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Partners withdraw petitions to take gas from Access Northeast pipeline

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World Pipelines,

The proposed US$3 billion Access Northeast natural gas pipeline expansion, which would bring more natural gas to New England, now faces a major setback due to losing two of its key utility partners in Massachusetts. This comes just days after an unfavorable ruling made by the state’s Supreme Judicial Court, according to the Wall Street Journal, Mass Live and MaineBiz.

This recent development creates additional uncertainty over a plan that was conditionally approved by Maine's Public Utilities Commission, with an overall aim to lower New England's electricity costs by ensuring a more reliable supply of natural gas.

The recent Supreme Judicial Court decision disallowed electric companies in Masachusetts from charging customers for the cost of building natural gas pipelines. According to Mass Live, if pipeline advocates asserted the tariffs, they would save New Englanders US$1 billion each year through lowering the cost of wholesale electricity.

As a result of the ruling, National Grid PLC and Eversource Energy withdrew the petitions they had filed with the Massachusetts Department of Public Utilities for 20 year agreements to acquire gas from Spectra Energy Corp’s Algonquin gas transmission system.

Spectra, National Grid and Eversource had initially hoped to expand Spectra’s Algonquin system in an effort to bring up to 1 billion ft3 of gas to New England every day from 2018.

However, according to the Wall Street Journal: “Eversource said in a statement that it withdrew its contract petition in light of the court’s ruling.” The Eversource statement also noted: ““This does not affect our commitment to the project.”

Spectra has stated that the pipeline system continues to move forward and that National Grid and Eversource are still co-developers. It is also set to develop further if the company can secure more customers.

“We have put the court’s decision behind us. We are confident that, ultimately, the interests of New England’s consumers will prevail with desperately needed gas supply made available by Access Northeast,” Spectra commented on the Court ruling.

Construction cost has always been a key issue. While pipeline companies want to know that they will have customers before they spend billions of dollars putting pipes in the ground, power companies buy gas to fuel generators on a need-to-have it basis. Therefore, utility companies are in fact extremely restricted in the extent to which they can pass on higher costs to consumers.

The Conservation Law Foundation sued the company, describing the deal as a ‘pipeline tax’ that would shift the burden of funding pipeline construction onto consumers.

“The Massachusetts Supreme Judicial Court made it clear last week that electric companies can’t gamble on pipelines with the hard earned money of businesses and families across our state. That is exactly what these contracts would have done,” said Josh Block, a spokesman for the Conservation Law Foundation.

The high court ruling that vacated the so-called ‘pipeline tax’ now raises questions about the future of Access Northeast.

Edited from various sources by Anna Nicklin

Sources: Wall Street Journal, Mass Live and MaineBiz

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