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Liberty Utilities approved to buy natural gas off proposed NED pipeline

Another box has been checked in a company’s quest to build a controversial natural gas pipeline across much of southern New Hampshire.

The N.H. Public Utilities Commission has given the go-ahead to Liberty Utilities to buy natural gas from the Tennessee Gas Pipeline Co.’s proposed Northeast Energy Direct pipeline.

The approval will help the pipeline company make its case to the Federal Energy Regulatory Commission, which is responsible for approving the natural gas transmission project, that it’s needed in the Northeast.

The three-member Public Utilities Commission approved an agreement between the two companies Friday, finding it “just, reasonable and consistent with the public interest.”

Commission members also concluded officials with Liberty Utilities, also known as EnergyNorth Natural Gas, established that such an agreement “represents the most viable, reasonably available alternative for EnergyNorth to meet its current and forecasted customer requirements in a least-cost, and reliable manner.”

The contract’s term is 20 years, with service expected to start on Nov. 1, 2018, “unless certain delays occur or certain preconditions are not met.”

Tennessee Gas Pipeline Co. LLC, a Kinder Morgan company, is proposing the transmission pipeline, which would carry natural gas from shale gas fields in Pennsylvania through upstate New York, parts of northern Massachusetts and into southern New Hampshire before going to a distribution hub in eastern Massachusetts.

The pipeline’s proposed route has it crossing about 70 miles of southern New Hampshire, including Fitzwilliam, Richmond, Rindge, Troy and Winchester, and carrying up to 2.2 billion cubic feet per day of natural gas. The amount is equivalent to providing electricity for 1.5 million households.

Besides purchasing natural gas from the Northeast Energy Direct pipeline, Liberty Utilities is considering building a line to branch off the pipeline to supply fuel to customers in the Keene area. Liberty Utilities already sells a propane-air mixture to customers in Keene.

It’s likely that branch would have to come through Swanzey to get to Keene.

In addition to New Hampshire, Liberty Utilities operates in Arizona, Arkansas, California, Georgia, Illinois, Iowa, Missouri and Texas, and is a subsidiary of Algonquin Power and Utilities Corp. Algonquin, which has its headquarters in Ontario, Canada, is participating in the development of the pipeline with Kinder Morgan.

The newly approved gas-buying agreement is amended from the one Liberty Utilities and Tennessee Gas Pipeline reached in November 2014, allowing Liberty Utilities to buy 115,000 dekatherms of natural gas per day at a fixed rate from the Northeast Energy Direct pipeline.

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

Those amendments, reached as part of a settlement between Liberty Utilities and N.H. Public Utilities Commission staff, include a stipulation about how the company would deal with having more natural gas than it needs from the pipeline, if that happens. Liberty would have to reduce what it takes from the pipeline per day, according to the settlement.

The settlement, which was reached after some negotiation, was needed for the agreement to go forward.

A second stipulation gives Liberty Utilities a growth incentive to reach targeted customer and sales numbers, so it isn’t buying more natural gas than it needs. Potential growth areas for the company include Keene, Bedford, Laconia and 11 communities along the pipeline, according to the order.

Liberty Utilities estimates demand for natural gas in Keene and along the pipeline in New Hampshire could increase the need by up to 2.3 million dekatherms a year, the order said.

A dekatherm equals 10 therms. One therm equals about 29.3 kilowatt hours of electricity, which is a small portion of the 10,908 kilowatt hours the average American household consumed annually in 2013, based on data from the U.S. Energy Information Administration.

If Liberty Utilities doesn’t meet the targets, it will not be able to recover up to $300,000 in its winter gas costs, according to the order. The amount it will be able to recover depends on how close it comes to hitting the targets, the order said.

The pipeline project itself must be approved by the Federal Energy Regulatory Commission for the agreement between Liberty Utilities and Tennessee Gas Pipeline to take effect, according to the Public Utilities Commission order issued Friday.

Tennessee Gas Pipeline has had the pipeline project in the pre-filing stages with the federal commission for the past year, and expects to file the full application with the agency this month. Company officials expect it will take a year for the pipeline to receive federal approval, if it does, and they’ve proposed a start date for construction of January 2017. They anticipate the pipeline will be in service by November 2018.

Officials for Liberty Utilities and Kinder Morgan said Monday they’re pleased by the N.H. Public Utilities Commission’s decision.

“The 20-year contract demonstrates the critical need for additional natural gas capacity in New Hampshire, and how the new pipeline capacity will lower energy costs for the citizens of New Hampshire,” Kinder Morgan officials said in an emailed statement. “TGP’s NED project will help alleviate the natural gas supply constraints that cause New Hampshire and New England residents and businesses to pay the highest heating and electricity costs in the continental United States.”

Liberty Utilities spokesman John Shore said in an email that company officials expect buying natural gas off the Northeast Energy Direct pipeline will reduce costs to the company’s customers, particularly during the winter.

“The cost of purchasing gas and transporting it to our local distribution system is passed through to our customers with no mark up in price,” he said. “If we pay less, our customers will benefit from 100 percent of the savings.”

He said company officials remain interested in bringing natural gas to Keene, and expect to file plans with the N.H. Public Utilities Commission during the first quarter of 2016.

“Although the NED pipeline isn’t expected to be in service until November of 2018, we are looking into converting customers in Keene to Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG) in the interim,” he said. “This would accelerate the process of switching to pipeline gas once the NED is built. This interim step could be in place as early as summer of 2017.”

While the N.H. Public Utilities Commission’s order is being celebrated by energy companies involved in, or seeking to benefit, from the project, it’s a blow to several Monadnock Region residents fighting to stop the pipeline.

Among them is Patricia Martin of Rindge, who submitted comments to the state agency in July questioning the agreement.

Martin, who has a background in electrical engineering, said Monday the commission’s decision is “very disappointing,” and she is especially concerned about the length of the contract, as a lot can happen in two decades with the energy market.

“The Marcellus Shale (the source material in Pennsylvania) could run out before the 20 years is up,” she said. “We’re supposed to be putting emphasis on energy efficiency and reducing our needs.”

The state commission’s approval of the agreement gives more assurance to the Federal Energy Regulatory Commission that there is a need for the pipeline, which is part of the criteria the five commission members look at when deciding whether to approve the project, she said.

“This is not good news for us,” she said, referring to pipeline opponents.

This article was written by Meghan Foley from The Keene Sentinel, N.H. and was legally licensed through the NewsCred publisher network.