Massachusetts attorney general: Expanded pipeline capacity for natural gas is ‘not needed’
By Stephen Bennett
The fuel oil industry is fighting proposals to build natural gas pipelines in New England, saying additional pipeline capacity is not needed. The industry received important support for that position from the Massachusetts attorney general, but the fight is far from over, said Michael Ferrante, president of the Massachusetts Energy Marketers Association.
“It’s very, very good news,” Ferrante said of the attorney general’s finding. “It’s not the end game by any stretch, but it’s a very, very important obstacle for these utilities and these pipeline companies to overcome.”
Kinder Morgan, a pipeline and terminal company that is proposing the largest pipeline, announced two days after the release of the attorney general’s report that its subsidiary, Tennessee Gas Pipeline Company, had filed an application with the Federal Energy Regulatory Commission for the pipeline, which it is calling the Northeast Energy Direct Project. Kinder Morgan says the proposed pipeline would ease “natural gas capacity constraints,” providing fuel for electricity generation, and would result in lower electricity and lower natural gas prices for consumers.
But the study commissioned by Massachusetts Attorney General Maura Healey, who by law represents consumers in utility cases, concluded that the state can meet its energy needs and decrease costs without building new natural gas pipelines. Instead, the study recommended improving energy efficiency and management.
“The region is unlikely to face electric reliability issues in the next 15 years and additional energy needs can be met more cheaply and cleanly through energy efficiency and demand response,” Healey said in a statement in November, upon release of the study. Demand response is an approach to energy conservation in which consumers are encouraged, through lower rates, to reduce or shift their electricity usage. The approach can help electric system planners and operators balance supply and demand.
The attorney general’s study, which took three months, examined whether the region would encounter electric reliability challenges through 2030, and it evaluated the cost-effectiveness and environmental impacts of various solutions to those challenges.
“As we make long-term decisions about our energy future, it’s imperative we have the facts,” Healey said. “This study demonstrates that we do not need increased gas capacity to meet electric reliability needs, and that electric ratepayers shouldn’t foot the bill for additional pipelines. This study demonstrates that a much more cost-effective solution is to embrace energy efficiency and demand response programs that protect ratepayers and significantly reduce greenhouse gas emissions.”
Ferrante said, “The very important point here is that more natural gas certainly is a threat to our industry, but, as well, it’s very expensive.” Kinder Morgan has estimated the cost of its proposed pipeline at approximately $5 billion, and Ferrante said the combined cost of building the Kinder Morgan and other proposed pipelines is projected to be between $6 billion and $8 billion. “In the states that are impacted, which is every one of the New England states, the natural gas utilities want those costs to be put on the backs of electric rate payers,” Ferrante said.
Ferrante, MEMA chairman Ted Noonan of Noonan Energy, Springfield, Mass., and Michael Trunzo, director of public policy and industry relations for the New England Fuel Institute, have been working together to represent the fuel oil industry’s position on the gas pipelines, and that has included meetings with the Massachusetts state attorney general’s office and with Distrigas/GDF Suez NA, which operates a terminal that receives LNG delivered by ship at its facility in Everett, Mass., on the north edge of Boston.
To the AG’s staff, Ferrante said, “We were very candid that this would damage our industry, this was just more natural gas that is going to be used to convert homes, but apart from that we don’t believe it’s needed. There appears to be enough supply of natural gas and liquefied natural gas to meet the region’s energy needs. There’s no reason to spend these billions of dollars on new pipelines and then put that on the backs of electric consumers. That’s been our message.”
Carol Churchill, communications manager for Distrigas of Massachusetts, the LNG terminal operator, told Fuel Oil News via email, “We agree with Attorney General Healey that the region should not gamble with electricity ratepayers’ money to subsidize long-term natural gas pipeline contracts when reliable and far more cost-effective means, such as LNG and other solutions, are proven and available.
“We have always believed LNG, together with dual-fuel power generation, energy conservation, and demand-side management programs, to be cost effective and reliable complements to natural gas pipelines to meet long-term demand,” Churchill said. “Conversely, we do not believe subsidized pipelines to be in the best interest of energy consumers.”
Churchill added, “LNG is a proven solution that requires no additional infrastructure, and has been used to meet peak demand in New England since 1971.
