Prohibit the ‘pipeline tax’

There are smarter ways to invest in economy

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.

Meet the Author

Kathryn R. Eiseman

President, Pipe Line Awareness Network for the Northeast Inc.
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.