What is the proposed “pipeline tax” on our electric bills, and why is there a bipartisan effort to ban it?
The so-called “pipeline tax” is a scheme under which consumers across New England would be charged on their electric bills to finance construction of new gas pipelines – as well as above-ground gas infrastructure, such as the stadium-sized liquefied natural gas facility proposed for the South Coast town of Acushnet and the industrial compressor station proposed for a densely populated area of Weymouth.
Massachusetts electric ratepayers have never funded gas pipelines before. The legality of the scheme is questioned by parties ranging from the Massachusetts Attorney General to the New England Power Generators Association, and a challenge to the approach is pending before the Supreme Judicial Court.
The specific pipeline project currently on the table is called Access Northeast, proposed by Spectra Energy, National Grid, and Eversource. The scheme could work out well for the Eversource and National Grid corporate families because they would profit from the construction and operation of the pipeline, while their electric ratepayers would take on the costs of the project and the risks associated with the fluctuating price of natural gas and the general volatility of the gas industry.
In other words, real families struggling with their monthly bills would be saddled with the costs and risks instead of the shareholders of the energy companies.
In addition to this unfair funding scheme, there are real environmental, safety, and community concerns. The mayor of Weymouth, Robert Hedlund, recently turned down $47 million that Spectra Energy offered the town in an attempt to end official resistance to the proposed compressor station. The antiquated federal Natural Gas Act takes away the right of municipalities and private property owners to simply say “no” to the buildout of fossil fuel infrastructure on their land and in their communities. But the states retain the right to decide whether ratepayers will be forced to fund it.
This comes down to a fundamental policy decision about how Massachusetts ratepayers should be investing our energy dollars over the coming decades. Our energy efficiency programs help keep Massachusetts electric bills down – while rates run high, the average bills paid by Massachusetts homeowners are actually lower than in most states because, on average, we waste less energy. And investment in renewables means investing in energy sources that do not have an ongoing fuel cost, which is beneficial to consumers.
A study commissioned by Attorney General Maura Healey’s office last year confirmed that there are cleaner and cheaper ways to meet our electrical reliability needs than building out new gas infrastructure. Kinder Morgan recently withdrew its Northeast Energy Direct pipeline proposal primarily because there was not sufficient market demand for its proposed pipeline.
Lost in the clamor about a “need” for more pipelines are a few salient facts:
- Existing gas infrastructure meets our current needs;
- Electrical demand in New England continues to decline;
- The wholesale electric price spikes of 2013-14 have essentially been resolved by the market; and
- The clean energy economy in Massachusetts (including the renewable and energy efficiency sectors) includes 100,000 jobs and is among our fastest growing job sectors, while natural gas, and much of the labor to create the infrastructure, is brought in from elsewhere.
A bipartisan effort in the House of Representatives, led by House Ways and Means Vice Chair Stephen Kulik and House Minority Leader Brad Jones (joined by 95 other members of the House), succeeded in keeping the “pipeline tax” out of the House version of the energy bill. The Senate voted 39-0 to explicitly prohibit a “pipeline tax” on consumers’ electric bills.
The legislative session ends at the end of this month. Citizens across the Commonwealth would like to see an explicit prohibition of the “pipeline tax” in the final bill.
There are smarter ways to invest in our economy and continue to develop more cost-effective energy resources here in Massachusetts than building out interstate fossil fuel infrastructure and putting consumers, landowners, and communities at unnecessary risk.
Kathryn R. Eiseman is the director of the Massachusetts PipeLine Awareness Network and the president of the Pipe Line Awareness Network for the Northeast.
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Excellent article! The pipeline tax is a pure outrage. In NH we’re paying for the coal plant scrubber that doubled in cost to build and will soon be retired. Why, oh why, would we give them another crack at burying us in stranded costs?
