Week Ending February 8, 2019

Moratoriums on Gas Service Raised as Industry Seeks Infrastructure Additions

This Article Appears as Published in Foster Report No 3235
Moratoriums on Gas Service Raised as Industry Seeks Infrastructure Additions

While the Green New Deal has gained a lot of attention nationally about transitioning away from fossil fuels, regional challenges for natural gas pipelines and gas service moratoriums in the Northeast are spurring debate at local levels about pipeline and distribution infrastructure.

At different gas industry events over the past few weeks, the moratoriums for new gas customers in southern New York state and western Massachusetts have been referred to as indicating a need for new pipeline facilities. The inability to build new pipelines to meet growing natural gas demand has been cited by American Gas Association (AGA) President and CEO Dave McCurdy, Diane Leopold, president and CEO of Dominion Energy’s Gas Infrastructure Group, and AGA Chairman James Torgerson, who is CEO of AVANGRID.

AVANGRID’s Berkshire Gas has had a gas service moratorium in place for parts of Franklin and Hampshire Counties for several years because the utility cannot deliver additional gas supplies to the areas, Torgerson noted when he became AGA chairman in December 2018.

More recently, at the February 4 Natural Gas Roundtable, McCurdy commented that there is not enough pipeline capacity to deliver gas to Northeast markets due to political barriers put up by “certain governors.” It was clear he was referring to New York Governor Andrew Cuomo, and state regulatory actions that have essentially blocked or significantly stalled new interstate natural gas pipelines from gaining approvals, which can have economic implications for customers in the region.

That was mentioned by consumers and business interests in New York after utility Consolidated Edison (ConEd) in January announced it would impose a gas service moratorium for much of Westchester County due to limited pipeline capacity on high demand days. The utility is trying to meet consumer needs through non-pipeline alternatives, which is what renewable resource advocates and environmental groups urge. Those alternatives will be explored along with gas infrastructure projects that can meet New York State requirements, ConEd said in its January statement announcing the moratorium.

However, until the utility can align demand with available supply, “we will no longer be accepting applications for natural gas connections from new customers in most of our Westchester County service area beginning March 15,” ConEd said.

State lawmakers and others have raised concerns about the economic impact the gas moratorium will have, limiting residential and commercial development in the area. Mike Spano, mayor of Yonkers, New York, and Assemblywoman Amy Paulin have commented on the harm a gas service moratorium would have in the region.

ConEd’s moratorium announcement was foreseeable years ago and is a sign of what’s to come from other utilities if additional pipeline infrastructure cannot be built, said Peter Kauffmann, spokesman for New Yorkers for Affordable Energy. The group is a coalition of community, labor, and business leaders who support efforts to enhance access to natural gas in the state, which banned fracking years ago and has a hard line on pipeline facilities being addressed in court decisions.

“This action is a direct result of the state’s continued blockade on natural gas infrastructure, which will make it harder and harder – and more and more expensive – for New Yorkers to heat their homes and run their businesses. Despite extensive efforts by Con Ed to identify non-pipeline alternatives, the reality is that additional natural gas infrastructure is needed to ensure the state’s energy needs are met,” Kauffmann said in a statement.

The New York Public Service Commission (PSC) on February 7 said it will hold hearings on ConEd’s decision to not accept new gas customers in most of Westchester County. The hearings will allow comments from the public at two different venues on February 12 and February 13, overseen by an administrative law judge or other presiding officer.

PSC staff is investigating the changing market conditions that led the utility to announce the moratorium. “Staff will develop a report on its findings and will review how utilities across the state are meeting customer needs in a manner that is consistent with the state’s energy goals,” the PSC said. The report is due July 1, 2019.

Environmental groups have expressed support for restricting new gas pipeline infrastructure, and actions in a few other states could aid their cause. Legislation in Vermont has been introduced that would prohibit new fossil fuel infrastructure, with state lawmakers discussing the breadth and applicability of the measure at a recent discussion on the bill (S. 66). The prohibition would not apply to gasoline stations or repairs to existing pipelines, noted state Sen. Alison Clarkson.

As introduced in early February, “this bill proposes to prohibit the construction of fossil fuel infrastructure in Vermont, except for infrastructure certified by the Federal Energy Regulatory Commission,” it states.

Several pipeline projects to move additional gas supplies into New England have been on hold due to market or legal challenges at different levels.

The head of the Interstate Natural Gas Association of America commented on state actions in a statement about President Donald Trump’s State of the Union address to Congress. INGAA President and CEO Don Santa said the group is encouraged by the Trump administration emphasizing the development of infrastructure, noting that pipelines are a vital transportation link between domestic production areas and consumers.

“Nonetheless, over the past few weeks we’ve seen natural gas utilities make announcements about the possible curtailment of new natural gas hook-ups in some areas of the country that are driven by decisions made at the state level. The impact of these decisions is real and entirely avoidable,” Santa said.

McCurdy and other gas industry officials have noted that to address climate change concerns and sustainability goals, more utilities are making renewable natural gas available and part of the gas supply stream. Such efforts capture methane from municipal waste facilities, agricultural resources such as anaerobic digestors, and other facilities to minimize the carbon footprint associated with natural gas use, officials have said.

FERC commissioners have commented on the gas supply concerns of ISO New England and a report issued in 2018 that warned about fuel security, reliance on more gas-fired generation and the possibility of controlled power outages in the years to come. Much of the debate in New England is about pipeline capacity and the contracting practices of generators, with some groups arguing that additional capacity is not needed but market pricing and reforms to encourage firm transportation contracts with pipelines.

In Maryland, which also has banned fracking – even though the production potential of the state is limited — lawmakers on February 7 introduced legislation to require the state Department of the Environment to conduct full reviews under Section 401 of the Clean Water Act for any new gas pipelines. Previously, the state took a lax view of its CWA authority on pipeline facilities, which was why a Columbia Gas Transmission project went before the Board of Public Works, which rejected a right-of-way easement for the short pipeline that would pass the Western Maryland Rail/Trail after crossing the Potomac River from Pennsylvania into Maryland. The 3.37-mile pipeline is designed to extend through part of Washington County, Maryland, reaching a connection with Mountaineer Gas in Morgan County, West Virginia, to send 47,500 Dth/d to the utility.

Columbia Gas Transmission in early January deemed the ruling unfortunate for a project that had been thoroughly reviewed and approved by FERC and the Maryland Department of Natural Resources, with the company examining its options to keep the project on track.

The Pipeline and Water Protection Act (S.B. 387, H.B. 669) is sponsored by Maryland Sen. Bobby Zirkin and Delegate David Fraser-Hidalgo. They said the measure is designed to close the loophole that has allowed pipelines to a avoid review under the Clean Water Act. “We need our state officials to uphold their responsibilities to protect drinking water from fossil fuels by carrying out thorough reviews of fracked gas pipelines,” Zirkin said in a statement.

By Tom Tiernan TTiernan@fosterreport.com

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