Tuesday, December 18, 2018

Generation Owners Seek to Block EDC-Pipeline Deals

By William Opalka

Two generation owners on Friday petitioned FERC to block New England states’ efforts to have electric ratepayers underwrite the cost of expanded natural gas pipelines (EL16-93).

Access northeast map - iso-ne ferc pipelinesNextEra Energy and Public Service Enterprise Group said the proposals by state regulators to release natural gas capacity to electric distribution companies “will render ISO-NE markets unjust, unreasonable and unduly discriminatory, and result in manipulation of the ISO-NE market.”

The generators asked FERC to rule by Aug. 23 and order ISO-NE to draft a “prophylactic tariff fix” within 90 days. They also seek a technical conference and “final” FERC order by the end of January 2017, before the next Forward Capacity Auction in February.

“State regulators in Massachusetts, New Hampshire, Connecticut and Rhode Island are on the verge of implementing a scheme expressly intended to artificially suppress prices in wholesale energy markets in New England,” the companies wrote.

“Having no use for the pipeline capacity, the EDCs would release the capacity at below-market rates — first to gas-fired generators … and then whatever is left will be released to the marketplace,” the complaint continued. “This transportation subsidy would artificially flood ISO-NE markets with gas, thereby unreasonably suppressing gas prices and wholesale power prices.”

The proposal by the EDCs, endorsed in varying stages in proceedings by state regulators, would allow the distributors to recover from their ratepayers the cost of access to expanded pipelines.

EDCs Eversource Energy and National Grid favored the capacity release proposal at a FERC technical conference held last month. (See Utilities Seek OK for Gas Releases to Generators at Technical Conference.) The two are partners in the proposed Access Northeast pipeline at the center of the dispute. It would bring shale gas from the Marcellus region of Pennsylvania into New York and New England.

The Massachusetts Department of Public Utilities, which is the furthest along among the regulators, has ruled such a contract is legal under state law. It is considering a proposal for a 20-year gas supply contract that could be approved as early as October. (See More Pipelines for New England: ‘Gold-plating’ or Necessity?)

Massachusetts Attorney General Maura Healey has supported a lawsuit filed by ENGIE and the Conservation Law Foundation that challenged the legality of such contracts. A ruling by the state’s Supreme Judicial Court is expected soon.

Another proposed pipeline that could have benefited from ratepayer subsidies, Kinder Morgan’s Northeast Energy Direct, was scuttled earlier this year, in part because of the lack of commitments for firm capacity customers. (See Kinder Morgan Board Suspends Work on Northeast Energy Direct Pipeline.)

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