Utilities withdraw plan for $3 billion natural gas pipeline expansion
Pipeline operator Enbridge, together with Eversource and National Grid, said it needs more time to build political support for a proposed tariff on electric ratepayers.
By Jon Chesto GLOBE STAFF JUNE 29, 2017
The state’s two biggest utilities are shelving a massive $3.2 billion natural gas pipeline project known as Access Northeast until they can find a way to pay for it.
Eversource and National Grid — together with pipeline operator Enbridge — said they notified the Federal Energy Regulatory Commission on Thursday that the companies would suspend the permitting process. The pipeline expansion, they say, is needed more than ever in New England, to bring cheaper natural gas on particularly cold days to the region’s power plants. But they need more time to build political support for a proposed tariff on electric ratepayers.
This is the second massive natural-gas project in New England to be put on hold because of financing problems. Pipeline operator Kinder Morgan suspended a major pipeline plan last year.
“Once we work through the legislative [support], we’ll be able to reengage the FERC filing process and be back on track,” said Brian McKerlie, a vice president at Enbridge.
Their focus now is on finding a way to pass along the costs to electric ratepayers in the form of a tariff. To do this, they’ll need to ramp up their lobbying efforts at the Massachusetts State House. That’s because the state Supreme Judicial Court in August struck down a plan put forward by the Baker administration to allow electric ratepayers to pick up the tab for the pipeline expansion, saying it wasn’t permissible under existing state law. Other New England states put similar proposals on hold as a result.
McKerlie said the initial hope was to start construction next year on Access Northeast, a 125-mile project that mostly involves replacing existing pipes with larger ones in Massachusetts and Connecticut to expand Enbridge’s capacity. The entire construction process could take as long as three years. But with the suspension of the FERC review, the timeline is in jeopardy, he said.
McKerlie said Enbridge’s acquisition of Spectra Energy, the pipeline company that had been leading the charge for Access Northeast, in February had nothing to do with the decision to withdraw from the federal review process.
The court decision last year in Massachusetts was a setback for the two utilities, but they said at the time that they would continue to find a way to pay for Access Northeast.
The utilities say Access Northeast could reduce electric ratepayers’ bills by as much as $1 billion a year across New England. They argue the new infusion of lower-cost natural gas would more than offset the cost of a tariff, allowing power plants to burn gas on cold days when that gas is often diverted for heating uses and not available for electricity.
Critics, meanwhile, are skeptical and argue that electric ratepayers would see their bills skyrocket to help pay for the natural gas expansion. They say less expensive or more environmentally friendly solutions — more renewable power, for example, and liquefied natural gas storage and shipments — are available.
Grid operator ISO New England, which is responsible for making sure the region has enough electricity, remains concerned about the increased reliance on natural gas as older coal-fired and nuclear power plants shut down. The utilities will play up that concern as they lobby for a change in state law that could allow Access Northeast to go forward.
“It’s clear that the New England ISO is gravely concerned about reliability in the region,” said John Flynn, a senior vice president with National Grid. “The need for this project is not in doubt. . . . Hopefully, we can get cooler heads to prevail and get the votes we need to go forward.”
The Access Northeast partners could find a tough audience at the State House. The state Senate last summer voted to oppose any effort to pass on natural gas pipeline costs to electricity customers. The House leadership could be more amenable, but dozens of rank-and-file members last year signed a petition opposing natural gas expansion efforts.
Lee Olivier, an executive vice president at Eversource, said the project partners will also need legislation to be passed in New Hampshire as well as Massachusetts but not in the other New England states.
“We’re in the outreach process, speaking with legislators and listening to legislators about what they would like to see,” Olivier said. “We will be back in the fall when we would seek legislation that would enable this project.”
Natural gas expansion has become one of the most prominent hot-button issues in Massachusetts politics, with opponents fighting pipelines at every turn. Three smaller controversial projects — a proposed Enbridge-backed compressor station in Weymouth, a recently completed Enbridge pipeline through West Roxbury, and a Kinder Morgan spur in Sandisfield — are not directly affected by last year’s Supreme Judicial Court ruling.