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Maine PUC Moves Forward to Consider Pipeline Expansions

The Maine Public Utilities Commission (PUC) voted 2-1 to move forward with a plan to consider natural gas pipeline expansions in the state, and for regulators to pay up to $75 million a year for the expansion costs.

In 2013, lawmakers in the Maine state legislature enacted the Energy Cost Reduction Act (ECRA), a provision that authorizes the PUC to execute -- after consultation with the state's public advocate and the governor's energy office -- contracts to acquire up to 200 MMcf/d of natural gas pipeline capacity a year, for an annual cost not to exceed $75 million.

At a special meeting Thursday, PUC Commissioners Tom Welch and Mark Vannoy voted to proceed to a second phase in the process, where regulators would invite pipeline expansion proposals for consideration [2014-00071]. Commissioner David Littell dissented.

On Oct. 1, a PUC examiners' report said the state's electricity customers were "unlikely" to benefit from the plan, but advocated moving forward with it anyway and considering any expansion proposals on a case-by-case basis (see Daily GPI, Oct. 6). Meanwhile, several pipeline companies urged the PUC to act with caution.

"It seems to me that one of the fundamental reasons why [ECRA] was passed was that there wasn't any logical party to come forward to make an investment that would have the effect and purpose of reducing electricity rates," Welch said Thursday. "I don't see the fact that other people haven't come forward -- because they view this investment as risky -- as being evidence at all for the notion that it shouldn't be done for the benefit of ratepayers.

"The ratepayer risks are a different character entirely. They are substantial. There is a substantial risk that we should account for. The benefits may not be realized to the extent that we envision them. Parenthetically, I don't think the absolute cost of gas is one of the most relevant factors at all...But in any case, there are obviously things that need to be taken into account and will have to be weighed carefully in the context of a particular proceeding."

Littell warned the PUC was about to engage in an "unprecedented" market intervention.

"There is a strong argument that if we're going to look at this we should do the appropriate integrated resource planning that one would do in the type of system that we abandon -- which we're not doing," Littell said. "That goes directly to my point that if we're looking at this particular type of market intervention, we should look at whether others are less expensive and less risky.

"This is what I would characterize as 'arm chair planning.' You're looking at one particular solution without looking at what the most cost-effective overall [solution] might be."

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