Last Friday, Tennessee Gas Pipeline Company, L.L.C., a subsidiary of energy giant Kinder Morgan, filed an application with the Federal Energy Regulatory Commission (FERC) for a permit to expand its interstate natural gas pipeline. The company says that the $5 billion proposed Northeast Energy Direct (NED) project would cross Western Massachusetts and go through New Hampshire to connect to the Maritimes and Northeast pipeline, which runs inland through Maine up to Atlantic Canada.
“The NED Project is a transformative project for the northeast United States,” said Kinder Morgan East Region Natural Gas Pipelines President Kimberly S. Watson in a statement. “Despite being just a few hundred miles from the most abundant and low-cost natural gas production area in the country, consumers in the Northeast pay some of the highest natural gas and electricity rates in the continental United States. These higher prices are due, in large part, to natural gas pipeline infrastructure that is insufficient to meet the winter heating demand of local distribution companies (LDCs) and electric generators.”
The NED project is one of the proposed pipelines at the center of a contentious debate over whether Maine and three other states — Massachuetts, Rhode Island and Connecticut — should charge rate payers to subsidize the building of natural gas pipelines. For the past two years, the four states have been negotiating a policy that would likely involve Maine approving the transmission of Canadian hydro to southern New England to meet those states’ carbon reduction targets. In exchange, a potential deal could require the other states to help subsidize a natural gas pipeline that supporters believe would help lower costs for Maine manufacturers. The Maine Public Utilities Commission (PUC) is also considering a go-it-alone proposal that would require Maine ratepayers to pay up to $1.5 billion to buy up gas pipeline capacity. Pending FERC approval, TGP says the company could begin construction on the pipeline in January of 2017, with service to begin in November 2018.
At a town hall meeting in Rockland on November 4, Gov. Paul LePage expressed confidence that a deal could be reached by the end of 2016, stating, “The horse is out of the barn. I don’t see how it can be stopped there.”
However, TGP’s permit application came two days after an energy study commissioned by Massachusetts Attorney General Maura Healey determined that “power system reliability can and will be maintained over time, with or without additional new interstate natural gas pipeline capacity,” through at least 2030.
The study’s author, Boston-based Analysis Group, concluded that energy efficiency and improved demand response systems are preferable to building new gas pipeline infrastructure. The authors further noted that New England’s growing dependence on natural gas, which currently produces 44 percent of the region’s electricity, is not sustainable and will hinder the region’s ability to meet national and regional carbon reduction requirements.
In a statement TGP called the study “seriously flawed” and argued its recommendations “will do nothing to lower unnecessarily high electricity costs for ratepayers or provide long-term solutions to the region’s chronic energy problems and environmental challenges.”
The company also suffered a setback in June when a Maine PUC-commissioned study by Boston-based consultant London Economics International LLC determined that it would not be cost effective to charge Maine ratepayers to subsidize natural gas pipeline given the state’s low consumption of the fuel.
Critics of the pipeline expansion proposal have also expressed concerns that the current development of LNG export terminals in the Canadian Maritimes could cause gas prices to spike, as the fuel is sold on the global market, leaving ratepayers with all of the risk and none of the reward.