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Gas pipeline deal OK’d by PUC staff

CONCORD – Regulators are one step closer to approving a contract between Liberty Utilities and Kinder Morgan for space on a proposed natural gas pipeline through southern New Hampshire.

That’s good news for pipeline supporters who say the project will lower electricity prices, but bad news for opponents who worry about devastation to the landscape.

Opponents lost a key battle on Friday, as the staff of the Public Utilities Commission signed off on a request by the state’s biggest natural gas utility to buy space on the Northeast Energy Direct project.

The three-member commission still has to formally approve the deal, after a hearing scheduled for July 22. But the staff recommendation is an important milestone, and comes as a disappointment to pipeline opponents who plan to contest the agreement at the hearing.

Representatives of the Pipeline Awareness Network (PLAN) point out that the proposed settlement was agreed to despite the testimony of the PUC’s own expert witness and the agency’s consumer advocate, both of whom strongly oppose the deal.

Liberty serves nearly 90,000 customers with natural gas connections from Nashua to the Lakes Region. In its filing with the PUC, the company maintains the additional space on the proposed Kinder Morgan pipeline is needed to meet existing demand and anticipated growth in natural gas customers.

The state’s other natural gas utility, Unitil, with 29,000 customers mostly on the Seacoast, has declined to contract for any space on the proposed pipeline.

In related news, Kinder Morgan cites agreement with Liberty as proof pipeline is needed.

Evidence of need?

Shipping contracts with utilities like Liberty are essential for the interstate pipeline to be approved by the Federal Energy Regulatory Commission, which views such binding agreements as evidence of need.

Kinder Morgan’s proposed Northeast Energy Direct pipeline would create a pathway for low-cost natural gas from the Marcellus shale formation in Pennsylvania into New England, with a route that crosses much of southern New Hampshire. Supporters say the project is needed to help lower electricity costs in a region where most of the electricity is generated by natural gas power plants.

Opponents, including many in the communities that would host the pipeline, argue that the size of the project goes way beyond the actual energy needs of the region. They raised questions about the deal as soon as it was announced, pointing out that Liberty is the wholly owned subsidiary of a Canadian company that is a partner with Kinder Morgan in the pipeline construction.

Liberty first filed its request with the PUC on Dec. 31, asking for approval to enter into a 20-year contract with Kinder Morgan subsidiary Tennessee Gas Pipeline to purchase up to 115,000 dekatherms per day of capacity on the proposed pipeline. PUC approval is necessary since all the costs associated with the deal would be built into natural gas rates to consumers for years to come.

According to Michael Licata, director of government relations for Liberty Utilities, the settlement as proposed approves the deal, with conditions.

If certain milestones for growth in customers and demand aren’t met, the approval would be reduced to 100,000 dekatherms, and the company could face financial penalties.

Response to concerns

Those conditions appear to be in response to concerns raised by expert witnesses for both the staff and the Office of Consumer Advocate.

Melissa Whitten, a utility consultant hired by the PUC staff, testified in May that the deal would leave Liberty with “substantial excess capacity that it would not completely absorb or grow into over the life of the contract.”

Pradip K. Chattopadhyay, assistant consumer advocate, testified that the deal is not in the interests of Liberty customers and should not be approved.

“The benchmarks are a step in the right direction, but we think more needs to be done,” said Consumer Advocate Susan Chamberlin. “In essence, this is a Mercedes when a Honda would be fine.”

When asked why the PUC staff would reach a conclusion that contradicts the testimony of their own expert witness, Chamberlin said, “I can’t explain the discrepancy.”

Licata said the company did its best to address the concerns of the expert witnesses in the proposed settlement.

“The very structure of the settlement addresses a number of concerns about the growth of our system in New Hampshire, what we intend to use the gas for, and how we intend to grow our system,” he said.

The three commissioners will hear arguments from all sides on July 22.

“This settlement defines specific growth goals that the company must attain to ensure that the capacity is being used to serve current and future customers in New Hampshire,” Liberty spokesman John Shore said. “We look forward to presenting this settlement and all the supporting information to the Public Utilities Commissioners.”

This article was written by Dave Solomon from The New Hampshire Union Leader, Manchester and was legally licensed through the NewsCred publisher network.

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