Maine Regulators Approve Natural Gas Pipeline Expansion, Rejecting Staff Recommendation

Jul 19, 2016

The Maine Public Utilities Commission has determined that Maine consumers would benefit by investing in expansion of natural gas pipeline capacity. The decision goes against an earlier recommendation from PUC staff, and it’s contingent on other New England states taking similar action and on a series of hurdles being cleared.

The PUC’s deliberations were technical and complicated. In the end, commission Chair Mark Vannoy says the big question was whether it was reasonably likely that the benefits to consumers would outweigh the costs of building additional pipeline infrastructure. PUC staff considered the outlay too risky. Commissioners disagreed, even though Vannoy says it’s not yet clear what the cost to consumers will be on their monthly bills.

“That’s going to depend on a number of things. The rest of the region is going to have to get behind the project. They’re going to have to go through their processes and get there. We’re going to have to negotiate a final precedent agreement,” he says. “So we have an idea of what the cost will be but we don’t have it down to the final yet.”

While the three commissioners voted unanimously to move forward with a contract for pipeline expansion, they disagreed over which of two existing pipeline projects to support. Two recommended Texas-based Spectra Energy’s Algonquin Pipeline project, which is already underway. One argued that the state should proceed with the smaller Portland Natural Gas Transmission System instead.

Commissioners did agree that both projects meet the criteria of the Energy Cost Reduction Act, a bill passed by the Legislature in 2013 as a way to avoid electricity rate increases. Vannoy says his vote relied heavily on arguments from Public Advocate Tim Schneider, who supports pipeline expansion based on cost-benefits modeling.

“We think that as the region becomes more reliant on natural gas, which is something that’s happening right now, there’s not enough gas pipeline capacity, and without government intervention there won’t be,” Schneider says.

Without additional capacity, he says the region is likely to see price spikes in the future as it did two years ago. He emphasizes that this is a regional effort — Maine has taken the first big step, but other states will have to go along.

“Everyone agreed that that’s the best way to move forward and the least risky,” Schneider says.

Well, not quite everyone.

“You have the commission’s own staff saying it’s a bad deal, recommending against it. Because remember, we are talking about $1 billion of consumer money being put at risk. The costs are certain in this case. The benefits are speculative,” says Ben Tettlebaum, a staff attorney with the Conservation Law Foundation. “I mean in some ways it’s like going to Vegas and betting this in a slot machine.”

One thing all parties seem to agree on is that there are additional obstacles to clear before any final deal can be reached. First, Gov. LePage will have to sign off on it. But even before that, Tettlebaum says the Massachusetts Supreme Judicial Court is expected to rule on whether that state can move forward with a similar contract.

That’s because the Conservation Law Foundation has argued that the state doesn’t have legislation authorizing one.

“If Massachusetts cannot move forward than that presents a substantial obstacle to Maine actually going forward with the contract because they constitute a significant portion of the load in the region,” Tettlebaum says.

If, for whatever reason, not all the other states choose to go along with Maine, Vannoy says the PUC has preserved the opportunity to go back to Portland Natural Gas Transmission System projects and potentially negotiate an agreement with a smaller group of willing states.

In the meantime, Tettlebaum says his organization is considering all of its options.