THE STATE’S TWO MAJOR ELECTRIC UTILITIES are asking state regulators to approve contracts they have negotiated on behalf of their customers to purchase access to proposed natural gas pipelines.
National Grid is seeking approval from the state Department of Public Utilities to enter into separate, 20-year supply contracts with the proposed Kinder Morgan and Access Northeast pipelines. Eversource Energy, meanwhile, wants permission to enter into a lone, 20-year supply contract with the proposed Access Northeast pipeline. Both utilities would purchase pipeline capacity and then resell it to power generators in the region, using the proceeds to offset the cost outlays.
The two utilities say the contracts – and others yet to be negotiated in other states – would help bring more natural gas to the region and drive down electricity prices. National Grid says the Kinder Morgan and Access Northeast pipelines would save the region’s electric customers an estimated $1.2 billion a year, with 46 percent of the cost savings flowing to Massachusetts customers. Eversource estimated the region-wide savings from the Access Northeast project would range between $900 million and $1.4 billion a year, with 45 percent of the benefits flowing to Massachusetts customers.
James Daly, vice president for energy supply at Eversource, said in testimony filed with the DPU that the benefits of the Access Northeast pipeline contract outweigh costs by a 3-1 margin.
Despite the rosy predictions, the contracts are stirring opposition. Some argue the unusual approach of having electricity ratepayers foot the bill for natural gas pipeline construction is an attempt to shift the risks associated with power generation from power plant operators to utility customers. Environmental groups and Attorney General Maura Healey also say the Baker administration and the two utilities should be exploring other ways to solve the region’s temporary gas shortages that do not involve greater, long-term reliance on fossil fuels.
The Baker administration in early April last year filed a petition with the DPU urging the agency to investigate how new natural gas capacity could be added to the New England market. After taking testimony, the DPU ruled it had the authority to approve contracts between electric utilities and pipeline operators. Eversource and National Grid said in filings that they jointly issued a request for proposals on October 23 and received responses from six pipeline operators and two providers of liquefied natural gas.
Both National Grid and Eversource have an ownership stake in the Access Northeast pipeline project along with Spectra Energy. Eversource said in a footnote to its filing that it “utilized a rigorous process to ensure that … contract negotiations were conducted on a transparent, arms-length basis.”
Spectra Energy is represented by the lobbying firm ML Strategies, which has close ties to the Baker administration.
What was the point of deregulating Massachusetts electric utilities almost twenty years ago if they’re seeking approval to enter into 20-year gas supply contracts to purchase pipeline capacity on the proposed Kinder Morgan and Access Northeast pipelines only to resell the natural gas to power generators in the region?
Fun fact, the Massachusetts Department of Public Utilities approved 20 year contracts not too long ago for Berkshire Gas, National Grid and Columbia Gas to buy capacity on the proposed Kinder Morgan pipeline. The DPU excluded two groups of opponents from the proceedings. What’s interesting about National Grid’s and Eversource’s proposal is to re-sell the gas to power generators. The Chairman of the Massachusetts Department of Public Utilities was the founding president of the New England Power Generators Association, the largest trade association in the region representing electric power generators. I wonder how many opponents will be excluded from these proceedings?