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Massachusetts AG Says New NatGas Pipeline Capacity Unnecessary

New England does not need new natural gas pipeline capacity and can meet its energy needs for the next 15 years with increased energy efficiency and demand response, Massachusetts Attorney General (AG) Maura Healey said, citing a study prepared for her office and released Wednesday.

The study, launched in July, was intended to determine whether the region would face electric reliability challenges through 2030 and also determine "the most cost-effective and clean solutions" for addressing any challenges (see Daily GPIJuly 7). Its release on Wednesday preceded by two days the anticipated certificate filing at FERC by Tennessee Gas Pipeline (TGP) for its Northeast Energy Direct (NED) project, which would serve New England power generators and local distribution companies.

Conducted by the Analysis Group over the last three months, the study found that, under existing market conditions, there is no electric sector reliability deficiency through 2030, and that no additional pipeline gas capacity is needed to meet electric reliability needs. Existing market conditions constitute a base case projection over the next 15 years that anticipates continuing increased reliance on dual-fuel units (natural gas- and oil-fired generation) and accounts for the declining long-term forecast of winter peak demand, according to a summary of the findings.

That would seem to contradict recent history during which New England consumers experienced winter power price spikes due to insufficient gas deliverability. The findings directly contradict a study prepared by Synapse Energy Economics and released in January by outgoing Massachusetts Gov. Deval Patrick (D) (see Daily GPIJan. 12).

The new study assumed a scenario in which New England becomes even more reliant on gas-fueled power than expected, and experiences a short-term disruption in other fuels, causing the electric system to be more stressed than expected on very cold days, the summary said. "Under these stressed conditions, the region could need about 2,400 MW for a few hours on a few very cold days (around nine days) by 2029-2030. This is the energy-equivalent of an additional 0.42 Bcf/d of new gas capacity, beyond any capacity that could be built to serve gas customers. That amount is equal to about one-third of the Northeast Energy Direct (NED) project, and 40% of the [proposed Spectra Energy Corp.] Access Northeast Project."

The study evaluated reliance on incremental dual fuel-power plants (the status quo); a higher reliance on firm liquefied natural gas (LNG); incremental natural gas capacity; energy efficiency and demand response; energy efficiency and low-carbon imports on existing transmission; and energy efficiency and low-carbon imports with new transmission. Solutions were compared to the status quo and evaluated for both their costs/savings for ratepayers and their impacts on New England greenhouse gas (GHG) emissions.

"The study concluded that all of the solutions would ensure the reliability of the electric system in a worst-case scenario. However, investment in energy efficiency and demand response would result in the greatest customer savings and would reduce GHG emissions," the summary said. "New gas pipelines infrastructure would result in less customer savings and would actually drive up GHG emissions. Energy efficiency combined with firm low carbon imports on existing transmission lines would also save customers money and would produce the greatest reduction in GHG emissions."

TGP parent Kinder Morgan Inc. said Wednesday the study is "seriously flawed."

It "...focused only on the electric power market in Massachusetts and the region, ignoring the need for more natural gas from local gas utilities struggling to meet increased demand from residents and businesses seeking to switch from oil to gas," Kinder Morgan said. "As a result, the study paints an incomplete and inaccurate picture to reach its conclusions. Its findings are contradicted by every other analysis in a long line of public studies, including a comprehensive review prepared for the Patrick administration's Department of Energy Resources, all of which found that Massachusetts and New England need substantially more natural gas capacity."

TGP plans to make its full certificate filing at the Federal Energy Regulatory Commission for NED on Friday (Nov. 20). The pipeline would carry supply from the Marcellus Shale. Its market path segment has secured more than 550,000 Dth/d of capacity commitments. Its supply path segment has agreements for 627,000 Dth/d. The market path segment from Wright, NY, to Dracut, MA, is scalable up to 1.3 Bcf/d. The supply path, which runs from the "heart of the Marcellus" to Wright is scalable up to 1.2 Bcf/d. The initial NED project would be constructed to meet subscribed capacity demand and could be scaled up as needed with the addition of compression. NED is expected to cost about $5 billion and be in service Nov. 1, 2018, assuming regulatory approvals.

NED is one of several solutions proposed to serve gas demand in the Northeast, particularly during the winter (see Daily GPISept. 18). Spectra CEO Greg Ebel said earlier this month that support was growing across a number of states for a pipeline solution to New England's natural gas needs, particularly his company's Access Northeast (see Daily GPINov. 4). Other proposals are for increased reliance on LNG and on renewable energy sources.

But there is natural gas-fueled power generation on the ground that is wanting fuel, Kinder Morgan said in its comments on the new study.

"Having spent more than a decade building natural gas electric generators to replace coal and oil facilities and reduce carbon emissions, the state has been forced to burn coal and oil in recent winters due to inadequate natural gas supplies," Kinder Morgan said. "Given the severe constraints on pipeline capacity, this pattern will likely repeat itself this winter and in the future.

"The [AG's] study actually supports the continued use of oil, combined with expensive imported liquefied natural gas, to manage natural gas shortages. This approach will not only deny relief to Massachusetts residents, businesses and industries burdened by sky-high energy costs, but also contribute to higher carbon emissions and make it more difficult to meet the goals of the state's Global Warming Solutions Act."

Healey, however, said ratepayers shouldn't be on the hook for more pipeline capacity.

"This study demonstrates that we do not need increased gas capacity to meet electric reliability needs, and that electric ratepayers shouldn't foot the bill for additional pipelines," she said. "This study demonstrates that a much more cost-effective solution is to embrace energy efficiency and demand response programs that protect ratepayers and significantly reduce greenhouse gas emissions."

On the AG's side is the Conservation Law Foundation (CLF), which has fought the NED project (see Daily GPI,Sept. 22).

"Adding more gas pipeline infrastructure to a region already over-reliant on natural gas defies economic sense, environmental sense and common sense," said CLF President Bradley Campbell. "The attorney general's report confirms, with sound analysis and hard data, that forcing businesses and families to bankroll a new, expensive natural gas pipeline is absolutely the wrong choice for Massachusetts and the wrong choice for New England. Instead, the data shows that by investing in energy efficiency and prioritizing renewable alternatives, we can lower energy prices while protecting our air and water."

The AG's study was supported by grants from the Barr Foundation and the John Merck Fund.    

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