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Maine PUC staff report urges rejection of LNG storage plans

Staff of the Maine Public Utilities Commission recommended that the panel shoot down several proposals for LNG storage projects that aim to offer a solution to the state's high peak-demand utility prices.

Out of 11 proposals, commission staff said, not one satisfies requirements in the state's LNG Storage Act, which says storage contracts must be commercially reasonable and in the public interest, as well as materially enhance LNG storage, have a significant effect on peak pricing and be reasonably likely to economically benefit gas and power utility ratepayers.

The commission in September 2016 asked for "physical energy storage contract" proposals after a decision by the state Legislature to give the commission the authority to direct Maine's utilities to execute a contract proposal.

The staff in its March 27 recommendation pointed to an earlier report by Navigant Consulting that found that while the proposals would increase the amount of LNG in the region, none of the contracts would be commercially viable. "Put another way, any benefit of having LNG storage capacity is negated by contract costs," Navigant said.

The report looked at scenarios with and without the Access Northeast gas pipeline, a Spectra Energy Corp/National Grid USA partnership that has been in limbo since regulatory and judicial decisions struck down proposed capacity contracts with electric utilities to fund the project. With the pipeline, Navigant found, just one of the LNG storage proposals had a positive net present value, which was slight at $6 million. Without Access Northeast, seven of the proposals would break even, though the report cautioned that peak prices are assumed to be consistently avoided in the scenario.

The commission staff's report is open for comments until the close of business on April 3. (Maine PUC Docket 2016-00253)