One of the largest operators of natural gas pipelines from western Pennsylvania into New England says expansion of its existing routes is the best way to meet the objectives of the six governors in the region, who’ve launched an initiative to open the pipeline bottleneck and lower electricity prices.
In a June 27 letter to the New England States Committee on Electricity, William T. Yardley, president of U.S. Transmission and Storage for Spectra Energy, points out that Spectra’s two pipelines into New England, the Algonquin and Maritimes Northeast, are already servicing 60 percent of the region’s natural gas-fired power plants.
“Any pipeline infrastructure solution that meets (the governors’) objectives will ultimately require the expansion of Algonquin and Maritimes,” he wrote. “Spectra Energy is eager to submit its regional solution and strategic investment recommendations.”
Much of the investment Yardley alludes to would come from a tariff on New England ratepayers, based on the notion that a small increase in electric bills to pay for pipeline will yield huge savings in electric prices down the road.
Spectra’s letter gives some insight into the behind-the-scenes jockeying by stakeholders in the wholesale energy market as the governors dangle the proposition of a “socialized” expansion of energy infrastructure in the six-state region.
Yardley suggests that Spectra should help NESCOE craft the request for proposals that will be issued on behalf of the governors’ initiative, writing, “We now seek to help define the RFP scope to ensure recognition of the importance of direct interconnects with power generators.”
Any Request for Proposals that favors existing interconnections would clearly tilt toward Spectra, which connects to more than half the natural gas power plants in the region.
Expanding the capacity of existing pipeline is the most logical way to go, Spectra argues, because — among other things — it would minimize the environmental impact.
The other major pipeline company into the region, Kinder Morgan, has proposed a 250-mile expansion of its Tennessee Gas Pipeline from New York toward Dracut and Pepperell, Mass., with lateral lines stretching into Nashua and Hollis and the main line stretching into Merrimack.
Kinder Morgan’s Northeast Expansion Project, however, has already run into tough local opposition in the Massachusetts and New Hampshire communities where new rights of way for the pipeline would have to be acquired.
Spectra is proposing expanding its Algonquin system in five regional zones that connect to 40 percent of the region’s power plants, while increasing capacity on the Maritimes line to support another 20 percent.
The company already has an expansion project underway along the Algonquin line that is being funded by long-term commitments from local gas distribution companies like Liberty Utilities, called the Algonquin Incremental Market expansion (AIM).
“The AIM project will begin to de-bottleneck the pipeline system by the winter of 2016, helping to enhance reliability and soften prices in New England,” according to Yardley. “Forward price estimates support this. Current market indications for the winter of 2016-17 reflect a 28-percent decrease in price as compared to this coming winter.”
While utility-funded projects like AIM will increase capacity, they will not solve the electric reliability issue, according to Yardley, who called for a more ambitious pipeline expansion to meet the governors’ objective. The proposed in-service date for that larger expansion would be November of 2018.