Requires a town to vote on whether or not to site a liquified natural gas storage facility in the town.
New Hampshire’s demand for natural gas for electricity and home heating has been rising, as has the cost of electricity. Electric rates in New Hampshire (and New England) are among the highest in the United States. This has led some to argue the state should seek to increase natural gas capacity by encouraging the construction of new gas pipelines. Where those pipelines would be built, and the costs and benefits of those pipelines, are issues that lead to impassioned debates sometimes based more on emotion than facts.
Federal control over which pipelines get built
Any pipeline that crosses state lines must get approval from the Federal Energy Regulatory Commission (FERC). The authority of FERC to regulate interstate pipelines completely overrules state regulations, including state laws about eminent domain.
However, FERC must note where a project violates state or local regulations. FERC may then request a revision of the project to bring it into line with local ordinances. FERC also accepts public input while evaluating the costs and benefits of a project.
For projects that stay within New Hampshire, the state Site Evaluation Committee (SEC) gets final say on approving or turning down proposals.
The SEC is also required by state law to approve interstate pipeline projects—even though they can’t reject anything the federal government has already okayed.
While the SEC can’t block a federally-approved pipeline, it can request changes, such as wetland restoration or erosion control, and historically federal regulators have shown some consideration for such requests.
In recent years the New Hampshire Legislature has also considered many bills regulating pipelines. Those bills have addressed eminent domain, insurance requirements, cleanup procedures, and more. Given the ultimate power of FERC, legislators have killed most of these bills.
Pipeline companies must also raise funds to build new pipelines, usually by contracting with energy suppliers and other businesses that agree to purchase natural gas in the years to come. Since the energy market is always changing, it can be difficult for pipeline companies to lock businesses into these long-term contracts.
The biggest area of debate right now is whether electricity providers – particularly Eversource – can enter into long-term contracts to purchase natural gas and then bill customers for those contracts. These long-term contracts fund new pipelines.
The Public Utilities Commission ruled that such contracts violate New Hampshire’s utility restructuring laws from the 1990s. Those laws prevent utilities that sell electricity from also owning their own power sources. Ideally this forces utilities to buy electricity from the cheapest power plants, rather than making customers pay for a company's own less efficient power plants.
Some legislators want to change this law because they believe allowing utilities like Eversource to support pipelines by making a long-term contract will encourage more pipelines to be built. They argue that this will lower energy prices by increasing the supply of natural gas.
In 2016 Kinder Morgan announced that they were suspending a proposed natural gas pipeline through southern New Hampshire. Kinder Morgan said there was not enough interest from prospective customers to fund the pipeline.
Right now there are no other proposals to extend interstate pipelines through New Hampshire. There are, however, several proposals for expanding natural gas pipeline networks within the state, such as the Granite Bridge project from Manchester to the Seacoast.
PROS & CONS
“New Hampshire should promote the construction of new pipelines.”
- New Hampshire already has some of the highest electricity rates in the nation. A shortage of natural gas contributes to high electricity rates. State government should do whatever it can to increase the supply of natural gas and therefore lower electricity rates. According to a 2015 study from the New Hampshire Business and Industry Association, “Failing to expand the region’s energy infrastructure will cost New England households and businesses $5.4 billion in higher energy costs (in 2014 dollars) between 2016 and 2020.”
- Many older fossil fuel power plants are being retired, which is going to create even more demand for natural gas power in the coming years. According to ISO New England, “More than 4,200 megawatts (MW)—an amount equal to almost 15% of the region’s current generating capacity—will have shut down between 2012 and 2020 and is being replaced primarily by new natural-gas-fired plants.”
- Natural gas much cleaner than other non-renewable sources. Even renewable energy sources have environmental costs, such as the toxic impact of mining rare earth metals needed to manufacture solar panels. It therefore makes sense for New Hampshire to increase the use of natural gas.
- Natural gas is cheaper than renewable energy sources. For example: according to a Brookings Institute study of energy generation costs, $29 million in solar capacity investment must be made to produce the same electricity, with the same reliability, as a $1 million investment in a natural gas-powered plant.
- Even if New Hampshire chooses to get most of its energy from renewable sources, natural gas power plants are critical to grid reliability. The supply of wind and solar power waxes and wanes with the weather, whereas natural gas is always there to meet demand.
- Injuries and spills are very rare on pipelines. According to a 2013 report from the Manhattan Institute for Policy Research, “Americans are more likely to get struck by lightning than to be killed in a pipeline accident.”