I wondered if the construction costs for fracked gas pipelines increased like the costs for building nuclear power plants so I looked it up. Next door in Vermont a pipeline financed by ratepayers ballooned in costs from $64.4 million to $165.6 million. That’s according to the Vermont Business Magazine article, “Addison gas pipeline cost increases 7.8 percent to $165.6M,” dated 6/21/2016. The new cost estimate is more than $100 million above the original estimate and double the Vermont Gas estimate of $86 million when the project received its certificate of public good in 2013. Vermont Gas Systems repeatedly assured the public the pipeline would come in “on time and on budget” but the cost overruns keep on coming. Where’s the incentive to contain costs when ratepayers are forced to finance the pipeline’s cost?
Speaking of ballooning construction costs, when the Seabrook Nuclear Power Plant’s costs increased beyond the utility’s ability to finance them the state legislature…whose members receive a $100 annual salary with no pension benefits and no health insurance… passed a bill banning construction work in progress (CWIP) charges on ratepayers’ electric bills and it was signed into law by the governor. What’s Massachusetts state legislators doing to protect ratepayers interests? About 100 state representatives signed a letter to keep the “pipeline tax” out of the House version of the energy bill while the Senate voted 39-0 to explicitly prohibit a “pipeline tax” on consumers’ electric bills…so nothing…absolutely nothing.
We don’t want it. We don’t need it. New pipelines should go away. We need to reduce dependence on the gas we already use. We can do it! https://climatecrocks.com/2016/07/14/intermittent-nuclear-plant-back-on-line/
The pipeline is inevitable. State and regional governments have mandates for renewable energy (intermittent and variable power from wind and solar) that have set aside 25%, with a promise of more to come, of the electricity market for them exclusively. To get that much energy from wind and solar, all conventional power plants on the grid have to reduce their participation and run with flexibility to balance the variability of wind and solar. That outlook ruins the economics of inflexible baseload power, which is why coal and nuclear power plants are forced into early retirement.
The most flexible power is generated by inefficient natural gas power plants. As a result, coal and nuclear must be replaced with natural gas. As long as Beacon Hill insists on pursuing the path to a clean energy future at any cost, the need for more natural gas is unavoidable.
Pipeline executives are smart enough to know all this. They know that the state and region has put themselves over a barrel, and that is why they are demanding that ratepayers fund the new pipelines. They know that sooner or later we will need to exceed to their demands or live in the dark.
The irony is that dirty natural gas combined with variable wind and solar power avoids little to no carbon.
So, the path to a clean energy future is doomed to failure!
Our choices are making gas inevitable – its not that we need it. We’re closing clean nuclear plants that have been relicensed for another 20 years, to make room for gas, (mostly because the gas industry found product and asked our regulators to do so). Our leaders and regulators have let us down by accepting a gas industry narrative that gas is clean. Gas emits Greenhouse Gases so it is not contributing to clean energy. If we allow our fleet of nuclear plants to be closed, we will not be able to stop gas – and the gas industry knows it. Our reliable base load is being turned off because clean power still lacks the incentive to make it viable when gas is cheap. Oil and gas still enjoy subsidies and incentives and they are exempt from clean air and water standards so their cost is externalized and the playing field is not level. But the only way to prevent wild swings in market pricing is to continue to emphasize clean power sources.
I realize very few people know much about nuclear power. Or worse, they know what they know about nuclear power and its negative. I am an environmentalist who believes that people and places should be protected from poor policy. Its poor policy to close plants that are solving the problem of emissions especially when the result will be to increase market share for gas. We have very little discussion about the positive contribution of our nuclear fleet over the past 5 decades of reliable electric energy in New England. Being unaware of nuclear’s contribution is the fastest way to lose its benefits. And when those benefits go, we will not see them again any time soon.
As for flexibility: molten salt reactors can handle load following (and can be designed to run on spent fuel) – so it is not true that gas provides us with features that clean energy sources cannot provide. It about the choices we make today.
More gas is more emissions. More gas is more price volatility. More gas is less clean energy – because we’re going to lose clean power sources as long as we choose to support this pipe dream from the gas industry that they are doing anything but tiptoeing around their inevitable extinction.