Almost everyone agrees that the cost of electricity in Maine and New England is too high. Almost everyone, that is, except the region’s power plant owners.

They’ve recently stepped up their opposition to plans aimed at lowering wholesale natural gas prices by expanding pipeline capacity. These plans would pump more fuel to power plants when electricity demand peaks, increasing supply to gas-fired generators that now provide half of the region’s power.

Environmental and citizen groups grab headlines in the fight over new gas pipelines. But don’t look for these power generators to be marching around with protest signs that denounce climate change, or raising their voices at town meetings where pipeline routes are debated. Their fight is being waged quietly in legal filings at the Federal Energy Regulatory Commission in Washington, D.C., the key agency that must approve interstate power projects.

In a recent filing, two major players complain that a proposed pipeline project called Access Northeast would flood New England with natural gas, “unreasonably suppressing gas prices and wholesale power prices.”

These plant owners charge that states and utilities have concocted a “scheme” intended to “artificially suppress prices” by contracting for quantities of gas that the utilities know they don’t need.

Maine’s Public Utilities Commission approved such a “scheme” last week. It gave conditional approval to a plan in which electric customers would underwrite a contract through their power rates that would help pay for expanded natural gas capacity in New England. The project that two of the three commissioners said would provide the greatest benefit to consumers is Access Northeast, which its developer says will save New England ratepayers $1 billion in a typical year. Inadequate gas supply is costing Mainers more than $200 million a year, according to state estimates, because of the premium being charged for wholesale natural gas in New England when demand outstrips supply.



Massachusetts regulators have approved a similar plan. But efforts there to let utilities enter into long-term contracts for gas from Access Northeast are being challenged in court by the Conservation Law Foundation and the owner of Boston Harbor’s liquefied natural gas terminal.

The outcome of this complaint at FERC could affect rulings in Maine and Massachusetts, observers say.

One of the parties in the FERC case is NextEra Energy Resources, which owns Wyman Station in Yarmouth, Maine’s largest power plant.

Wyman Station in Yarmouth is owned by NextEra Energy Resources. The aging plant – fueled by oil, not gas – was put up for sale three years ago because it was considered obsolete and too costly to run. But tight natural gas supplies on the coldest winter days and lower oil prices have made Wyman valuable again.

Wyman Station in Yarmouth is owned by NextEra Energy Resources. The aging plant – fueled by oil, not gas – was put up for sale three years ago because it was considered obsolete and too costly to run. But tight natural gas supplies on the coldest winter days and lower oil prices have made Wyman valuable again.

Wyman is old and fueled by oil, not gas. It was put up for sale three years ago because it was considered obsolete and too costly to run. But tight natural gas supplies on the coldest winter days and lower oil prices have made Wyman very valuable again. ISO-New England, the region’s grid operator, pays millions of dollars each year for Wyman to stand ready in winter, in case the winter pipeline squeeze makes gas unavailable or too expensive.

NextEra is big into wind and solar these days, but it also owns the Seabrook nuclear power plant, one of the region’s largest and most important generators. Seabrook runs more-or-less constantly. Figures gathered by ISO-New England indicate that Seabrook earns tens of millions of dollars a month in the winter, thanks to higher wholesale prices.


NextEra also has a heavy hitter on its side in its complaint at FERC. Joseph Kelliher was the agency’s chairman until 2009. He’s now executive vice president for federal regulatory affairs at NextEra.

The other party is PSEG Cos. of Newark, New Jersey. It owns an oil-fired power plant in New Haven, Connecticut, and a coal- and oil-burning plant in Bridgeport, Connecticut, where it has plans to build a new gas-fired unit.

Together, they are fighting proposed, state-sponsored contracts that would support the development of Access Northeast, proposed by Houston-based Spectra Energy.

Access Northeast would boost the amount of gas flowing through the existing Algonquin and Maritimes & Northeast pipelines and provide direct connections to 60 percent of New England’s power plants. The goal is to make sure these plants have enough gas to run on the coldest days, when competing demands for heat and manufacturing make supplies tight and expensive.

