Like a grizzly bear accidentally stepping on a porcupine, VikingVoyageur seems to have tread on a Wisconsin landowner whose husbandhappens to be a Noble Prize winning economist with a dislike ofpipeline infrastructure. In testimony filed at FERC on behalf ofhis wife Katherine D. Miller, Merton H. Miller, McCormickDistinguished Service Professor of Finance, Emeritus, of theGraduate School of Business, University of Chicago, warned theCommission if its goal in approving new pipelines is to benefitconsumers then it should toss the Voyageur project.
The pipeline would have “no beneficial price impact onconsumers,” said Miller, a winner of the Nobel Memorial Prize inEconomic Sciences and a current member of the board of directors ofthe Chicago Mercantile Exchange. “The gains from this project arestrictly private and to be divided among producers, shippers andlocal distributors.”
Miller explained that even though the 2.3 Bcf/d AlliancePipeline Project does not drop gas off in Wisconsin, Wisconsincustomers will experience lower prices if Alliance is built becauseWisconsin prices are basically Chicago hub prices plustransportation to Wisconsin. If the price decreases in Chicago -and it will if Alliance is built, said Miller – the price of gasalso will drop in Wisconsin. Even though Voyageur would run throughWisconsin before reaching Chicago, however, Wisconsin customerswould not experience any additional benefit. The higher netbackswould line the pockets of Canadian producers and Voyageur shippersrather than ultimate endusers, Miller said.
Essentially, the two pipeline projects are no different in theireconomic and supply impact from a Wisconsin consumer’s perspective.The line that costs the least to build will be the most economic.But building both lines would be a real waste, resulting ininefficiencies of redundancy, Miller said. “[E]ither two pipelineseach operating at less than economic capacity [would be built], orone surviving pipeline and one abandoned pipeline. In either case,the country’s valuable economic resources are being wasted.”
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