Pipeline charges prompt lots of questions

Who’s looking out for ratepayers?

ACCUSATIONS AND INVESTIGATIONS are underway in response to an academic white paper posted by the Environmental Defense Fund concerning artificially created pipeline capacity constraints and resultant spikes in energy prices. The sides are lining up as usual, with the region’s ratepayer advocates expressing a need for further investigation and better rules to protect consumers, and the Northeast Gas Association seeking to discredit the analysis with an op-ed published in as many New England states as possible. This white paper comes right on the heels of another report published in September with a more pointed title: “Art of the Self-Deal: How Regulatory Failure Lets Gas Pipeline Companies Fabricate Need and Fleece Ratepayers.”

It’s too soon to understand the full ramifications of Eversource and Avangrid’s pipeline capacity scheduling practices, but the findings of the white paper compel many questions that must be answered. Among them:

  • Were excessive capacity withholding practices a critical factor in moving forward Kinder Morgan’s Connecticut Expansion project in the Berkshires and the AIM and Atlantic Bridge projects of Spectra (now Enbridge)? The finding that the practice was especially pronounced among Eversource and Avangrid gas utilities in Connecticut is particularly devastating to Massachusetts land conservationists and to landowners in the Town of Sandisfield, where Kinder Morgan is completing construction of its pipeline through constitutionally protected conservation land in Otis State Forest (as well as through several private properties). The Connecticut Expansion project was designed to provide additional pipeline capacity to three Connecticut gas utilities – specifically, one owned by Eversource and two owned by Avangrid. A group of landowners has argued all along that the companies’ claim of need for new capacity was palpably misleading, based on confidential materials that their energy lawyer analyzed.
  • Who is looking out for ratepayers, anyway? Apparently not our current regulators in Massachusetts. Recall that we needed the Supreme Judicial Court to step in to block Massachusetts Department of Public Utilities (DPU) approval of a scheme that aimed to allow electric ratepayers to be charged for new gas pipeline capacity. While the DPU is currently reviewing Eversource’s rate increase request, many are wondering whether the alleged $3.6 billion in New England’s ratepayers’ money can be recovered. Connecticut’s Pubic Utility Regulatory Authority just initiated a formal investigation in response to the white paper’s findings. Attorney General Healey’s office is reportedly conducting an independent review; New Hampshire’s consumer advocate says that the report points to a need for better market rules to protect ratepayers; Maine’s public advocate says, “What we don’t need is even the appearance of manipulation of quantities and prices.”

Meanwhile, many new legislative initiatives aim to protect ratepayers and hasten the shift in how Massachusetts approaches energy. One bill that will receive a committee hearing next week, H.3400/S.1847, aims to institute some commonsense reforms in the way the DPU addresses pipeline capacity questions and related matters. Among other things, the legislation would create a rebuttable presumption against approval of contracts between regulated utilities and their corporate affiliates. This is one small step towards preventing energy conglomerates and their shareholders from profiting at ratepayer risk and expense. This fall, the Telecommunities, Utilities, and Energy Committee will hear many other critical bills that can impact our energy future, including a grid modernization bill sponsored by Rep. Jennifer Benson and Sen. Marc Pacheco, H.1725/S.1875, geared at protecting consumers while promoting the transition to a clean grid that utilizes local, decentralized power sources.

  • Will the report’s findings impact ISO New England’s regional fuel security study and overall approach to the realities of a grid in transition? Our grid operator has just delayed the release of its own widely anticipated study, evidently for an entirely unrelated reason. No comment on the academic analysis has been offered by ISO New England, which has been fixated on pipeline capacity constraints as a grid reliability and security issue – even though malfunctions in the gas pipeline system in extremely cold weather, coupled with increasing reliance on natural gas, are clearly a threat to grid reliability in their own right (frozen equipment interfered with the operation of some gas plants and pipeline infrastructure during the 2014 polar vortex). It would be prudent for all the major stakeholders involved in maintaining grid reliability to await – if not effectuate – an independent investigation of the claims regarding artificially created pipeline capacity constraints before making decisions that could lead to unneeded infrastructure proposals and protracted legal battles.
Meet the Author

Kathryn R. Eiseman

President, Pipe Line Awareness Network for the Northeast Inc.
Rather than working to convince us that we need more pipeline capacity, ISO New England could follow the lead of forward-thinking grid operators such as the California ISO (CAISO), which issued its own report earlier this month urging an active shift away from fossil fuel use. CAISO is actively working to prepare its grid to take advantage of the electric storage capacity of electric vehicles, so that the vehicles can help power the grid at times of peak demand. Notably, instead of claiming to be “resource neutral,” CAISO is taking a stand firmly on the side of renewables and demand resources, and offering to work with regulators towards developing a sustainable grid. We should expect no less from ISO New England.

There is already plenty of work to do on all fronts. Now, in the wake of this new academic analysis, a multi-state, collaborative investigation is warranted, so that we better understand the capacity scheduling practices on all of the region’s interstate pipelines – both to ferret out any wrongdoing, and to improve rules and regulations in order to rein in currently legal maneuvers that tie us to ever more fossil fuel infrastructure at ratepayer expense.

Kathryn R. Eiseman is director of the Massachusetts Pipeline Awareness Network and president of the Pipeline Awareness Network for the Northeast, Inc. 

  • Pat Brady Martin

    The UNH Carsey Perspective study noted that New England has approximately twice as much technical pipeline capacity as economic capacity. What this means is that while some pipelines are full, others are only half subscribed at times. It seems to me that an Operations Research Study of pipeline flows and changes in regulations to encourage capacity sharing between pipeline operators should come before using eminent domain on citizen lands. Outstanding article!

  • MarkinArl

    Gas pipeline capacity shortages makes price manipulation possible and the SJC is to blame for that, blocking residents from getting needed capacity and protection from peak pricing pain.

  • NortheasternEE

    To stop skyrocketing rates, repeal the Green Communities Act and the Global Warming Solutions Act. Regional laws and regulations aimed at 100% renewable energy (wind and solar), is forcing intermittent and variable resources (VER) on the power grid, which, in turn, is forcing the incompatible baseload power from coal and nuclear into early retirement. It is now obvious that the grid will need either more pipeline capacity or LNG storage. Either way, we are looking at skyrocketing rates. As for the 100% renewable energy, unless seasonal energy storage becomes economically available (not likely), the balancing power to VER will be just in time natural gas.

    As long as fossil fuel natural gas is the goto power to balance renewable VER, no carbon is avoided, and Climate Change is unaffected. All we can expect is skyrocketing rates, and increasing power outages for nothing in return.

  • BenSahn

    This article makes some excellent points:
    1) there is inadequate oversight of the gas pipeline industry
    2) information provided by the gas pipeline industry should not be taken at face value but must be researched and fact checked by an independent third party
    3) ISO-NE should be working toward renewables, not the same-old same-old which favors existing ways of doing business and the fossil fuel industry
    4) grid modernization, done the right way, is essential to our future.