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Maine PUC endorses utility contracts with pipelines, favors Access Northeast

Maineregulators have unanimously endorsed a plan that authorizes electricdistribution companies to purchase capacity on natural gas pipelines servingthe increasingly gas-dependent ISO New England Inc. region.

TheMaine Public Utilities Commission in its July 19 decision ignored PUC staffadvice and voted toallow ratepayer-supported electric utilities to enter into contracts with aregional pipeline operator if neighbors Connecticut, Massachusetts, NewHampshire and Rhode Island move forward in supporting the regional plan aswell. The commission in a 2-1 decision also endorsed 's Access Northeastas the regional pipeline expansion project most likely to succeed.

TheAccess Northeast pipeline and storage project, also backed by and , would upgradethe Algonquin Gas TransmissionLLC system and add regional liquefied natural gas storage assets inNew England to provide up to 925,000 Dth/d of gas deliveries. DissentingCommissioner Carlisle McLean instead endorsed the project over concerns that the use of gas storage by AccessNortheast would invite lawsuits. A third contender, 's Northeast EnergyDirect pipeline project, was canceled in April.

Theendorsement of the Access Northeast project allows Maine electric utilities tostart negotiations with Spectra as enabled by the Maine Energy Cost ReductionAct. Under the act, the commission has the authority, with the help of thestate's advocate and governor's office, to enter into gas supply contracts orallow a utility to do so instead for up to $75 million per year as long it isin the public interest. Maine's major utilities are subsidiary andEmera Inc. subsidiaryEmera Maine. The lawwas enacted in 2013 following extreme winter weather that sent electricityprices rocketing as a result of pipeline constraints caused by high demand forspace heating.

"Ouractions here are simply to restore the supply demand balance in theregion," PUC Chairman Mark Vannoy said at the deliberations. "They donot seek to suppress pricing below that which a balanced market would supply."

"Atthis point, the best path forward for Maine and the region is to finalize aprecedent agreement with Access Northeast," Vannoy said. In addition toneeding approval from Gov. Paul LePage, the future of the plan to shore up NewEngland's gas supply capacity through contracts with utilities is dependent onpending decisions by both FERC and the Supreme Judicial Court of Massachusetts,which is considering a lawsuit against a similar order by the Massachusetts Department of PublicUtilities.

GregCrisp, general manager of business development for Spectra, in a statementwelcomed the vote to move forward with negotiating a contract for Maine'sload-weighted share in the Access Northeast Project.

AnthonyBuxton, an attorney speaking on behalf of manufacturers for the IndustrialEnergy Consumer Group, in a news release also expressed support for thecommissioners' decision and argued more gas capacity is needed to lowerelectric rates. According to Buxton, the PUC's authorization to commit to $75million will only eliminate about $200 million a year in existing energy costsfor Maine consumers, who have been paying an additional $200 million to $300million more annually due to insufficient pipeline capacity.

TheNew England Power Generators Association, which represents regional merchantgenerators, criticized the decision in a statement and stressed natural gasprices are at historic lows as liquefied natural gas exports continue to increase,power plants meet reliability obligations, and new natural gas pipelines arebuilt.

"Theapproval by the Maine PUC appears to be the first domino to fall for contractsto subsidize natural gas pipeline development into New England," NEPGAPresident Dan Dolan said. "Inserting ratepayer financial guarantees forthese projects, however, will lead to market distortions, costs and risks forthose ratepayers."

TheConservation Law Foundation, an environmental advocacy group which is aplaintiff in the Massachusetts case, also attacked the PUC for its decision."Today, the fossil fuel industry hoodwinked the PUC into gambling onebillion dollars of Mainers' hard-earned money on a massive new gaspipeline," foundation attorney Ben Tettlebaum said in a news release."We will continue fighting to ensure that no other state in New Englandfollows in Maine's footsteps and that this proposed pipeline dies on the vine."