Sunday, June 24, 2018

More Pipelines for New England: ‘Gold-plating’ or Necessity?

By William Opalka

NORTH FALMOUTH, Mass. — It all comes back to pipelines.

Discussions about New England’s energy future invariably end up focused on the outsized role natural gas plays in the region’s power mix, and how that aligns or runs counter to various policy goals. Also debated is who should pay for pipeline build-outs.

A discussion at the 23rd Annual New England Energy Conference on Wednesday, presented by the Northeast Energy and Commerce Association and the Connecticut Power and Energy Society, was no different.

Most speakers agreed that some pipeline capacity is needed (though environmental groups, energy efficiency advocates and LNG suppliers dispute that premise).

The discussion came three weeks after the suspension of the Northeast Energy Direct pipeline and amid ongoing controversy over whether regulators should allow electric ratepayer support for the proposed Access Northeast project. (See Kinder Morgan Board Suspends Work on Northeast Energy Direct Pipeline.)

Dan Dolan - New England Energy Conference - Pipelines

Dolan © RTO Insider

Dan Dolan, president of the New England Power Generators Association, said new generation clearing in recent Forward Capacity Auctions show the market has responded to the region’s needs. Smaller gas infrastructure projects shows that contractual commitments from distribution customers are increasing supply without electric ratepayer support, he added.

“We look through any public policy proposal through the prism of subsidies. Given that rubric, no, we don’t support” Access Northeast, Dolan said. “As we see contracts, that [demonstrates what] should be built, but I don’t think we need to gold-plate the system.”

Serna © RTO Insider - New England Energy Conference - Pipelines

Serna © RTO Insider

Not so, according to Camilo Serna, vice president of strategic planning and policy for Eversource Energy, who disputed the subsidy characterization. “The alternative is that the [electric] customers will be paying more in the winter,” he said.

Eversource, which is a partner in Access Northeast, predicts consumer electricity costs will drop by $1 billion to $2 billion annually with increased natural gas supply.

“The market hasn’t been able to deliver that infrastructure. The generators don’t have the incentive to commit [to pipeline contracts]. I don’t think it’s gold-plating if you see that we really haven’t made any gas infrastructure investments for 20 years,” Serna said.

Rebecca Tepper - New England Energy Conference - Pipelines

Tepper © RTO Insider

Whether the investment falls on pipeline developers or electric ratepayers will be resolved for Massachusetts by the state’s Supreme Judicial Court. Arguments were held recently on an order by the state’s Department of Public Utilities allowing pipeline cost recovery. The order was challenged by Massachusetts Attorney General Maura Healey.

“We don’t think it’s legal. It’s not consistent with the [state] restructuring act, which was to take ratepayers out of the business of investing in large infrastructure projects and put the risk on private investors,” said Rebecca Tepper, deputy chief of the attorney general’s energy and environmental bureau.

Anne George - New England Energy Conference - Pipelines

George © RTO Insider

“We get very nervous about making big infrastructure decisions on the backs of ratepayers based on something that happened two winters ago when the circumstances today are entirely different,” she added.

Although ISO-NE is project-neutral, it says more pipeline capacity is necessary for stable and affordable electricity, as nearly half of New England’s supply comes from gas-fired generation, a share that is expected to increase.

“We still see natural gas as one of our primary challenges,” said Anne George, vice president, external affairs and communications for ISO-NE. “We see demand for it to continue to grow and we have not built any pipeline infrastructure to support that growth.”

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