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New Hampshire High Court Decision Could Reignite Access Northeast Project

The Supreme Court of New Hampshire has reversed a 2016 decision by the state's Public Utility Commission (PUC) that blocked Eversource Energy’s plan to use electricity rates to pay for constructing the Access Northeast expansion project, which would add 900,000 Dth/d and additional liquefied natural gas (LNG) storage to the Algonquin Gas Transmission LLC (AGT) system.

"We hold that the PUC erred in dismissing Eversource's petition as a matter of law," the high court said in an opinion issued Tuesday. The court reversed the PUC's dismissal and remanded the case to the agency.

In October 2016 the PUC refused to approve a 20-year transportation and storage capacity contract between the Spectra Energy pipeline and Eversource Energy, with costs to be borne by ratepayers. Eversource, the pipeline and other supporters of the capacity agreement had argued that the statute enabling electric utility restructuring in the Granite State is intended to lower energy prices.

Eversource and supporters said electric distribution companies' (EDC) purchase of natural gas transportation and storage capacity to be used by power generators would further that cause.

Opponents of the Eversource proposal argued that the restructuring statute's most important objective was to get the EDCs out of the power generation business completely, and that the proposed capacity contract and the release of capacity to wholesale power generators were preempted by the Federal Power Act and the Natural Gas Act.

Fundamentally, the argument came down to whether the 1996 restructuring statute is primarily intended to reduce consumer costs (through EDCs taking natural gas capacity, for example), or whether its primary intent was to foster competition through restructuring and unbundling.

The PUC sided with the opponents. Eversource appealed, arguing that the regulators were "wrong as to both the expressed purpose of the law and in finding a mandate or directive for the separation of generation and transmission and distribution services within it."

Eversource said it appreciated "that the Supreme Court got it right -- the primary purpose of electric industry restructuring is to ensure reliability and lower energy costs for our customers.” However, Eversource has not said what specific actions, if any, it may take on Access Northeast at the PUC.

"This decision has broad implications for New Hampshire's energy future at a time when the region has a critical need for additional sources of reliable and affordable energy. For example, there is little question that customers in New Hampshire and the region will benefit from an increased supply of natural gas to be used to create electricity."

Last year, citing "gaps in energy policy" in New England, AGT withdrew Access Northeast from FERC's pre-filing review process. The project had been in a regulatory/contracting holding pattern since late 2016.

Access Northeast encountered pushback from competitors that claimed AGT's plan was anti-competitive and would artificially suppress prices. To an extent, the Federal Energy Regulatory Commission agreed, denying a capacity release waiver proposed to allow the EDCs to sign up for the space on Access Northeast.

The project had mixed results at the state level. While Maine utility regulators agreed to join in a regional electric reliability effort that would have benefited Access Northeast, the Supreme Judicial Court of Massachusetts overturned a plan approved by that state's regulators to move forward with the EDC pipeline contracts. Connecticut regulators subsequently dropped a request for proposals to add pipeline and storage capacity, as well as LNG resources.

In light of the state Supreme Court decision, Eversource said it would revisit the PUC's denial of a 2016 power purchase agreement with Hydro Quebec that would have brought the area 100 MW from the Northern Pass hydroelectric transmission project.

AGT is an affiliate of Spectra Energy, which merged with Enbridge Inc. in 2017. Access Northeast is sponsored, along with Spectra, by New England's two largest utilities: Eversource and National Grid USA.

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