Court has dealt a major setback to the state's efforts to add natural gas pipeline capacity
OREANDA-NEWS. The Massachusetts Supreme Judicial Court has dealt a major setback to the state's efforts to add natural gas pipeline capacity in New England by requiring electric ratepayers to pay for new infrastructure.
The court today invalidated an order from state utility regulators that authorized electric utilities to recover from their ratepayers the costs of entering into long-term contracts for pipeline capacity. Massachusetts governor Charlie Baker (R) pushed the idea as a way to reduce natural gas price spikes each winter caused by pipeline constraints. Those price spikes translate into higher electric prices in New England because the grid relies heavily on gas-fired generation.
But the Massachusetts high court ruled today that it would undermine the key goal of a 1997 state law that deregulated electric markets and shifted the risks of power generation from ratepayers to developers. The plan would expose ratepayers to the "very types of risks" the state legislature was trying to protect them from, the court ruled.
US midstream company Spectra Energy was relying heavily on the funding plan to pay for its proposed 900mn cf/d Access Northeast pipeline. The project, which includes an LNG regasification facility in Massachusetts with 6.8 Bcf of gas storage, would mostly serve gas-fired power plants and be located largely in existing utility corridors.
Spectra said it was "extremely disappointed" with the court ruling today. It said it would need to "reevaluate our path forward — consistent with the court's decision — to provide the infrastructure so urgently needed by New England's electric consumers."
The pipeline funding plan was highly divisive in the state. Massachusetts attorney general Maura Healey strongly opposed the plan. The decision "confirms our longstanding position that existing law bars electric distribution companies from using ratepayer money to foot the bill for natural gas pipelines," she said today.