October 12, 2017

Environmental study claims gas companies created artificial shortage

Construction crews test natural gas flow as they work to install pipelines. Eversource, not pictured here, is alleged to have created artificial natural gas shortages.

A study Massachusetts utility Eversource Energy calls a complete fabrication, false and misleading claims the utility company and one other created artificial gas shortages by scheduling deliveries without actually flowing gas on some of the coldest days of the year.

The report was published earlier this year and posted to the Environmental Defense Fund's website. As a result of the alleged artificial shortages, New England customers paid $3.6 billion more for electricity, the report said.

Eversource spokesman Michael Durand called the report a "complete fabrication as evidenced by the lack of credibility it has received in the industry."

"The underlying concept is not only false and misleading, but concerningly irresponsible as it lacks any understanding of how gas procurement actually works.," he said. "It appears to be fabricated by anti-pipeline proponents who are trying to make the case that pipeline shortages in New England are due to capacity withholding. To the contrary – it is well documented that New England pipeline demand greatly exceeds the supply on cold days."

The report, written by an Environmental Defense Fund research group, said four local gas utilities owned by Eversource and Connecticut energy firm Avangrid scheduled "far more pipeline capacity the day before gas delivery than they ended up using the next day."

The companies would often downschedule their orders only at the end of the gas delivery day, which was too late for that unused capacity to be made available to the secondary market, the EDF says.

The practices "blocks other firms from utilizing pipeline capacity, which artificially limits gas supply to the region and drives up gas and electricity prices," the study says.

Gas and electricity prices increased by 38 and 20 percent, respectively, over a three-year study period.

Durand, on behalf of Eversource -- which provides natural gas to the Worcester region -- vehemently critiqued the report, saying the company has "no ability to withhold what is being fully utilized to serve those customers and to ensure reliable service on the coldest days, as the report claims."

Further, the company wouldn't benefit from high prices derived from withholding gas, Durand said.

"Our focus and actions are driven by our responsibility to ensure our customers have enough gas – we can't run the risk that they are left in the cold," he said.

The industry association representing Eversource and Avangrid -- the Northeast Gas Association -- also called the Environmental Defense Fund report profoundly misleading.

"Two utilities cited in their report (Avangrid and Eversource) did nothing irregular, improper, or legally questionable with their reservation of gas capacity on an interstate natural gas pipeline. In fact, they were acting with the full approval of regulators and in the best interests of their customers and their communities. They planned prudently to ensure they had sufficient, reliable supplies of natural gas during some of the harshest cold weather New England experiences," NGA said in a statement.


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