One of the nation’s largest natural gas pipeline companies announced Wednesday that it will expand its system in New England, a move that could help ease a lack of winter capacity that has been linked to billions of dollars in higher electricity costs in Maine and the region.
Houston-based Kinder Morgan Energy Partners L.P. said it has reached agreements with local natural gas distribution companies in southern New England to transport the equivalent of 500 million cubic feet per day on an expansion of the Tennessee Gas Pipeline called the Northeast Energy Direct Project.
New England burns an average of 4.5 billion cubic feet of gas a day in the winter. Adding 500 million cubic feet, an 11 percent increase, would be the equivalent of 3.5 million gallons of heating oil a day.
Kinder Morgan said it would boost capacity through a combination of new pipelines in Massachusetts, Pennsylvania and New York, as well as additional loops, new compressor stations and other modifications from Pennsylvania to New Hampshire. Service would begin in November 2018, pending approval from federal energy regulators and state and local governments.
Kinder Morgan’s plans complement other expansion and project proposals in Maine and the region that are meant to increase supply and bring the high cost of natural gas here closer to national averages. That could lower electricity rates because half of the region’s power is generated with natural gas.
A study by the region’s power grid operator found New England homes and businesses paid $3 billion more last winter for power than they would have if adequate gas supplies were available. Increased demand during a cold snap early last December, for example, pushed wholesale natural gas prices in New England four times higher in only a week. On Dec. 14, the average price of natural gas in the Boston area was nearly $33 per million BTUs, while in New York it was only $7 per million BTUs.
Kinder Morgan’s announcement comes as the six New England governors’ proposal to increase gas pipeline capacity by nearly 20 percent in three years continues to move forward. The plan has drawn criticism because utility customers would be asked to help pay for the projects, which could cost billions of dollars, through increased electricity rates. Those costs would be quickly recovered by savings on energy bills, advocates say.
Approval in Maine is being considered this summer and fall by the Maine Public Utilities Commission.
Tom Welch, the commission’s chair and an architect of the governors’ plan, said it’s too early to say whether the Tennessee Gas Pipeline expansion would lower electric rates, or by how much.
“I think it’s significant, but it’s not a game-changer,” Welch told the Portland Press Herald. “It certainly suggests the free market can do something, but whether it’s enough to achieve the public policy goals is a key question.”
The pipeline expansion plan was welcomed by the head of New England’s largest group of business energy users.
Robert Dorko, president of the Industrial Energy Consumer Group in Maine, called the proposal “a critical first step in eliminating the energy cost crisis that every winter hammers all New England energy consumers.”
A manager at Sappi Fine Paper in Skowhegan, Dorko represents factories that were forced to shut down or reduce production for periods last winter, when electricity prices spiked. The trade group is calling for new pipeline capacity approaching 2 billion cubic feet per day.
“Today’s announcement means that the ongoing gas pipeline capacity purchase proceeding at the Maine Public Utilities Commission can determine whether New England gets the gas pipeline capacity we need,” Dorko said. “Maine can tip the balance. … We cannot miss this opportunity.”
Kinder Morgan’s proposal also was greeted enthusiastically by labor unions that help build pipelines.
John Napolitano, president of the Maine State Building and Construction Trades Council, praised the announcement as “providing economic hope for building trades members and their families, and an urgently needed lifeline for Maine and New England energy consumers who struggle every winter with high energy costs.”
Conservation groups, including Environment Northeast, are pushing back. They say pipeline expansion ignores diversified, lower-impact solutions and adds to the region’s over-reliance on gas.
“ENE remains concerned that this new pipeline may depend on unprecedented subsidies from electric ratepayers, and the public needs more information before this moves forward,” said Peter Shattuck, the group’s director of market initiatives in Boston. “Additionally, consumer demand for cost-effective cleaner alternatives – such as energy efficiency, distributed generation and advanced heating technologies like air source heat pumps – is booming, and states need to evaluate the potential for utilizing these lower-risk alternatives to meet our energy needs.”
The Tennessee expansion also is drawing opposition in western Massachusetts, where residents are concerned about gas pipelines running through their neighborhoods.
Kinder Morgan said its project could be scaled up to meet future demand and capacity as high as 1.2 billion cubic feet a day.
Tux Turkel can be contacted at 791-6462 or at: