A first-of-its kind effort by the six New England governors to expand natural gas pipeline capacity in the region has stalled and may be dead because of Massachusetts politics, dealing a blow to efforts to save Maine homes and businesses $120 million a year.
The plan, announced with great fanfare in January, would increase gas pipeline capacity by nearly 20 percent within three years and build at least one major electricity transmission line to bring renewable energy from Canada. Utility customers would be asked to help pay for the projects through electricity rates. The costs, though, would be recovered through savings on energy bills, according to advocates.
The plan hit a snag this month when the Massachusetts Legislature rejected a so-called clean energy bill presented by Gov. Deval Patrick. One part of that bill would have let utilities sign contracts for hydropower from Canada, a measure opposed by local power generators.
At the same time, growing public opposition to a new pipeline across northern Massachusetts has prompted Patrick and other influential politicians in the state to reconsider their support for the broader plan.
Taken together, the events have hobbled the regional effort, because new pipeline capacity in Massachusetts is critical to the venture.
The Maine Public Utilities Commission is hearing a case to determine whether Maine and its power customers should help subsidize the regional effort, and to what degree. A decision could come in early fall, but the developments in Massachusetts may shift the discussion to what Maine can do on its own.
PUC Chairman Tom Welch, who has helped develop the regional plan, acknowledged the setback in an interview Tuesday. He stopped short of saying the process is dead, but expressed hope that the states will find a new way forward.
“It’s a big issue and it’s complicated,” Welch said. “Sometimes the universe shifts a little bit and we have to figure out what to do with the universe as it exists.”
The governors’ plan was meant to ease a bottleneck that’s keeping cheaper natural gas from reaching New England on cold winter days, when demand for heating and power generation is high. The shortage has created record-high gas prices here at times, which in turn has increased electricity rates. That’s because roughly half of the region’s electricity is generated with gas.
Last winter, some paper mills briefly curtailed operations when power rates spiked. A Maine study released in March showed that if natural gas prices in New England were closer to those in other parts of the Northeast, electricity customers could save $1.5 billion a year, with $120 million of that savings in Maine.
For that reason, expanding pipeline capacity has been a top priority for Gov. Paul LePage. Last week, the governor wrote a letter to Patrick urging him to renew his support for the regional effort. He called Massachusetts’ decision to step back “a colossal mistake.”
LePage’s sentiment was echoed by a state official who represents the interests of utility customers.
“I’m disappointed that the regional effort has stalled, because we think that a regional solution is the best path forward,” said Tim Schneider, Maine’s public advocate. “If we have another winter like the last one, I expect everyone will come back to the table, though we’ll have lost a year. This puts more emphasis on the process at the Maine PUC.”
Natural gas expansion projects in the northern suburbs of Portland and the Augusta area will not be directly affected if the regional pipeline plan collapses because utilities sign long-term contracts for supply.
In Massachusetts, a plan to build a new natural gas pipeline has led to rallies and protests, and reactions from politicians.
Houston-based Kinder Morgan Inc. wants to build a 180-mile pipeline from New York state that would connect the shale gas fields in Pennsylvania to the pipeline network in Massachusetts. But the pipeline and its likely route across undeveloped land has angered property owners and environmental activists, who have concerns ranging from the effects of hydraulic fracturing to cutting down apple orchards.
They have found support from two Democratic U.S. senators, Ed Markey and Elizabeth Warren of Massachusetts. In a column last week in The Berkshire Eagle, Warren wrote: “Before we sink more money in gas infrastructure, we have an obligation wherever possible to focus our investments on the clean technologies of the future – not the dirty fuels of the past – and to minimize the environmental impact of all our energy infrastructure projects.”
Warren’s statement reflects the concerns of environmental groups including the Conservation Law Foundation, which has been fighting the governors’ process. The actions in Massachusetts were welcomed by Greg Cunningham, a senior attorney for Conservation Law Foundation in Portland. Consultants hired by his organization have been testifying at the Maine PUC against expanding pipeline capacity and Maine’s role in leading the venture.
“I think the early euphoria of Maine jump-starting a regional process has substantially subsided,” he said.
But discussions are moving ahead at the PUC. One issue is how, or if, Maine can help spur additional gas capacity to erase the price spread between New England and the Northeast average. Paper mills and other industrial customers have lobbied for a capacity that’s twice what the governors have been proposing. These estimates have led to highly technical discussions of risk and benefits – how much risk Maine ratepayers should bear under different situations and how to mitigate it.
Gubernatorial elections are on tap across New England in November, so support for the regional pipeline plan may change with the political landscape. At the same time, some pipeline expansion proposals may move ahead without major political or public opposition.
One example is Spectra Energy’s Algonquin Incremental Market project. It would boost gas volumes on an existing line through New York to Massachusetts without digging in a new corridor.
The Algonquin project has customers signed up and is awaiting permits, with the goal of pumping gas by November 2016. Not everyone agrees with the estimate, but Spectra Energy says this project alone can reduce the spread between what New England pays for gas and the Northeast average by roughly 35 percent.
Tux Turkel can be contacted at 791-6462 or at: