile, three regional groups of municipal officials have sent a letter dated November 19 to FERC Chairman, Norman Bay, requesting consolidated review of all proposals for natural gas pipelines in New England, including: NED; the Kinder-Morgan/TPC Connecticut Expansion; Spectra’s Atlantic Bridge, Spectra’s Access Northeast, Portland Natural Gas Transmission System Continent to Coast projects, and existing and planned LNG infrastructure.
The groups, the Northeast Municipal Gas Pipeline Coalition, Municipal Coalition Against the Pipeline, and New Hampshire Municipal Pipeline Coalition, are “groups of municipal officials who meet to review and assess the potential impacts of the Tennessee Gas/Kinder Morgan’s NED project.” Their press release states, “the three coalitions represent thirty-eight municipalities…and more than 375,000 people in Massachusetts and New Hampshire.”
A similar letter was also sent to members of Congress representing Massachusetts and New Hampshire, seeking support in convincing FERC to carry out one consolidated pipeline review.
The letter to FERC Chairman Bay seeks to consolidate review of the pipeline projects in order that FERC can decide which projects, if any, may warrant the eminent domain authority associated with the Certificate of Public Convenience and Necessity.
“Cities and towns cannot be forced to host a pipeline solely because an energy company would like to build one,” the letter states.
The Massachusetts town signatories are Andover, Ashby, Ashfield, Conway, Deerfield, Dracut, Dunstable, Gill, Groton, Littleton, Lynnfield, Montague, New Salem, North Reading, Northfield, Orange, Peabody, Pepperell, Tewksbury, Townsend, Wendell, and Wilmington. In New Hampshire, the towns represented are Amherst, Brookline, Fitzwilliam, Greenville, Litchfield, Mason, Merrimack, Milford, New Ipswich, Pelham, Richmond, Rindge, Temple, Troy, and Winchester.
FERC’s “Statement of Policy” issued on September 15, 1999 sets forth standards for FERC to follow in deciding whether to grant a Certificate of Convenience and Necessity to a pipeline company applicant.
The Commission must consider “the possibility of overbuilding, the avoidance of unnecessary disruption of the environment, and the unneeded exercise of eminent domain.
The Massachusetts and New Hampshire towns state, “the proposed NED pipeline would require new pipeline rights of way throughout western and northern Massachusetts and southern New Hampshire and is expected to involve an unprecedented number of eminent domain proceedings.”
Kathryn R. Eiseman, Director of Massachusetts PipeLine Awareness Network, said about the AG’s report, “Our governmental officials at all levels need to show the courage that Maura Healey has and help the Northeast stand up to this behemoth.”
