Unitil latest to sound alarm over Northeast pipeline capacity

Dive Brief:

  • Leadership at Unitil Corp. used the company's earnings call last week to stress the need for additional gas pipeline capacity to meet growing New England demand.
  • Customer growth and cooler weather helped push net income to $12.4 million, up from about $11 million in the first quarter of 2016.
  • Unitil CEO and President Robert Schoenberger said in the earnings call the New England ISO has been preparing a report on the need for new pipeline capacity that "ups the ante" on the issue.

Dive Insight:

Pipeline developers, grid operators and utilities are increasingly worried about a lack of pipeline options in the Northeast, with Unitil just the latest to sound the alarm. While some clean energy advocates have cast doubt on the need for more gas, Schoenberger's comments join a chorus who say the issue is real.  

Last month, National Fuel President and CEO Ronald Tanski, warned that utilities in gas-constrained regions might not be able to get the fuel generators and consumers need. Those comments were spurred by New York's decision to reject the company's proposed Northern Access pipeline, a roughly-100 mile pipeline that would have moved gas from the Marcellus shale to markets in Western New York, the Midwest and Canada.

Also in April, the New Jersey Department of Environmental Protection determined that a freshwater permit application for the PennEast natural gas pipeline was incomplete, delaying the project. 

Spectra Energy's Access Northeast ran into trouble last year, when a Massachusetts judge ruled the state couldn't require electric customers to foot the bill. And heading into this winter, officials from PJM Interconnection and ISO New England both indicated opposition to new gas pipeline capacity was putting their availability to procure fuel at risk.

Schoenberger's comment to analysts and reporters, that ISO New England is preparing a report on the issue, may signal some kind of campaign is coming. 

"They've been fairly academic about it up until now, but I think they're going to raise the profile to make sure that the public officials in the region understand that this is a necessity," Schoenberger said, adding that the region "cannot afford to allow all the shale gas to be going someplace else as opposed to taking advantage of it."

Unitil CFO Mark Collin added, "our hope is that the region can find a way to come together and find ways to bring more incremental pipeline capacity into the region to serve a growing demand for natural gas."

Unitil's natural gas sales margin was $38 million in the three months of the year, more than $2 million higher than 2016. Total therm sales of natural gas increased 3.6% in the quarter. Electric sales margins were $22 million, also about $2 million higher than the year before.

Electric sales margin in the first quarter of 2017 was positively affected by higher electric distribution rates and customer growth, the company said in its earnings statement.

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Filed Under: Generation
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