The Aug. 17 Massachusetts Supreme Judicial Court (SJC) ruling that invalidated contracts on the Access Northeast pipeline expansion has set off a new round of debate as the project’s backers vie for FERC approval of a crucial tariff revision.
Targeting demand from New England power generation, Access Northeast would add up to 1 Bcf/d of capacity to Algonquin Gas Transmission LLC’s system through primarily brownfield expansion (see Daily GPI, Feb. 19). With the region’s merchant generators unwilling to commit to the kinds of long-term contracts needed to spur pipeline development, backer Spectra Energy partnered with electric distribution companies (EDC) National Grid and Eversource Energy, which signed up for firm transportation on Access Northeast to be recovered through state-regulated ratemaking.
Under the proposed tariff revision Algonquin filed with the Federal Energy Regulatory Commission on Feb. 19 [RP16-618], the EDCs — while providing the financial commitment to move Access Northeast forward — would release their capacity to electric generators, a potential solution to add capacity to New England and address the region’s recent winter price spikes for gas and electricity.
Opponents of Access Northeast, including regional energy players Engie Gas & LNG LLC, NextEra Energy Resources LLC and PSEG Cos., have been lobbying FERC for months to try to sink the project on the grounds that it would artificially suppress prices in New England (see Daily GPI, June 29).
After the SJC decision (see Daily GPI, Aug. 18), Engie told FERC that the ruling “invalidated the approval for the very contracts supporting the asserted need for the tariff changes” for Algonquin’s system (see Daily GPI, Aug. 24).
This week, Massachusetts Attorney General Maura Healey also chimed in, telling FERC that “the operative facts and conditions on which Algonquin premised its petition in this matter have been mooted or at least materially altered” by the SJC’s ruling. “As a result…there will be no funding of Access Northeast pipeline construction by Massachusetts electric ratepayers and no [state program] that would govern the conditions under which capacity would be released and paid for.”
The Massachusetts ruling raises questions about the future of Access Northeast, but Spectra has not wavered from its commitment to move forward, saying it will continue working to get the project approved in other jurisdictions and that “our mission to re-establish the Massachusetts contribution is full-speed ahead” (see Daily GPI, Aug. 24).
This week, Algonquin, a Spectra affiliate, fired back at claims that the SJC ruling should factor into FERC’s deliberations on the tariff revision.
“The Massachusetts SJC decision is a ruling in one New England state; it does not change the fact that price signals indicate a need for pipeline infrastructure in the Northeast, and that the only market participants responding to those price signals are the [EDCs], which have requested the Algonquin tariff revision to ensure the greatest benefits to their customers,” Algonquin wrote, adding that “interpretations of Massachusetts law are not relevant to the review processes that are ongoing in Connecticut, Rhode Island and New Hampshire.”
In a separate but related FERC docket, Algonquin also responded this week to a complaint filed by NextEra and PSEG [EL16-93] aimed at stopping Access Northeast’s capacity release proposal. In that complaint, NextEra and PSEG described the project’s approach as “purely a scheme to suppress wholesale [electricity] prices, as all concerned freely admit.”
Algonquin, referring to the challengers collectively as “the Congestionators,” was sharply critical of the efforts to keep Access Northeast from moving forward.
“The Congestionators…have no objection to [Access Northeast] — as long as prices remain high,” Algonquin wrote. “The complaint is nothing more than an effort either to preserve inflated revenues accruing to them as a result of these high prices or, in the alternative, to generate enough regulatory uncertainty to kill any natural gas pipeline investment that may lower prices.”
Access Northeast is not the first New England-directed pipeline expansion to run into problems recently. Earlier this year, the state of New York denied a water permit to Constitution Pipeline LLC that has stalled the Marcellus/Utica shale takeaway project (see Shale Daily, April 25).
Around the same time, Kinder Morgan Inc. cancelled Tennessee Gas Pipeline Co.’s Northeast Energy Direct, citing the region’s lack of established regulatory procedures to facilitate binding EDC commitments as a factor (see Daily GPI, April 21).
Meanwhile, Appalachian Basin takeaway projects targeting other markets continue to press forward at FERC, including the Midwest-directed Rover Pipeline Project (see Shale Daily, July 29) and Nexus Gas Transmission LLC (see Shale Daily, July 11), and the Southeast-directed Atlantic Coast Pipeline LLC (see Shale Daily, Aug. 16) and Mountain Valley Pipeline LLC (see Shale Daily, June 30).
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