Tennessee Gas Pipeline: Mass DPU approves Berkshire Gas, National Grid contracts

 

Berkshire Eagle

By Clarence Fanto
cfanto@yahoo.com
@BE_cfanto on Twitter
POSTED:   09/01/2015 05:34:12 PM EDT

Opponents of Kinder Morgan’s proposed Tennessee Gas Pipeline project through eastern New York and western New England are facing a setback following state approval of long-term preliminary contracts for Berkshire Gas, National Grid and Springfield-based Columbia Gas to buy supplies from the proposed Northeast Energy Direct project.

The three major suppliers had signed 20-year agreements — to be formalized and go into effect when the pipeline goes into service — to purchase natural gas from the $3.3 billion, 30-inch natural gas pipeline project, if approved by federal regulators. But the preliminary contracts required state approval because they exceed one-year limits.

In an order issued late Monday, the state Department of Public Utilities approved the agreements despite intense opposition from pipeline critics, the state attorney general’s office and several state lawmakers.

One leading pipeline opponent predicted a court appeal of the DPU approval.

The pipeline originating in Wright, N.Y., west of Schenectady, using high-pressure fracked gas from the Marcellus Shale fields of Pennsylvania, would cross 16 Massachusetts towns, including seven in Berkshire County — Hancock, Lanesborough, Cheshire, Dalton, Hinsdale, Peru and Windsor. It would terminate in Dracut, north of Lowell, by way of southern New Hampshire.

The project was downsized earlier this summer from the original $5 billion, 36-inch pipeline plan because additional commitments from natural gas and electricity distributors were lagging.

Citing what it described as inadequate supplies of natural gas to meet demand, Berkshire Gas has declined to accept new customers in its Eastern Division service territory (Franklin and Hampshire counties) until the pipeline project is approved and goes on line.

Kinder Morgan is seeking approval by the Federal Energy Regulatory Commission by October 2016 so it can put the pipeline into service in November 2018.

The DPU ruling endorsed the Berkshire Gas contention that “there are no reasonable and viable pipeline alternatives to the NED project for the company because Berkshire’s service territory does not have access to any regional pipeline other than Tennessee, and Tennessee’s existing pipeline capacity to the company’s Eastern Division is fully subscribed. Moreover, the company states that the NED project is the only pipeline project under development in the region that could conceivably address the company’s capacity.”

The state agency also supported the company’s argument that “it has exhausted all available options to increase deliverability to its Eastern Division and has reached its limits with respect to providing safe, reliable, and least-cost service to customers.”

The ruling stated that the proposed agreement is “consistent with the company’s portfolio objectives and the state’s Global Warming Solutions Act … compares favorably to the range of reasonable alternatives, and is therefore consistent with the public interest.”

Reasonable alternatives include other pipeline projects and availability of liquified natural gas supplies.

In a background briefing for The Eagle from Boston, state energy officials said while the DPU approval order released Monday is specific to Berkshire Gas, parallel approvals are being issued to National Grid and Columbia Gas, utilizing the same “public interest standard.”

“The orders issued by the department do not constitute the approval of any interstate pipeline project,” said Peter Lorenz, communications director for the state Executive Office of Energy and Environmental Affairs. “The decision regarding whether or not an interstate pipeline may be constructed is made by the Federal Energy Regulatory Commission.”

Lorenz said the DPU approved preliminary contract agreements by the three distribution companies “for natural gas capacity to meet the current and forecasted demand of their customers.”

In response to The Eagle’s request for comment from Kinder Morgan, company spokesman Steve Crawford said that the DPU ruling “makes a few important points: Northeast Energy Direct will promote economic development by stabilizing electric prices; NED will serve customers in regions of New England that currently cannot receive natural gas ; NED will further reduce greenhouse gas emissions and help us reach Global Warming Solutions Act goals by allowing more homeowners to convert from oil heating to natural gas . ”

The companies’ agreements have been a lightning rod for criticism from state lawmakers, including Rep. Paul Mark, D-Peru, Stephen Kulik, D-Worthington, and others. The DPU had denied their application to become “full interveners” in the case.

State Attorney General Maura Healey also had challenged the preliminary contracts — calling for a delay in DPU action pending longer-range Berkshire Gas forecasts of energy supplies and demand — as did opposition groups such as Northeast Energy Solutions and the Pipeline Awareness Network for the Northeast.

In a reference to the hearings conducted by the DPU last spring, Katy Eiseman, president of the Pipeline Awareness Network, stated: “Given the way these proceedings were conducted, these rulings were entirely predictable. We will be weighing our options and conferring with Representative Kulik and our legal counsel regarding next steps.”

“Of course it is a disappointment,” she added, “but any other decision from this DPU would have been a complete surprise. We have long expected that a court appeal would be necessary to achieve a just and reasonable ruling on these agreements.

“The alternatives to this pipeline are real, and available at less risk and less cost to ratepayers, and less impact to landowners and the environment,” said Eiseman.

Contact Clarence Fanto at 413-637-2551.

Pipeline contract ruling …

Here is the summary of the state Department of Public Utilities’ ruling approving preliminary natural gas distribution contracts between Tennessee Gas Co. and three suppliers: Berkshire Gas, National Grid and Columbia Gas.

“The department has reviewed the company’s petition and the evidence presented to determine whether acquisition of capacity on the NED project is consistent with the company’s portfolio objectives and compares favorably to the range of available alternative options.

“The department finds that the company has identified a need for incremental capacity to ensure reliability and deliverability of natural gas to meet customer requirements. We also find that the company has established that the proposed acquisition of capacity on the NED project will enable the company to meet its short-and long-term requirements.

“We further find that the proposed acquisition will enhance the reliability, flexibility, and diversity of the company’s supply portfolio. Accordingly, based on our review, the department finds that the company’s proposed acquisition of NED project capacity is consistent with both the company’s portfolio objectives and the Global Warming Solutions Act, compares favorably to the range of reasonable alternatives, and is therefore consistent with the public interest.”

Source: State Department of Public Utilities Order, docket 15-48, available at:http://web1.env.state.ma.us/DPU/FileRoom/dockets/bynumber