THERE SOON MAY be a new charge on your electric bill for natural gas pipeline construction.

The novel idea first surfaced last summer as the six New England states began exploring ways to bring more natural gas into the region, and now a group of companies pushing a pipeline expansion plan are spelling out in greater detail how it might work.

The plan, called Access Northeast, would upgrade existing pipeline facilities to deliver an additional 1 billion cubic feet a day of gas into the region, which would boost supplies by about 25 percent. The $3 billion pipeline project would be financed by a $400 million-a-year gas-supply contract paid for by electricity ratepayers. Officials said the gas would be resold to gas-fired power generators and the revenue from those sales would be used to offset the ratepayer investment.

Access Northeast is a collaboration between pipeline operator Spectra Energy and the region’s two major utilities, Eversource Energy (the old Northeast Utilities, which had as subsidiaries NStar and Western Massachusetts Electric) and National Grid. Officials from all three companies briefed reporters on their project this week.

Lee Olivier, an executive vice president at Eversource, said an expansion of pipeline capacity should lead to an overall reduction in electric bills by eliminating price spikes caused by gas shortages. Olivier cites a new study paid for by his company that suggests savings region-wide during a normal winter would amount to $1 billion. During unusually cold winters, such as the one that occurred last year, savings could run as high as $2.5 billion, he said.

“The payback on this project is very, very quick,” Olivier said.

Backers say the unorthodox pipeline financing approach is needed because of the region’s heavy reliance on gas and the way gas-fired power plants buy their fuel. New England gets about 50 percent of its electricity from gas-fired power plants, and that percentage is likely to grow as coal-fired plants retire. Gas-fired power plants purchase their fuel on the spot market, in contrast with companies that deliver gas to homeowners, which sign long-term contracts for pipeline capacity. During most of the year, spot-market purchases are no problem. But, as the region discovered last winter, when temperatures fell and demand for gas from homeowners rose, there wasn’t enough pipeline capacity to delivery gas for all of the power plants. Gas prices on wholesale markets soared.

“The need for the project is unequivocal,” Olivier said. “This is something that has to get fixed or there will be dire consequences for the region.”

Gov. Charlie Baker, at a New England Council breakfast on Thursday, said he was encouraged by the Access Northeast project. Maine officials are also exploring having electricity ratepayers buy natural gas to ease shortages in that state.

Christopher Courchesne, a senior attorney with the Conservation Law Foundation in New Hampshire, said he likes the Access Northeast idea of expanding an existing pipeline rather than building a new one. He also says the financing scheme is interesting, but he is concerned that ratepayers could be stuck with the bill if the rosy projections about falling electricity prices don’t materialize.

“The billion-dollar question is whether the generators will buy the services,” he said. “They’re asking ratepayers to make a large bet of $400 million a year. If that bet doesn’t pay off, it’s potentially a real problem.”

Courchesne said gas markets this winter appear to be operating differently than they did last year. He said February has been particularly cold, Pilgrim Power Station has been down for much of the month, and the Vermont Yankee and Salem Harbor plants are no longer producing power. On Feb. 2, the region had record gas demand of 4.2 billion cubic feet. Yet despite these almost perfect-storm conditions, wholesale power prices in the region have not spiked and gas shortages have not materialized.

At this time last year, Courchesne said, there had already been 16 days when average wholesale electricity prices were greater than 20 cents a kilowatt hour. So far this year, he said, prices haven’t reached that level for a single day. (Consumers haven’t benefitted from this winter’s lower prices, however. Most buy electricity through their local utilities, which locked in electricity prices for the entire winter in the fall when prices were at record-high levels.)

The Access Northeast financing plan piggybacks on proposals initially developed by governors of the six New England states last summer. Those proposals foundered when Massachusetts dropped out of the coalition. Access Northeast officials say they hope the governors will resume their efforts but, if not, they plan to seek approval for their pipeline financing plan from each state’s public utility commission.

“It’s absolutely not a sure thing, And, yes, it is absolutely unprecedented,” said John Flynn, a senior vice president at National Grid. “This is a problem that is very unique to the region and the solution is equally unique.”

Bruce Mohl oversees the production of content and edits reports, along with carrying out his own reporting with a particular focus on transportation, energy, and climate issues. He previously worked...

4 replies on “Should electric ratepayers pay for gas pipelines?”

  1. “The payback on this project is very, very quick,” says Eversource EVP Olivier. Indeed it is, if ratepayers are picking up $400 million of the financing costs.

    Luckily for us ratepayers, we do not need this new pipeline.
    -Prices are not spiking this winter, even with very low temperatures and several generators offline.
    -The ISO, which runs the regional power grid, over-projects the need for new fossil fuel capacity by ignoring (for example) the phenomenal recent growth in solar power in our state.
    -The state’s electric utilities have not taken the first obvious step to dampen peak demand: incentivize customers to cut their power use during peak hours. Nor, apparently, has our DPU pushed them to do so. Other states are way ahead of us here.
    -Mass Save, the utility-run energy efficiency program, could invest much more in residential, commercial, and industrial retrofits that cost less than new energy — as state law requires it to do.

    Rather than asking the state to approve a new pipeline, Eversource and National Grid would do well to replace the leaky gas distribution pipelines that are wasting the gas they have and blowing past the state’s greenhouse gas target ceilings.

    Mike Prokosch
    Dorchester

  2. Frankly we are surprised you would even ask such a question as your headline states. Has corporate-think become so pervasive in the Commonwealth that we expect to pay them so they can maximize their obscene profits?? We don’t think so!

  3. The supply of electricity was deregulated and ISO-NE was setup to manage competitive markets to ensure the most reliable supply at the lowest cost. The Executive Office of Energy and Environmental Affairs, instituted by the Patrick administration, in an effort to force the renewable energy (RE) agenda and further diversify the fuel supply, has managed to increase the Natural Gas(NG) share from around 15% to more than 50% with RE playing a negligible role. They have managed to switch us away from coal, nuclear, and oil to the cheaper NG while raising rates 37%. Now, we are told that ratepayers need to pay extra for NG expansion in order to reduce rates. It will not happen.
    ISO-NE markets is where NG needs to compete without bias to ensure the lowest cost to the ratepayer. On average there is plenty of NG. The problem is peak demand. If NG generators want to remain competitive, they need to secure their fuel supply to meet their commitment to ISO-NE. The obvious solution is NG storage to support peak demand. If that makes NG less competitive with other resources, so be it. The collaboration of gas suppliers with utilities only serves to monopolize electric generation at the expense of the ratepayer. There is no way to guarantee lower rates without a level competitive field.
    Policymakers need to understand that they have us on a path to more than double electric rates which will drive industry and jobs out of state and out of New England.

  4. Saving energy costs a lot less than natural gas, with or without the pipeline. Long-term contracts for wind and hydro power can produce cheaper power too. On top of those things, we would rather see greater utilization of existing infrastructure, including LNG, demand response programs, and even a bit more low-sulfur oil during times of peak demand – all in the relative short run. If the pipeline is such a sure-fire answer, let companies finance it without a commitment from ratepayers.

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