Spectra cites pipeline progress in Massachusetts, says partners 'give us the advantage'
BOSTON >> The Houston-based company planning a major natural gas pipeline project in Massachusetts reported Wednesday that project officials are making progress and have executed contracts with electric distribution companies in New Hampshire and Massachusetts for more than half of the project's design capacity.
Spectra Energy Partners, which included project information in its newly released first quarter financial results, said processes required to approve the contracts are underway with state regulators and project officials expect additional contracts as processes move forward in Connecticut, Rhode Island and Maine.
The company, which is advancing expansion projects valued at $6 billion, reported first quarter distributable cash flow of $371 million, compared with $351 million in the first quarter of 2015. Spectra's Access Northeast project covers New York, Connecticut, Rhode Island and Massachusetts.
"Spectra Energy Partners grew its earnings and distributable cash flow in the first quarter, despite the continuing weak energy sector fundamentals and a warm winter. Our results once again underline the reliability and strength of our business model," Spectra Energy CEO Greg Ebel said in a statement.
Massachusetts lawmakers are crafting an omnibus energy bill and facing pressure from renewable energy proponents to restrain the state's growing reliance on natural gas. Pipeline opponents in late April celebrated the announcement by Kinder Morgan that it is suspending work on its $3.3 billion Northeast Energy Direct pipeline project, citing inadequate commitments from prospective customers. During a series of rallies, including one outside the State House on Tuesday, pipeline opponents have made clear that they stand ready to fight other expansion projects, such as the Access Northeast project that Spectra is developing with Eversource Energy and National Grid.
During an earnings call Wednesday, Ebel expressed confidence in Spectra's position, citing "ample liquidity" within the company, "strong balance sheets," "attractive dividends," and a disciplined approach to expansion projects.
Ebel said Spectra was pleased to be working on Access Northeast with Eversource and National Grid, major players in the Massachusetts and regional energy markets. "We've got great partners who know the region and give us the advantage of a very strong ground game," Ebel said.
According to Spectra, its Access Northeast project would save $1 billion on electricity costs paid by consumers in New England and improve the energy grid's reliability. If the project had been in-service during the extreme 2013-2014 winter, Spectra estimates the savings could have reached $2.5 billion.
During a conference call in 2015, utility officials involved with Access Northeast said it could lead to a more than 20 percent increase in natural gas supply to New England but declined to say whether customers would see an increase in their bills to pay for the project.
Project officials say it maximizes the use of existing utility corridors and the Algonquin and Maritimes & Northeast pipelines, replacing pipeline sections with larger diameter pipe to import gas from states such as Pennsylvania. The project connects to much of the existing and planned gas-fired power plants in New England. During his 2014 campaign, Gov. Charlie Baker spoke specifically about expanding capacity to bring in additional gas from Pennsylvania as a partial solution to the state's high cost of energy.
Spectra on Wednesday also reported that its AIM project, in its second year of construction, is more than 60 percent complete and is on target to meet its planned in-service date in the last quarter of 2016. The AIM project is supported by New England local distribution companies and involves expanding pipeline capacity of Spectra's existing Algonquin Gas Transmission system. According to Spectra, the AIM project "will allow abundant regional natural gas supplies from the Appalachian basin to flow reliably into the Northeast, helping to meet the increasing demand while lowering energy costs."
The Federal Energy Regulatory Commission in April issued a notice of intent to prepare an environmental impact statement for the Access Northeast project, kicking off a formal process that the agency uses to gather input from the public and interested agencies, according to Spectra, which says that Spectra "continues to advance toward a late 2018 initial in-service date."