“With LNG, customers can contract for what they need when they need it, on flexible terms, and aren’t required to commit to a 20-plus year bet on a single solution to the region’s energy needs as they would be with a new subsidized natural gas pipeline,” Churchill said.
The attorney general’s study was conducted by the Analysis Group, a Boston firm. It found that, through 2030, the region’s power system reliability “will be maintained during the region’s coldest winter months,” Healey said in her statement. The study used “extremely conservative” assumptions, including applying winter conditions from 2004, one of the coldest years in two decades, Healey said. Analysts also modeled a worst case scenario under which New England becomes even more reliant on natural gas power than expected, and experiences a short-term disruption in other fuels, causing the electric system to be more stressed than expected on very cold days. Under those conditions, the study determined, the region could need roughly 2,400 MW for a few hours across nine very cold days by 2029/2030. That is the energy-equivalent of an additional 0.42 billion cubic feet per day of new gas capacity.
To solve that deficiency, the study evaluated several options including: reliance on incremental dual fuel-power plants (the status quo); a higher reliance on firm liquefied natural gas (LNG); incremental natural gas capacity; energy efficiency and demand response; energy efficiency and low-carbon imports on existing transmission; and energy efficiency and low-carbon imports with new transmission. Solutions were compared to the status quo and evaluated for both their costs/savings for ratepayers and their impacts on New England’s greenhouse gas emissions.
The study concluded that all of the solutions would ensure the reliability of the electric system in a worst case scenario. However, investment in energy efficiency and demand response would result in the greatest customer savings and would reduce GHG emissions. New gas pipelines infrastructure would result in less customer savings and would actually drive up GHG emissions. Energy efficiency combined with firm low carbon imports on existing transmission lines would also save customers money and would produce the greatest reduction in GHG emissions, the study found.
The study also reviewed two “infrastructure scenarios”–first, an oversized pipeline (new 0.5 Bcf/day natural gas pipeline in service in 2020), which would bring customer savings, but significantly increase GHG emissions; second, low carbon imports (2400 MW in-service in 2020 over existing and new transmission lines) which was the only alternative studied that would meet the region’s climate goals by 2030, but was the most expensive studied alternative.
The study accounted for recent news that Pilgrim Nuclear Power Plant is scheduled to shut down no later than June 2019, resulting in the loss of 680 MW of non-GHG emitting power.
The attorney general provided a copy of the study to the Federal Energy Regulatory Commission for its consideration as part of the federal review of the Kinder Morgan Northeast Energy Direct pipeline project.
The study was made possible by grants from the Barr Foundation and the John Merck Fund.
Legal Wrangling Looms
Conservation Law Foundation, an environmental group based in Boston, is challenging the Massachusetts Department of Public Utilities over the department’s approval of contracts between three gas distribution utilities and Kinder Morgan.
Michael Ferrante, president of the Massachusetts Energy Marketers Association, said the DPU approved the contracts for the utilities to buy gas from proposed pipelines “that haven’t been built yet.” (See main story for details on proposed pipelines.)
The Foundation said, “These contracts are essential to the development of a proposed natural gas pipeline that would cut through significant regions of the Commonwealth and carry 200 million cubic feet per day of additional natural gas above what the Commonwealth now consumes.” The Foundation said it filed appeals with the DPU and the Massachusetts Supreme Judicial Court in September. It filed an appeal against each of the three contract approvals. Josh Block, a spokesman for the Foundation, told Fuel Oil News that the court had yet to set a date for the appeals to be heard. The group expects the court to schedule a date in early January, Block said.
Bradley Campbell, president of Conservation Law Foundation, said, “It’s time to get serious about addressing climate change, and that simply cannot happen if we trade our coal dependency for gas dependency.
“When considering these three cases, the DPU unlawfully failed to assess the environmental impacts of the significant greenhouse gas emissions that would result, as required by the Global Warming Solutions Act,” Campbell said in a statement. “Had they followed the law, they would have found that approving an overbuild of natural gas pipelines defies legal obligations, economic logic, environmental consciousness and common sense.”
The three local gas distribution utilities involved in the respective appeals are Boston Gas Company, Bay State Gas Company and Berkshire Gas Company.
Campbell added that the cases are among others the Foundation is engaged in that “rest on one central question–is the GWSA merely a set of guidelines that can be altered and ignored, or does it impose legal mandates that are binding and enforceable? The answer will decide the future of our state’s power grid, our climate and the health of our communities.”