Massachusetts court bars electric utilities from charging ratepayers for gas pipeline construction

Dive Brief:

  • Massachusetts' Supreme Judicial Court has prohibited state regulators from approving contracts requiring electric utility customers to support development of gas pipelines, throwing a major project in the state into doubt.
  • The decision puts pressure on Spectra Energy's Access Northeast project, which Eversource Energy and National Grid had signed on to support.
  • Massachusetts Attorney General Maura Healey hailed the decision as a win for consumers, saying it means pipeline developers "will need to find a source of financing other than electric ratepayers’ wallets.”

Dive Insight:

New England still needs gas, but following a decision by the Massachusetts' high court, regulators in that state will need to find another way to support development of transportation options.

"Requiring electric ratepayers to pay for new natural gas pipeline capacity effectively shifts the risks associated with building these projects to ratepayers, contrary to the state’s policies of the past two decades," Healey said in a statement.

Healey has been an opponent of utility customers supporting pipeline development, releasing a study last year that questioned the need for more natural gas pipeline capacity in New England. Demand response and energy efficiency, it said, were the cheapest ways to meet growing demand. 

A spokesman for Spectra Energy said the company “is extremely disappointed with the decision,” according to Bloomberg. And Caroline Pretyman, a spokeswoman for Eversource Energy, told the news outlet that the decision leaves the region's gas supply in a "precarious" position.

The 1 Bcf expansion included upgrading existing pipeline facilities and storage assets, with a goal of supplying electric generation markets in the gas-constrained region.

But opponents say it unfairly places risk on electric customers, contrary to the state's longstanding policies. And the court's decision backed that concern.

Requiring electric customers to support the line would "reexpose ratepayers to the types of financial risks from which the Legislature sought to protect them," the court determined.

According to AG Healey, the decision "makes clear that if pipeline developers want to build new projects in this state, they will need to find a source of financing other than electric ratepayers’ wallets," Healey said. The decision "confirms our longstanding position that existing law bars electric distribution companies from using ratepayer money to foot the bill for natural gas pipelines."

The Access Northeast Project would upgrade the existing Algonquin Gas Transmission system and add regional liquefied natural gas storage assets in New England. According to Spectra, the project would boost peak day deliveries, on the coldest winter day, up to 925,000 dekatherms per day of natural gas, enough for approximately 5,000 MW of electric generation. 

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Filed Under: Generation
Top image credit: Wikimedia; Whhalbert