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Supreme Court backs Eversource on natural gas pipeline proposal

State House Bureau

May 22. 2018 9:24PM

CONCORD — The state Supreme Court has overturned a decision by the Public Utilities Commission regarding a proposal by Eversource to purchase space on a natural gas pipeline project known as Access Northeast.

The case was sent back to the PUC for reconsideration in a ruling that has significant implications for the electricity market in New Hampshire, according to stakeholders on both sides of the issue.

Eversource officials celebrated the ruling, and said it would cause them to revisit their proposal for a power purchase agreement with Hydro Quebec.

Opponents of the pipeline contract argued that Eversource, as a regulated distribution utility, was banned from owning power plants or “power generation capacity” under the state’s 1996 law restructuring the energy market to create competition.

While space on a natural gas pipeline is not the same as owning a power plant, the PUC agreed that the pipeline contract had the same effect, and ruled against the deal, which contributed to the demise of the pipeline project in 2017.

Eversource appealed to the state Supreme Court, which ruled on Tuesday that the overriding principle of the deregulation statute was to reduce electricity prices for consumers, not nececssarily to preclude utilities from owning generation capacity.

“We discern that the primary intent of the legislature in enacting (the electric market restructuring law) was to reduce electricity costs to consumers,” according to the concurring justices. “We disagree with the PUC’s ruling that the legislature’s overriding purpose was to introduce competition to the generation of electricity.”

Broad impact

Eversource spokesman Martin Murray said the decision has “broad implications for New Hampshire’s energy future at a time when the region has a critical need for additional sources of reliable and affordable energy.”

“We appreciate that the Supreme Court got it right — the primary purpose of electric industry restructuring is to ensure reliability and lower energy costs for our customers,” he said.

Eversource had argued that bringing more natural gas into the region would result in lower electricity prices, especially in the coldest months of the year.

Murray said the company is now reviewing its options regarding a power purchase agreement between Eversource and Hydro Quebec, which had been associated with the Northern Pass project that was recently rejected by the state Site Evaluation Committee.

The PUC’s denial of the power purchase agreement, which led to removal of the agreement and its associated benefits from the Northern Pass application, “was based on the same flawed legal analysis that the Supreme Court today overturned,” said Murray.

Don Kreis, the state’s consumer advocate on utility issues, urged the Legislature to clarify the restructuring statutes to “make clear that electric ratepayers should not be forced to pay for natural gas pipeline development.”

“If we need new interstate natural gas pipelines in New England to keep our electric grid running, restructuring means that shareholders and not electric ratepayers should bear the business risk,” he said. “The Legislature wasn’t thinking about this issue when it opted for restructuring in 1996, so it’s understandable that the court ruled as it did.”

The court ruling can be viewed below:

Dissenting justice

Justice Gary E. Hicks dissented, agreeing with the PUC that the Eversource proposal was “fundamentally inconsistent with the purposes of restructuring.”

“He chastised his colleagues for losing sight of the forest amid the trees,” said Kreis. “The forest he’s talking about is a thicket in which utilities are always striving to transfer business risk from shareholders to customers.”

Kreis said he will ask the PUC to dismiss the Access Northeast petition because Eversource and its partners are no longer pursuing the project.

Supporters of the Northern Pass hydroelectric transmission project seized on the ruling to urge reconsideration of that proposal.

“The ruling calls into question the judgment of PUC participants serving on the Site Evaluation Committee and their ability to accurately interpret the law,” said BIA President Jim Roche. “We hope today’s Supreme Court decision will prod SEC members to review their work on Northern Pass and reopen consideration of the sorely needed project.”

Similar statements urging reconsideration of Northern Pass in light of the court ruling were issued by the International Brotherhood of Electrical Workers, the New England Ratepayers Association and chambers of commerce in Nashua and Manchester.

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