Dive Brief:
- Next month, the Massachusetts Supreme Court will hear a challenge to new rules allowing electric utilities to purchase natural gas pipeline capacity, a decision made last year to help finance transport options being developed in the state, Masslive.com reports.
- The new rules allow utilities to support pipelines, provided the fuel is procured in a competitive and transparent process.
- Critics of the decision, worried electric customers will wind up subsidizing losing bets on gas, argue the state's 1997 utility restructuring law precludes the deals.
Dive Insight:
New England has struggled with how to procure a steady stream of natural gas to fuel power plants in the region. Massachusetts' decision to allow contracts of one-year or longer was aimed at keeping prices down while ensuring plants had gas to generate power.
Both the the Conservation Law Foundation and a liquefied natural gas importer say the state's Department of Public Utilities lacks the authority to authorize the pipeline contracts, and the 1997 Restructuring Act does not allow electric utilities to support gas infrastructure, MassLive.com reports. The commission put some restrictions on how the capacity must be acquired, but ultimately determined allowing utilities to enter long-term gas contracts would help boost electric reliability.
The rule change will allow utilities to support development of two pipelines: Kinder Morgan's Northeast Energy Direct Project, and Spectra Energy's Access Northeast.
According to MassLive, the DPU's decision last year to allow utilities to sign gas contracts marked the first time in 86 years the state had allowed that type of transaction. The fuel costs would be passed on to customers on their electric bills, with unused capacity sold back into the market. National Grid, in its DPU filing, said that the deal would save ratepayers $1.2 billion over a 20-year span.
Last year, Massachusetts Attorney General Maura Healey (D) released a study that questioned the need for more natural gas pipeline capacity in New England, finding additional investment in demand response and efficiency is the cheapest and cleanest option to meet power demand.
Oral arguments are set for May 5, where AG Healey intends to file an amicus brief ahead of the deadline.
