BOSTON — Fallout continues from last week's Supreme Judicial Court decision that forbade Massachusetts electric companies from charging their customers for the cost of building natural gas pipelines in New England.
The "innovative mechanism," where electric utilities would buy pipeline capacity on behalf of power plants, was proposed by the administration of Gov. Charlie Baker and adopted by his Department of Public Utilities last fall. It quickly met a legal challenge from the Conservation Law Foundation.
On Monday and Tuesday, four Massachusetts electric utilities under Eversource and National Grid withdrew petitions for firm capacity on Access Northeast, a $3 billion line planned by Spectra Energy, National Grid and Eversource.
In late 2015, the utilities — NSTAR, Western Massachusetts Electric, Massachusetts Electric and Nantucket Electric — petitioned the Department of Public Utilities for 20-year contracts with Access Northeast. The withdrawals come days after Attorney General Maura Healey asked the department to withdraw the petitions.
The high court ruling that vacated the so-called "pipeline tax" now raises questions about the future of Access Northeast. Last week, pipeline partners expressed disappointment, but said they are not ready to give up the idea of expanding natural gas capacity in the six-state region.
"While the court's decision is certainly a setback, we will re-evaluate our path forward and remain committed to working with the New England states to provide the infrastructure so urgently needed to ensure reliable and lower-cost electricity for customers," said Eversource spokeswoman Caroline Pretyman.
Similar statements were released by National Grid and Algonquin Gas Transmission, developer of Access Northeast.
As planned, the pipeline would cut through the Massachusetts towns of Franklin, Millis, Norfolk, Sharon, Stoughton, Canton, Bellingham and Walpole. It's part of a larger plan, described in three federal dockets, to transport Marcellus shale gas up the New England coast to Canada while serving local distribution companies, industry and a cluster of power generators in three states.
In New England, pipeline advocates face a conundrum. Pipeline developers won't move forward without committed customers lined up. But power plants, which use natural gas, prefer to buy fuel on the spot market instead of signing contracts.
Under the mechanism, electric companies would commit to buying pipeline space, and release fuel to generators through the market. State officials said it would provide reliable fuel to power generators, alleviate price spikes, and help expand natural gas pipeline infrastructure.
The landmark Aug. 22 opinion, penned by Supreme Court Justice Robert Cordy before his retirement, said the mechanism would violate a 1997 law that broke up energy monopolies in the state.
Court nixes 'pipeline tax,' electric utilities may not finance major natural gas projects
Fossil-fuel foes had dubbed the scheme the "pipeline tax," and said that corporations, not consumers, should shoulder the risks associated with infrastructure development.
However, pipeline advocates asserted the tariffs would save New Englanders $1 billion a year through lowering the cost of wholesale electricity. More than half of New England's power is now generated by natural gas.
It's not just environmentalists opposing utility support for pipelines. Two major power generators, NextEra Energy and Public Service Enterprise Group, have asked federal regulators to block the arrangement across New England, saying it would flood the market with natural gas and artificially suppress wholesale energy prices.
Similar pipeline funding mechanisms are on the table in Connecticut, Maine, New Hampshire, and Rhode Island. It remains to be seen if the Federal Energy Regulatory Commission will approve Access Northeast without support from Massachusetts electric utilities.
The Rhode Island Public Utilities Commission is expected to discuss the impact of the Massachusetts court decision on Aug. 25. In southern New England, the project includes 123 miles of new pipeline, expansion of seven compressor stations, including new compressor stations in Weymouth and Rehoboth, and a liquefied natural gas storage facility.
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