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Northeast Seeks to Expand Gas Pipeline to Lower Energy Costs

April 15, 2015 By Josh Kessler

Winter electricity costs are being driven by constrained natural gas delivery capacity, according to attorney Elizabeth Moroney of Massachusetts Department of Energy Resources. According to The Recorder, a Greenfield, Massachusetts, newspaper, Moroney wrote that electricity supply charges increased 60 to 96 percent this winter. The agency is exploring whether utilities can enter long-term contracts with gas suppliers, which would resell the gas to power generators – an idea that seems to be prohibited by rules established during restructuring. Pipeline developers say that they need these commitments before they are willing to undergo the risk of building the pipelines.

Rhode Island and Maine have already implemented these measures, and Connecticut has pending legislation of a similar nature. However, Matthew Beaton, Secretary of Energy and Environmental Affairs for Massachusetts, says that the Federal Energy Regulatory Commission (FERC) has jurisdiction over the issue and could prohibit this type of pipeline financing mechanism. As Retail Energy Buyer reported previously, Gordon van Welie, chief executive of the New England ISO, stated that FERC prohibits deregulated utilities from investing directly in pipelines and collecting returns on these capital investments. This proposal would be a dollar-for-dollar pass-through to customers, not a capital investment that would provide utilities a return on investment.

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