Kathryn R. Eiseman: Pipeline battle may not be over
CUMMINGTON >> A wave of victory parties and impromptu parades has swept the region, celebrating the suspension of Kinder Morgan's Northeast Energy Direct (NED) pipeline project. What comes next?
This is not an end, but a beginning of the recognition of the power and potential of the broad-based network of engaged citizens, organizations and state and local officials that has formed over the past 26 months of concerted opposition to the pipeline.
There are several directions that the movement is taking.
Some people are shifting more attention to other gas pipeline and power plant projects in the state. Others seek to influence federal legislation to reform the Federal Energy Regulatory Commission (FERC). Many are also focusing on promoting clean energy solutions as a way to reduce demand for gas and other fossil fuels.
Beware 'zombie NED'
But for those who need a reason that hits closer to home to stay involved, here's a sobering reality: political pressure is necessary to ensure that we do not see what some are calling "zombie NED" — a return of the nightmare pipeline proposal. NED is still twitching and could be given life support by the legislature.
Here is a little background to understand the risks and pressure points.
Kinder Morgan's stated reason for suspending the NED project is its inability to secure enough pipeline capacity contracts. (That is, insufficient market demand, or "no need" for NED.) The company has also made clear that a key to establishing adequate demand lies with electrical power generation. Kinder Morgan has, for more than two years, been scheming to work out a way to make electric ratepayers across New England help pay for NED's construction.
A competing pipeline company, Spectra Energy, devised a plan to do just that for its Access Northeast project. Kinder Morgan has been trying to piggyback on this novel scheme — referred to by many as a "pipeline tax" because it saddles the public with the cost of new gas infrastructure. Last year, the Department of Public Utilities (DPU) gave its blessing to this electric-utility pipeline-contract scheme, including "cost recovery" from consumers.
Under the scheme approved by the Baker administration — which is being challenged in court — electric utilities have entered into agreements for space on both Access Northeast and the NED pipeline. Kinder Morgan has pointed to legal uncertainty over this so-called "pipeline tax" as a factor in its decision to shelve NED.
The state legislature is working on an omnibus energy bill that could contain a provision that allows this electric-ratepayer pipeline-financing scheme in conjunction with these contracts. If the DPU is allowed (through new legislation) to approve these contracts, that legal uncertainty goes away for Kinder Morgan.
It is true that even with the electric utility contracts Kinder Morgan has (with National Grid) for NED, the 1.3 billion cubic foot (Bcf) per day pipeline never became more than 50 percent subscribed. Below is some nitty-gritty detail, but the takeaway is that if the National Grid electric contracts get the "all-clear" by way of new state legislation, Kinder Morgan could decide that NED is economically viable again (even if it has to scale it back by downsizing the mammoth compressor stations once more). Likewise, if the gas markets change, other companies could sign up with Kinder Morgan.
Join anti-pipeline rally
Back in February of 2014, Kinder Morgan proposed this project as "scalable from approximately 600,000 Mcf/d to 2.2 Bcf/day." The company cited interest from local gas companies, power generators, industrial end-users, and developers of LNG export projects. When it submitted the NED application to FERC, Kinder Morgan had about 552,000 Mcf/d lined up, primarily with gas utilities, including Berkshire Gas, Columbia Gas, and National Grid's gas company. The addition of National Grid electric utility contracts put it over 650,000 Mcf/d.
So, the "pipeline tax" alone could be enough to make the NED project instantly financially viable again. All of the NED applications and petitions are currently merely suspended, not withdrawn, while our legislature crafts its energy legislation.
On May 3, the Senate Committee on Global Warming and Climate Change is holding a hearing on the suspended NED project and the commonwealth's clean energy future. The anti-pipeline movement is holding a rally on the State House steps beforehand. Be there. Let Beacon Hill know that while we celebrate each victory, we know that eternal vigilance is the price of freedom from ill-conceived energy policy decisions. Let them know we are here to stay.
Kathryn R. Eiseman is director, Massachusetts PipeLine Awareness Network, president, Pipe Line Awareness Network for the Northeast.
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