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National Grid Utilities Seek Contract OKs on Competing New England Pipeline Projects

National Grid's Massachusetts Electric Co. and Nantucket Electric Co. recently asked Massachusetts regulators to approve contracts for natural gas pipeline capacity on separate projects by Algonquin Gas Transmission LLC and Tennessee Gas Pipeline LLC (TGP).

The utilities, each doing business as National Grid, propose two long-term capacity contracts with Algonquin for capacity on the Access Northeast (ANE) project. As well, they propose two long-term contracts with TGP for capacity on its Northeast Energy Direct (NED) project. TGP is a Kinder Morgan Inc. pipeline. Algonquin is a unit of Spectra Energy. Spectra is leading the ANE project, in which National Grid is a participant (see Daily GPIFeb. 19, 2015).

"The analysis conducted in support of National Grid's petitions estimates levelized annual net benefits of $1.2 billion per year from 2019 through 2038 under normal weather conditions, under a scenario where the ANE and NED projects are both put into service," National Grid said in a cover letter to the filings with the Massachusetts Department of Public Utilities (DPU).

"Selecting both pipelines has an expected net present value benefit of $10.9 billion for New England electric consumers. Approximately 46% of the benefits would accrue to consumers in Massachusetts."

National Grid said it also examined scenarios under which only one of the pipeline projects is put into service. ANE alone would yield $1.1 billion in levelized annual net benefits for New England electric customers from 2019 through 2038 under normal weather conditions. The corresponding figure for NED alone is $1.4 billion.

The company said it wants contracts approved for both projects in order to maximize savings for customers while minimizing risk. It said its risk analysis found "...that contracting on both the NED and ANE projects has the highest risk-adjusted expected value after factoring in the probability of the successful completion of each project."

Contracts for ANE capacity require approval from DPU by Oct. 1, and NED contracts require regulatory approval by Oct. 3.

Last fall, DPU said it was permissible for Massachusetts electric utilities to enter into long-term contracts for pipeline capacity (see Daily GPI, Oct. 5, 2015). DPU found that an electric distribution company (EDC) contract for capacity would be consistent with the state's utility Restructuring Act "...if an EDC is able to demonstrate that entering into a contract would result in cost savings for EDC ratepayers and otherwise satisfies the standard of review for approving EDC gas capacity contracts..." DPU said in it order.

Pipeline projects in New England have faced a mountain of opposition at the Federal Energy Regulatory Commission from concerned landowners and some local politicians. The Massachusetts attorney general has also been a vocal opponent of Tennessee's NED (see Daily GPIDec. 31, 2015).

Meanwhile, the Conservation Law Foundation, which also is opposed to the NED project, has appealed DPU's approval of NED capacity contracts with utilities Boston Gas Co., Bay State Gas Co. (known as Columbia Gas of Massachusetts since 2010 and a NiSource Inc. company), and Berkshire Gas Co. (see Daily GPISept. 22, 2015).

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