New England Electric Ratepayers Eyed To Fund Gas Pipeline

Feb 18, 2015

While the Kinder Morgan natural gas pipeline proposed for the Southern tier of the state has gotten a lot of attention of late it’s not the only project proposed for the region. There’s another pipeline build-out on the table in Massachusetts, and people in New Hampshire – even those who don’t buy any natural gas – could wind up both paying for it, and benefiting from it.

The project in question is called Access Northeast, and it stretches from Pennsylvania to Boston and  through seven New Hampshire communities, then into Maine and the Canadian Maritimes. It was announced last year as a partnership between pipeline developer Spectra Energy and New England’s biggest electric utility – Eversource Energy (formerly Northeast Utilities).

It would involve replacing an already existing pipeline with bigger pipe and cost around $3 billion dollars. It would bump up the region’s gas pipeline capacity by something on the order of 20 percent.

And according to an analysis commissioned by its developers, it will lower electric rates.

“Once Access Northeast is operational, it’s projected to save customers, on an average year, kind of an average winter, about a billion dollars a year across our region,” said Lee Olivier in a conference call Wednesday held to announce National Grid has joined the project.

The fact that electric utilities are proposing to pay for natural gas pipeline is what makes this project different. Eversource and National Grid will ask for permission to pass on the costs of developing the pipeline  on to New England’s electric rate-payers.

National Grid’s senior Vice President John Flynn said this proposal is “absolutely not a sure thing, but yes, it’s utterly unprecedented.”

Normally natural gas heating companies pay for pipeline expansions. They then sell whatever capacity they aren’t using to electric power plants during the summers and other low demand periods.  

Under this plan, it would be the electric companies who would sell capacity to power plants. While electric ratepayers would pay for the gas pipeline, the companies contend overall electric bills would drop thanks to lower electric rates, and revenues from selling pipeline capacity.

“There should be a net reduction over the first year to 18 months of the customer’s bill,” Eversource’s Olivier explained.

The germ of this idea emerged out of a committee formed by the six New England States’ governors in 2013, but it stalled out over the summer.

This proposal faces its own challenges.

“I don’t see how New Hampshire law would currently provide for that,” says Cliff Below, a former New Hampshire Public Utilities Commissioner and state senator.

Below says this would be less complicated “in states that have fully integrated utilities … and you can’t choose any other source.” But in New Hampshire market deregulation, which lets customers choose their electricity provider, means to fund this project through rate-payers will require rewriting state law.

That process is rarely uncomplicated.

**Clarification: An earlier version of this story misstated the geographic areas of the project.