Customers Pull Contracts for Spectra Pipeline Effort
August 23 2016 - 10:40PM
Dow Jones News
A pipeline expansion that would bring more natural gas to New
England faces a setback after losing its major customers in
Massachusetts, following an unfavorable ruling by the state's
Supreme Judicial Court.
Utilities National Grid PLC and Eversource Energy withdrew
petitions they had filed with the Massachusetts Department of
Public Utilities for 20-year agreements to take gas from the
Algonquin Gas Transmission system. The pipeline system, owned by
Spectra Energy Corp., is set to expand if the company can secure
more customers.
The moves came after the Supreme Judicial Court of Massachusetts
last week blocked a plan that would have allowed the electric
utilities to pass along the costs of signing up to the pipeline to
consumers.
Eversource said in a statement that it withdrew its contract
petition in light of the court's ruling.
"This does not affect our commitment to the project," the
company said.
Spectra said in a statement Tuesday that its expansion project
is still moving forward, and that National Grid and Eversource are
still co-developers. The company could find other customers for the
capacity, in Massachusetts or in other states.
"We have put the court's decision behind us," Spectra said. "We
are confident that, ultimately, the interests of New England's
consumers will prevail with desperately needed gas supply made
available by Access Northeast."
Proponents of the plan argued that a lack of pipelines in New
England has driven electricity costs up, especially during cold
winter months when gas is also being used for home heating, and
that new pipelines would save customers money.
While New England sits within driving distance of mammoth
natural gas shale formations, a lack of pipelines has kept output
from nearby states from reaching the region.
Spectra, National Grid and Eversource had hoped to change that
by expanding Spectra's Algonquin system in an effort to bring up to
1 billion cubic feet of gas to New England every day starting in
2018.
Finding a way to pay for construction has been a roadblock:
pipeline companies want to know they'll have customers before they
spend billions of dollars putting pipes in the ground. But power
companies buy gas to fuel generators on a need-to-have it basis,
and utilities are restricted in the extent to which they can pass
on higher costs to rate payers.
In an order last year, the Massachusetts Department of Public
Utilities determined that it could approve long term contracts
between electric distribution utilities and pipelines and allow the
utilities to pass along the costs to consumers.
The Conservation Law Foundation sued. Opponents described the
deal as a "pipeline tax" that would shift the burden of funding
pipeline construction onto consumers.
"The Massachusetts Supreme Judicial Court made it clear last
week that electric companies can't gamble on pipelines with the
hard-earned money of businesses and families across our state. That
is exactly what these contracts would have done," said Josh Block,
a spokesman for the Conservation Law Foundation.
Write to Alison Sider at alison.sider@wsj.com
(END) Dow Jones Newswires
August 23, 2016 22:25 ET (02:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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