Customers may have to pay for new pipelines

CONCORD -- Jan 26 - McClatchy-Tribune Content Agency, LLC - Dave Solomon The New Hampshire Union Leader, Mancheste

The idea of charging electric ratepayers for new natural gas pipelines has moved one step closer to reality, even as state lawmakers debate a bill that would prevent such arrangements.

New Hampshire's Public Utilities Commission has decided it will take applications from Eversource or any other electric distribution company that wants to purchase long-term contracts for space on natural gas pipelines and blend the cost into electric rates.

Proponents of that approach argue that electric ratepayers will be better off in the long run because the new pipeline capacity will result in lower costs for electricity. Most of the state's electricity is generated by natural gas-fired power plants.

Those power plant owners aren't signing up for space on any of the proposed pipelines, so the New England governors have proposed a fee on electricity customers to get the job done. Opponents of that idea, including many in the state Legislature, say the pipelines shouldn't be built at ratepayer expense.

Consumers of natural gas and electricity eventually pay for pipelines and transmission lines when they buy electricity or natural gas, but the up-front cost of building infrastructure has not been blended into electric rates since the state abolished laws allowing charges for "construction work in progress."

The question of whether such charges should be allowed for natural gas pipelines was hotly debated before the PUC staff as it conducted an investigation into pipeline constraints and their impact on electricity prices.

"It is clear to the commission, from a review of the staff report, stakeholder comments and materials made public through this investigation that no consensus exists regarding the potential legality of such an acquisition of gas capacity by a New Hampshire electric distribution company," the commissioners wrote in a Jan. 19 order. "Furthermore, we expect that such a capacity acquisition would be highly controversial."

Awaiting a test case

Rather than wade into that controversy on a hypothetical basis, the commission plans to rule on the legality of pipeline contracts by electric companies only "if and when" one of them files a petition asking for such approval, and "related cost recovery."

The state is wading into uncharted legal territory as it grapples with high electric prices, as the commission noted, "There is no New Hampshire precedent for electric distribution companies to purchase gas pipeline capacity for electric generators."

There are at least two major gas pipeline projects in the works that could conceivably apply for ratepayer funding, now that the PUC has opened the door -- the Northeast Energy Direct project proposed by energy company Kinder Morgan, and the Access Northeast expansion proposed by a partnership of Eversource, National Grid and Spectra Energy.

In a possible indication of what lies ahead for New Hampshire, National Grid on Jan. 15 asked the Massachusetts Department of Public Utilities to approve 20-year contracts for gas capacity on both the Northeast Energy Direct and Access Northeast pipelines.

The filing in the Bay State came just three months after the Massachusetts PUC ruled that it would accept such applications. Now that the New Hampshire PUC has followed suit, pipeline opponents are expecting a similar application in the Granite State.

According to MassLive.com, "the petitions presume that savings to consumers associated with increasing the flow of natural gas to New England would more than compensate for the costs of building the two pipelines, estimated at about $8 billion combined."

Keene State Rep. Jim McConnell is among the lawmakers sponsoring a bill, HB 1101, that would settle any legal ambiguities. "The PUC staff may think this kind of thing could be legal," he said. "But if my bill passes, we make it illegal."

dsolomon@unionleader.com