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Study charging improper use of New England pipe capacity was 'flawed,' FERC says

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Study charging improper use of New England pipe capacity was 'flawed,' FERC says

Federal Energy Regulatory Commission staff said there was "no evidence of anticompetitive withholding of natural gas pipeline capacity" by New England shippers on Enbridge Inc.'s Algonquin Gas Transmission LLC system, as an Environmental Defense Fund report had alleged.

The FERC inquiry arose out of allegations in a report released by the Environmental Defense Fund, or EDF, in 2017. The report said New England utilities Eversource Energy and Avangrid Inc. had deliberately blocked access to pipeline capacity on the Algonquin system to drive up gas and power prices in the region and had cost New England consumers an extra $3.6 billion. The report said Eversource and Avangrid blocked access by scheduling deliveries without actually flowing gas. The EDF focused on New England and the Algonquin system, but the report's authors said other regions should be studied for similar behavior. The utilities strongly disputed the report.

The commission said in a Feb. 27 news release that it will take "no further action on the matter."

States, including Massachusetts and Connecticut, launched reviews of pipeline shippers behavior based on the report. "Commission staff took these allegations very seriously and conducted an extensive review of both publicly available and non-public data," FERC staff said. "On the basis of that review, staff determined that EDF's study was flawed and led to incorrect conclusions about the alleged withholding. Commission staff found no evidence of capacity withholding."

The FERC Office of Enforcement's Division of Analytics and Surveillance led the inquiry. The office monitors wholesale gas and power markets for potential market manipulation and other inappropriate behavior.

Eversource spokesman Michael Durand said the company has pointed to problems with the report since it was released. "FERC's finding confirms what we've been stating all along — that the defamatory claims made by the EDF were uninformed and inaccurate," he said.

The EDF was not available for comment at the time of publication. The environmental group, along with other organizations, has disagreed with the pipeline industry and other parties that the New England market suffers from the effects of a limited pipeline network during winter and other peak periods. The group has opposed some attempts by states and pipeline companies to build more capacity, including the abandoned Access Northeast expansion project on the Algonquin pipeline.

The expansion was developed by Enbridge's Spectra Energy Partners LP, Eversource and National Grid plc.