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Spectra Energy Partners LP's Access Northeast project has been in a regulatory/contracting holding pattern since late last year, but the company said Friday that New England needs the natural gas the Algonquin Gas Transmission LLC expansion would deliver and it remains committed to the project.
"The project's partners continue to pursue a viable commercial and operational model to provide clean-burning natural gas to gas-fired electric generators in New England in support of the region's emission goals," Spectra said in its earnings announcement.
"While the project has been in discussions on other contracting strategies, including participation among gas distribution companies, the complexity of any regional solution requires clarity among the New England states regarding the support and legal authority for electric distribution companies to contract for project capacity."
Access Northeast is sponsored, along with Spectra, by New England's two largest utilities: Eversource Energy and National Grid USA. The project still needs offtaker commitments from electric distribution companies, but regulators in New Hampshire and Massachusetts have so far balked. State lawmakers might need to step in to change that, analysts at S&P Global Ratings said earlier this year.
Last December, Algonquin told the Federal Energy Regulatory Commission it needed more time "to solidify the commercial foundation" for Access Northeast. Last May, after Kinder Morgan Inc. (KMI) scrapped its New England-focused Northeast Energy Direct project, Spectra sought to differentiate Access Northeast from the KMI effort. On Friday Jefferies analyst Christopher Sighinolfi wrote that Access Northeast "faces substantial headwinds" after Massachusetts limited the ability of electric utilities in the state to contract for natural gas pipeline capacity.
But Spectra isn't giving up. "When the states achieve alignment -- in the form of consistent legislative or other legal authority supporting natural gas infrastructure for electric reliability -- the project's partners remain able and committed to bringing Access Northeast to New England consumers," the company said.
"Access Northeast's partners will continue working with state and federal agencies, as well as other stakeholders, to help close gaps in legal authority that are currently prohibiting the region from achieving its significant environmental goals, as the current system configuration requires the continued operation of older, higher emitting generation units, such as coal and oil plants.
The company's fourth quarter and full year earnings did not come with the customary analyst conference call as the company is expecting a first quarter closing of itsmerger with Enbridge Inc. The deal has just received U.S. Federal Trade Commission clearance.
Spectra Energy Partners reported net income of $327 million for the fourth quarter. For the year, net income was $1.24 billion. The fourth quarter and yearly results included non-recurring special items of $36 million and $80 million, respectively. Year-ago fourth quarter net income was $317 million and full year 2015 net income was $1.27 billion. Fourth quarter 2016 ongoing distributable cash flow (DCF) was $330 million, compared with $260 million in the prior-year quarter. For the year, ongoing DCF was $1.3 billion, a $90 million increase from $1.21 billion in 2015.
Spectra Energy Corp. reported fourth quarter net income of $208 million. For the year net income was $1.02 billion. Both results included special items of $127 million and $243 million, respectively. One year ago the company reported a fourth quarter net loss of $188 million and full year net income of $460 million. Ongoing DCF for the fourth quarter was $309 million, compared with $201 million in the same quarter last year, and was $1.38 billion for the year, up from $1.29 billion in 2015.