Spectra plans to do this by upgrading the Algonquin line and adding LNG storage. That would bring up to 1 billion cubic feet a day of new gas, much of it from Pennsylvania shale deposits, to a region that needs more than 4 billion cubic feet on a frigid winter day. Spectra estimates that the 5,000 megawatts of electricity generated by the new gas supply could power 5 million typical homes. The target date is late 2018.

Underscoring these efforts are high electricity prices throughout New England. According to the latest comparison from the U.S. Energy Information Administration, retail residential electricity rates in April averaged 12.43 cents per kilowatt-hour in the U.S. while Maine residents averaged 14.34 cents per kwh, the lowest in the region. Connecticut residents averaged 21.15 cents per kwh that month, the highest in New England.



The administration of Gov. Paul LePage is a strong supporter of Access Northeast.

Patrick Woodcock, the governor’s energy director, points out that the difference today between whether wholesale power prices are high or low in the winter hinges directly on New England’s gas supply. Two winters ago, when a polar vortex plunged into the Northeast, gas priced for immediate delivery hit a record high and was 15 times more expensive than gas from fields in nearby Pennsylvania. The spike caused some paper mills and other factories to stop production.

Last winter, the reverse was true. Warm weather led to slack demand and very low prices.

“When power prices go up, who is receiving the extra payment?” Woodcock asked. “It’s going to the power plants, and everyone receives those higher prices, whether they’re a hydro or nuclear plant. So there’s a huge incentive for power generators to oppose additional natural gas capacity into New England.”

Woodcock said he disagrees with the characterization in the FERC filing that having utility customers help pay for expanding gas capacity is a scheme intended to “artificially suppress prices.” Any time utility regulators take action it has some impact on prices, he said, so the term “artificial” has no meaning.


NextEra didn’t respond to an interview request. But Dan Dolan, president of the New England Power Generators, said opposition isn’t directed at the actual project, but the way it would be financed.

“We don’t believe electric utility ratepayers should subsidize a new natural gas pipeline used by power plants,” said Dolan, whose trade group represents NextEra and PSEG.

Dolan acknowledged that pipeline expansions would bring more supply and cheaper gas. But he said consumers would still pay billions of dollars to build the lines, which wouldn’t be fully used on many days of the year. An unintended consequence, he said, is that cheap gas would threaten operations at the region’s two remaining nuclear power plants, Seabrook and Millstone in Connecticut.

Dolan pointed out that wholesale electricity prices are now among the lowest on record. At the same time, owners are competing with each other, spending billions to build the next generation of plants, without state subsidies.


But Tony Buxton, a lawyer who represents Maine manufacturers that use a lot of energy and lobbies for natural gas expansion, said New England still has some of the highest power prices in North America. The global glut of petroleum and natural gas – not competition – is chiefly responsible for moderating prices. Even now, gas delivered into New England is more than twice as expensive as gas in Pennsylvania, recent figures from the federal Energy Information Administration show.


That point was echoed by Richard Kruse, a Spectra vice president for regulatory issues. Kruse said electric rates will go down when Access Northeast is built, and generators will be forced to acknowledge that.

“For them,” he said, “lower costs for consumers appear to be a bad thing. The complaint is an effort to maintain the status quo, which only ensures continued high and volatile prices, given infrastructure constraints in the region.”

While the FERC filing is focused on the Access Northeast project, it provides a forum for a larger legal battle over the role of states, versus the federal government, in setting energy policy.

For instance: FERC rules help make sure the electric grid is maintained properly to keep the lights on. Reliability is one of the benefits New England states see from expanded pipeline capacity, but NextEra and PSEG say the states have failed to explain why their judgments should supersede FERC.

In the FERC filing, the two power generators say that the most economic way to meet demand in the winter is to build power plants that fire on both oil and natural gas, and to create access to LNG for gas-fired plants.

“There are many legitimate ways to lower prices for customers, such as increasing efficiency, but this (ratepayer-backed pipeline expansion) is not one of them,” they said in their complaint.


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