Pipeline tariff is not a tax

It would save ratepayers $780m to $1.2b a year

SEVEN OF THE TOP 10 most expensive states for electricity costs are in the Northeast, including Massachusetts. We pay the sixth-highest retail electricity prices in the nation – almost 50 percent above the national average.

With ample natural gas supplies only a day’s drive away in Pennsylvania, why are Massachusetts and our New England neighbors failing to benefit from those low-cost, domestically produced supplies?

In a word, infrastructure. New and expanded pipelines could connect our power plants to clean-burning natural gas in Pennsylvania’s Marcellus shale, helping to lower both utility costs and emissions.

But legislators are considering a provision that could eliminate an opportunity to cost-effectively fund the infrastructure we need. The Massachusetts Senate passed an amendment to its energy bill that prohibits the Department of Public Utilities from imposing a tariff on electric customers to share the cost of natural gas pipelines needed in our state.  Such tariffs, which must be reviewed and approved by independent regulators, are commonly used to fund the addition, maintenance, and improvement of the infrastructure that keeps our lights on and our homes comfortable. To put it in perspective, the pipeline tariff that the Senate is trying to block could save consumers between $780 million to $1.2 billion a year, and the entire cost of the project could be recovered from the cost savings realized from a single cold winter.

Some have tried to label this funding mechanism a “tax,” but no taxpayer dollars are involved when customers are charged for a benefit they receive, and in this case a benefit that lowers their overall costs. Do they also oppose customer-financed programs that directly subsidize renewables, energy efficiency and low-income energy assistance programs?

Further, suggesting we have to choose between natural gas and renewables is a false choice.  Natural gas enables growth of wind and solar by providing reliable, affordable power when the wind doesn’t blow and the sun doesn’t shine.

Sixty percent of our electricity is now generated by natural gas, and our air is cleaner because of it. In New England, natural gas has contributed to significant emissions reductions for nitrogen oxide (65 percent), sulfur dioxide (92 percent) and carbon dioxide (35 percent), according to ISO New England. Nationwide, the US Energy Information Administration (EIA) says carbon emissions from electricity generation are at 22-year lows, due largely to greater use of natural gas.

Pipelines are one of the safest, most efficient ways to transport the energy American families and businesses need. The most recent data show the nation’s 320,000 miles of natural gas pipeline transport energy at a safety rate of 99.999 percent.

Blocking energy infrastructure will not magically change our energy needs. According to the EIA, even under optimistic scenarios for renewable energy growth, oil and natural gas will still supply 60 percent of US energy needs by 2040.

Failure to recognize that reality and build the pipelines necessary to take advantage of nearby natural gas has cost the region at least $7.5 billion during a span of three recent winters alone. Unless we update our infrastructure to keep pace with electricity needs, it is estimated that by 2020 our energy bills could jump $5.4 billion, we could lose $12.5 billion in disposable income, and give up 167,000 jobs across a variety of sectors including construction and manufacturing.

Meet the Author

Steve Dodge

Executive director, Massachusetts Petroleum Council
Hydropower, solar, and wind all have roles to play in our energy mix, but these options do not substitute the need for additional natural gas. The House and Senate have until the end of the month to resolve their differences and pass an energy bill. As they promote a healthy mix of renewables, let’s hope they don’t push our energy costs over the edge by failing to take into account the need for additional natural gas supplies. The rest of the country is enjoying the benefits of natural gas – there’s no good reason for Massachusetts residents to be left out.

Stephen Dodge is the executive director of the Massachusetts Petroleum Council.