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National Grid reveals plans to connect NY customers hit by gas moratorium

National Grid USA said it will take "unprecedented" measures to provide gas to thousands of downstate New York homes and businesses denied service this year, bowing to pressure from the governor's mansion while continuing to raise concerns about its ability to meet winter demand in light of supply constraints.

The company unveiled its plans after New York regulators ordered National Grid to immediately connect 1,157 customers and present plans to accommodate more than 3,700 applicants in total. The utility's strategy mostly relies on reducing gas demand among existing customers this winter, and National Grid continued to warn the state's refusal to approve new pipeline capacity puts New Yorkers at risk.

"[E]ven in a best case scenario, these gas conservation programs will only allow a relatively small number of new customers to safely connect to the system this winter," the company said in a recent finding.

National Grid in May refused to process new applications unless the state moves forward the Northeast Supply Enhancement pipeline project, which would increase gas capacity into its New York City and Long Island service territories. The company has argued the pipeline system is at capacity but is now trying to meet Gov. Andrew Cuomo's demands to accommodate customers after he threatened to slap fines on National Grid and replace its downstate utilities with another gas provider.

National Grid aims to expand demand response, energy efficiency

The company's implementation plan for connecting the initial 1,157 customers largely relies on convincing existing customers to dial back their gas use during peak times and implementing energy efficiency measures.

National Grid said it will attempt to expand an existing pilot program that offers financial incentives to commercial and industrial customers to tap alternate fuel sources and throttle back their gas consumption. That approach could allow the company to reallocate gas from big customers to smaller ones on the coldest days of winter.

The utility acknowledged it has never attempted demand response on this scale but said that the strategy could work based on customer interest in the incentive program and in combination with other measures. Those measures include convincing some customers to opt for non-firm service instead of firm service, allowing National Grid to interrupt supplies to these users as needed.

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National Grid is also considering rolling out a similar program for residential customers to voluntarily cut their use during peak times. At the same time, the company is seeking to expand an energy efficiency programs to further drive down peak usage. The utility said it will prioritize programs based on customer interest and their success in reducing demand in the past.

National Grid believes the measures should be sufficient to accommodate the first batch of 1,157 customers, and once the utility meets those customers' needs, it will consider additional residential and commercial hookups on a case-by-case basis.

Utility turns to compressed natural gas

National Grid also submitted a contingency plan, as ordered by the New York Public Service Commission, to identify solutions to connect more customers and account for the service interruptions that regularly crop up during the peak winter heating season.

The cornerstone of the contingency plan is securing supplies of compressed natural gas, or CNG. The plan requires running about 50 CNG trailers a day between two existing injection points in Long Island. National Grid warned that the supplies would be vulnerable to poor road conditions, weather events and traffic congestion.

"Because the availability and deliverability of sufficient CNG supplies is dependent on a number of variables outside of the company's control, CNG is not considered a viable long-term solution to serving new peak demand," the utility wrote.

National Grid has also secured peaking supplies of natural gas through primary firm pipeline capacity. However, suppliers made much of that gas available in response to a service disruption on the Texas Eastern Transmission LP system — an interruption that could reduce normal service into National Grid's service territory by more than 100,000 Dth/d. That means the peaking supplies the utility has secured will mostly just offset curtailments from TETCO and do not provide a reliable way to expand service, National Grid said.

The New York Public Service Commission claimed in its Oct. 11 order that National Grid would have a better buffer to absorb disruptions on interstate systems had it invested more in demand response, energy efficiency and local compressed and renewable natural gas facilities in recent years.