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Bay State Lawmakers Object to Potential Cost to Consumers of TGP Pipeline

April 14, 2016 By Cheryl Kaften

A bipartisan group of 91 Massachusetts State House legislators delivered a letter to House Speaker Robert DeLeo (D-Winthrop) on April 13 preemptively objecting to the inclusion of any provision in an expected omnibus energy bill that would require Bay State electric customers to pay for a proposed natural gas pipeline.

At issue in the letter distributed by House Ways and Means Vice Chair Stephen Kulik (D-Worthington) and House Minority Leader Bradley Jones (R-North Reading) is a high-pressure natural gas pipeline proposed by the Tennessee Gas Pipeline Company– called TGP Northeast Energy Direct – that would carry shale gas from Pennsylvania through parts of Massachusetts. The pipeline is projected to cost between $5 billion and $8 billion.

In the letter, the lawmakers say that in addition to burdening ratepayers, the pipeline will diminish private property values and public lands protected by the constitution and “make it impossible” for the state to meet its statutory emissions reduction requirements under the Global Warming Solutions Act.

“We write today to express our deep concern about one concept …. [the] proposed ratepayer financing of gas pipeline infrastructure,” they stated. “We urge you to omit any public support for gas pipelines expansion from omnibus energy legislation.

“The proposals to pay for the $5[ billion to] $8 billion cost for new pipelines by assessing a surcharge, tariff, or tax on electricity customers are unprecedented,” they asserted, adding, “Ordinarily, the natural gas producers would be expected to pay for this infrastructure expansion, if the expected revenue from natural gas sales would justify the cost. The fact that this is not happening means industry players have determined the risk not worth the reward.

“Why should the ratepayer shoulder risk when private industry is unwilling to [do so]?”

Further, the signatories to the letter protested the idea of adding more volatility to an already unsettled and unstable market. “Gas pipeline expansion through our region exposes the public to greater economic risk by enabling gas exports to international markets. A 2015 analysis by the U.S. Department of Energy determined that exposing U.S. customers to a volatile global gas market could raise domestic prices more than 7 percent.”

Led by Energy Committee House Chairman Thomas Golden (D-Lowell), lawmakers are trying to craft an omnibus energy bill to address the region’s loss of coal-fired power sources and the planned closure of a nuclear plant in Plymouth. The bill is expected to establish footholds in Massachusetts for wind energy and hydro-electric power from Quebec.

Kulik said that, while he has not heard specifically that pipeline financing is slated for inclusion in the omnibus bill, pipeline opponents want to put that idea to rest before it gains any traction.

“There’s speculation that it could be” included, he said. “The utilities may well be pushing this so we want to head that off.”

However, in a statement to the State House News Service, Kinder Morgan, the parent company of Tennessee Gas, said it would pay to build the pipeline and customers would pay fees associated with transporting the natural gas along the pipeline.

“The proposed NED Project would bring sorely needed additional gas capacity to New England’s gas and electric distribution companies, benefiting the region’s energy and economic future and lowering energy prices for consumers,” the company said in the statement. “If approved by regulators, the project would be paid for by Kinder Morgan. Customers and shippers that use the project’s pipeline and infrastructure would pay set fees to transport natural gas from supply areas to commercial end-use markets.”

The lawmakers who signed the letter come from all corners of the state, Kulik said, because even if the pipeline would not traverse their district they recognize that financing it through a tariff would mean higher electricity bills for their constituents.

“We’ve had a lot of support from legislators throughout the state, even those whose districts are not directly in the path of this pipeline project,” Kulik said. “I think as a consumer issue, as an energy policy issue, as an environmental protection issue, we’re finding a lot of broad support from legislators throughout the state.”

The pipeline project is currently under review by the Federal Energy Regulatory Commission (FERC), which, Kulik told the news service, could make a final determination on the pipeline’s future by the end of this year.

Finally, late last year, Massachusetts Attorney General Maura Healey’s office released a report that determined that the state could meet its future energy reliability needs without new natural gas pipelines. The Tennessee Gas Pipeline Company called Healey’s study “seriously flawed.”

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