- In the short term, pipeline construction creates jobs and boosts the economy.
“New Hampshire should not promote the construction of new pipelines.”
- While natural gas prices are low now, there is no guarantee they will remain low in the future, as fossil fuel markets are historically volatile. Increasing the region’s reliance on natural gas, instead of diversifying our portfolio of energy resources, makes us more vulnerable to potential price spikes.
- The cost of renewable energy sources is expected by many to decrease in coming years. According to a report from Bloomberg New Energy Finance, technology advancements will lower the cost of solar power 66% and the cost of onshore wind power 47% by 2040. State government should therefore not allow electricity providers to saddle ratepayers with long-term contracts to purchase natural gas.
- Due to laws aimed at reducing carbon emissions and other pollution, the demand for natural gas will likely decrease in the coming years, eliminating the need for any new pipeline. A 2017 study prepared for the Mass Energy Consumers Alliance and other partners concluded, “Existing laws and regulations will cumulatively require New England’s use of natural gas for electric generation to decrease by 27 percent by 2023, relative to 2015 levels.”
- According to a 2015 report from the Analysis Group, Inc., completed on behalf of the Massachusetts Attorney General, the New England electricity grid will stay reliable at least through 2030, even with no new pipeline. The report concluded, "We find that power system reliability will be maintained with or without electric ratepayer investment in new natural gas pipeline capacity."
- While natural gas burns cleaner than other fossil fuels, the extraction and transportation of natural gas causes the release of methane, which traps more heat than carbon dioxide and is a contributor to climate change.
- Residents close to a pipeline may suffer from lower property values or even have their property seized through eminent domain.
Requires a certificate issued by the Site Evaluation Committee to include a provision that the applicant guarantees funding for restoration efforts in the event of environmental damage caused by the facility.
Requires the Site Evaluation Committee to issue a certificate for an energy facility if the committee fails to act within 365 days of acceptance of an application.
Requires the Public Utilities Commission to determine if gas pipeline capacity contracts with a term of more than one year are in the public interest.
Allows electric utilities such as Eversource to pursue contracts to purchase capacity on natural gas pipelines and/or electricity from new transmission line projects, provided that the contracts will lower electricity rates and/or improve the reliability of the electric grid. The Public Utilities Commission would still have to find that the contracts are in the public's best interest.
Prohibits any tariff, tax, or fee on any electric ratepayer for the purpose of financing the construction of a high pressure gas pipeline.
Establishes protections for property owners if a pipeline company takes their land through eminent domain. For example, this bill sets up a process for the pipeline company to pay for reloaction, temporary housing, and legal expenses.
Establishes criteria for high pressure gas pipeline applications, including compensation to property owners in eminent domain proceedings. This bill also requires 75% or more of the gas transmitted into New Hampshire to be distributed within New Hampshire.
Requires new construction of underground pipelines and storage tanks to be below the frost line.
Requires owners of gas transmission pipelines to maintain insurance or provide a bond against any loss resulting from failure or malfunction of a pipeline.
Makes various changes to the laws regarding the use of eminent domain for pipelines. For example, this bill allows an owner whose property is taken under eminent domain to require the pipeline company to acquire the entire property, not just a part.
Prohibits any tax or fee on ratepayers to fund a gas pipeline.
Requires utilities and pipeline companies to pay a royalty on natural gas intended for sale in a foreign country.
Establishes a study committee on stranded costs associated with pipeline capacity contracts. The bill was originally written to require the public utility commission to determine whether any pipeline capacity contract with a term of more than one year is in the public interest.
Requires that every compressor station for natural gas transmission built in New Hampshire after July 1, 2016 shall obtain the power for its operation from external energy sources.
Establishes a tax on revenues received under contracts for natural gas transmission via in-state pipelines.
Originally written to require a pipeline company to purchase all of a resident's land when the land is taken through eminent domain. The Senate rewrote the bill to instead increase the criteria for the Site Evaluation Committee to consider when approving pipelines.
Establishes a 5-year tax deferral from the business profits tax, the business enterprise tax, and the utility property tax for the expansion of natural gas distribution systems.
Should NH promote the construction of new pipelines?
In December, Liberty Utilities filed an application to build a 27-mile, $340 million natural gas pipeline along Rt. 101 from Manchester to Stratham. The project has to receive approval from both the NHPUC and the state Site Evaluation Committee before it can proceed.
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