Eversource facing big Beacon Hill challenge
Utility seeks to overcome resistance to gas pipeline financing plan
EVERSOURCE ENERGY FACES a monumental lobbying challenge this year – convincing Beacon Hill lawmakers to pass legislation allowing electric ratepayers to finance the construction of a natural gas pipeline into the region.
The challenge is immense because the Supreme Judicial Court ruled in August that the novel financing scheme is not allowed under existing Massachusetts law, which means the Legislature must approve legislation making it legal. Yet the entire Senate – Democrats and Republicans alike – voted in June in favor of an amendment prohibiting electric ratepayers from financing a natural gas pipeline. The House never took up the Senate amendment, but many House members hold a similar view.
Eversource has been reviewing a number of options for financing the pipeline in the wake of the Supreme Judicial Court’s decision. But in a conference call with financial analysts on Wednesday, utility officials said they have concluded that the best and perhaps only way to get a pipeline built is to stick with the original plan – having the region’s electric ratepayers pay for it.
Eversource wants to build the Access Northeast Pipeline along with its partners Spectra Energy and National Grid. Four of the New England states are on board with Access Northeast’s novel financing plan, but the project faces big hurdles in New Hampshire and Massachusetts.
In Massachusetts, Eversource officials said they haven’t filed any legislation yet. Instead, they are doing outreach work to lawmakers and business leaders on the need for a new pipeline. Company officials say a new pipeline would bring cheap gas into the region and help hold down prices, particularly in winter months when the region has difficulty meeting demand for gas to both heat homes and to run power plants.
Lee Olivier, Eversource’s executive vice president, said on Wednesday the winter bottlenecks for gas drive up the region’s electricity bill by about $1 billion.
Olivier indicated a key part of Eversource’s education strategy will be a report due out this summer from the operator of the regional power grid, ISO-New England. The grid operator has called repeatedly for the construction of new pipeline capacity, but Olivier indicated the new report will spell out in detail the cost of not moving ahead. “I don’t see how they can maintain reliability without bringing gas supply into the region,” he said.
Olivier said the report will make the case that the status quo is not acceptable, and that carbon emissions will increase without new pipeline capacity. When gas-fired power plants don’t run, typically other plants running on coal and oil have to fill the gap.
Marcia Blomberg, a spokeswoman for ISO-New England, said in an email that the study will update a report done in 2014 and examine “the power system’s ability to reliably serve demand over an extended cold spell when the region’s fuel infrastructure is constrained.”
There had been speculation last year that Eversource could possibly finance the Access Northeast pipeline the traditional way, with financing provided by customers of local gas utilities. But Olivier ruled that out on Wednesday, saying “that will not work.”He also said the pipeline could not be built without financial support from Massachusetts. The state accounts for 42 percent of New England’s electricity consumption and the other five New England states would balk at financing a pipeline that would primarily benefit the Bay State.
George Bachrach, president of the Environmental League of Massachusetts and a former state senator, said he didn’t think Eversource could pull it off. “But these are hardball players with a lot of lobbyists,” he said.