Should ratepayers fund pipelines?

Eversource is taking the state to court over whether electricity rates can cover the cost of natural gas pipelines.

This past fall Eversource asked the Public Utilities Commission (PUC) if it could enter a twenty-year contract to purchase natural gas from the Access Northeast pipeline, with the costs covered by an increase in the electricity rate for Eversource customers.

The PUC ruled against Eversource because New Hampshire law forbids electricity distributors from also owning power generating facilities.  The law is intended to increase competition to lower the cost of energy. 

Eversource is appealing the PUC’s decision to the Supreme Court, arguing that the pipeline will decrease energy costs, and therefore satisfies the purpose of the law.

Electricity rates have risen dramatically over the past few winters because there is such a high demand for natural gas for heating and electricity.  More pipeline could increase the supply of natural gas in New Hampshire, easing prices.  Several pipeline projects have stalled, however, because many natural gas purchasers are reluctant to lock in the twenty-year contracts that can fund new pipeline construction.  If Eversource was able to lock in a twenty-year contract, it could help increase the natural gas supply, lowering natural gas prices, which in turn would lower electricity prices from natural gas power plants.

The energy market can change a lot in twenty years, however, and increasing the natural gas supply may not always help keep electricity prices low.  There may be new forms of energy that are even cheaper.

Rep. Jim McConnell is sponsoring a 2017 bill that would explicitly forbid charging ratepayers to fund natural gas pipelines. 

The New Hampshire Supreme Court will hear Eversource’s case later this year.

Do you think ratepayers would benefit from funding a natural gas pipeline?  Share your opinion in the comments.