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.