Pipeline firm makes case for more natural gas

THE COMPANY TRYING TO EXPAND a major natural gas pipeline coming into New England said on Friday that the growing opposition in the Legislature is failing to recognize that more gas is needed to bring down electricity prices, to avoid brownouts and blackouts, and to help develop renewable forms of energy.

Top officials from Access Northeast, a consortium of Spectra Energy, Eversource Energy, and National Grid, made the case for their pipeline expansion in an interview with CommonWealth. Their viewpoint, which was accepted as gospel two years ago when natural gas prices were sky high, is now coming under fire on Beacon Hill.

The politics of natural gas is scrambled, as growing numbers of Republicans and Democrats unite in opposition to new pipelines. The Senate last week voted 39-0 in favor of an amendment that would block Eversource and National Grid from tapping their electric customers to pay for pipeline expansion. A majority of representatives signaled in an April letter to House leaders that they feel the same way.

L.J. Olivier, executive vice president at Eversource Energy,  acknowledged the politics has changed but not the need for new pipeline capacity. “Somewhere along the way they forget to do the math,” he said of the project’s opponents. “For us, we really think it’s a no-brainer.”

During the harsh winter of 2013-2014, the region’s pipeline network couldn’t accommodate both the demand for gas needed to heat homes and gas needed to run power plants. The shortage prompted the price of electricity to skyrocket, which was reflected in customer bills the following winter.  A consensus quickly emerged that additional pipeline capacity was needed to avoid similar shortages in the future and the electricity price spikes that accompanied them during some winter months.

The problem was how to pay for new pipeline capacity. The companies that operate the region’s natural gas-fired power plants  refused to commit to long-term purchase contracts because there was no guarantee they could recoup their money if temperatures failed to plummet and gas supplies remained sufficient.

Policymakers hit on the novel idea of assessing the customers of electric utilities to finance natural gas pipeline expansion. The theory was that the arrangement would benefit electric customers by lowering their bills, increasing the reliability of the power grid, and helping – not hindering – efforts to reduce carbon emissions.

The Access Northeast project is multifaceted, but basically it seeks to replace an existing pipeline that is 26 inches in diameter with a pipe that is 42 inches in diameter. Officials say the project would cost about $3 billion and deliver just under 1 billion cubic feet of natural gas to the region.  The company also wants to build a liquefied natural gas storage facility in Acushnet, which would be filled when gas prices are cheap and tapped during winter months when gas is in high demand. Officials said none of the gas delivered by the pipeline expansion would go for export.

Access Northeast officials say the availability of gas in peak demand periods would prevent electricity prices from rising and save customers money. They estimate a customer using 700 kilowatt hours of electricity a month would pay $2.50 more a month for the purchase of natural gas pipeline capacity but save a total of $7.50 in electricity charges. The net savings would be $5 a month, or $60 a year.

The officials disputed the narrative of opponents that pipelines would lock the region into increased carbon emissions for years to come. “It’s just the opposite,” Olivier said, noting that additional gas is needed to avoid burning oil and coal during high-demand periods and to serve as a backstop for the grid when the sun doesn’t shine or the wind doesn’t blow.

John Flynn, senior vice president at National Grid, said new natural gas-fired power plants are needed to fill the void as existing nuclear and coal plants shut down over the next three to five years and renewables grow to fill the gap. “You need a bridge to the future,” he said.

The politics of natural gas has suddenly become very sticky. The Baker administration’s decision to tap electricity customers to pay for new natural gas pipeline capacity is being challenged at the Supreme Judicial Court, with a decision expected later this summer. The Senate voted to take the issue out of the court’s hands by approving an amendment to the branch’s energy bill that would bar electric utilities from tapping their customers for pipeline expansion. Attorney General Maura Healey has also weighed in, releasing a study suggesting no new pipeline capacity is needed for the smooth functioning of the power grid through 2030.

Olivier and Flynn said they will try to educate lawmakers over the next few weeks about the need for new pipeline capacity as House and Senate lawmakers hammer out a final energy bill. Olivier said brownouts and blackouts are possible if new pipeline capacity isn’t added. He also said the attorney general’s study missed the mark. “Every study that’s been done except for her’s said additional pipeline capacity is needed,” he said.

William Yardley, president of US transmission and storage at Spectra Energy, said the project wouldn’t be canceled if the court rules against the preferred financing mechanism or the Legislature bars it. “We’d have to find another mechanism to pay for it,” he said. Flynn agreed. “From a customer reliability standpoint, this has to get built,” he said.

Asked what other financing mechanism exists, Yardley declined to say. “We have ideas, but we probably wouldn’t publicize them at this point.”