PUC Considering Proposals to Expand Natural Gas in Maine

Apr 28, 2016

Maine’s top utility regulators are considering a proposal to increase the region’s gas pipeline capacity — and who would pay for it.

Natural gas powers half of the region’s electricity plants, and three years ago rising natural gas prices and constricted supplies drove wintertime electricity prices to surprising highs.

That drove the Legislature to act, directing the Public Utilities Commission to study whether Mainers could benefit if the state secured long-term contracts for gas supply.

The upfront cost to consumers under the proposed plan would be as much as $75 million a year. But the contracts could provide a secure revenue stream that gas companies could leverage to finance investments in new pipeline capacity.

Backers say that could benefit consumers in the long run by decreasing the cost of electricity from gas-fired power plants.

“We’ve calculated that the reduction on their bills — the net reduction on their bills — on the commodity side is probably in the 15-16 percent range after paying for the pipeline,” says James Daly, vice president of energy supply for Eversource Energy, a southern New England utility that is partnering with other industry players to propose a major buildout of pipeline capacity through Massachusetts, a project known as Access Northeast.

That project was one of three proposals submitted to the PUC, although one of the others, called Northeast Energy Direct, was scrapped last week.

Daly says that’s a sign regulators should stabilize the market by securing long-term gas contracts.

“We’ve seen the danger of not moving and that big projects that cost a lot of money, that proponents just leave the market, they say, ‘We’re not doing it,’” he says. “So I think the market needs a shot in the arm.”

But detractors say that natural gas prices have cratered since the high of three years ago, and demand has leveled off as well, showing that regulatory intervention could be risky for consumers.

“The idea that increasing the supply in New England will drive down electricity prices is speculative, and worse than that it’s speculation on the backs of our electricity customers,” says Greg Cunningham, an energy analyst at the Conservation Law Foundation.

Cunningham says that at a time when the U.S. is trying to reduce carbon dioxide emissions, it would be a mistake to lock the region and ratepayers into an energy regime dominated by natural gas, which contributes to global warming.

The Public Utilities Commission is taking testimony on the proposals this week and may have another hearing next week. A decision is expected in June.