Proposed Access Northeast pipeline would cost New England Consumers $6.6 billion, not $3.2 billion claimed by pipeline sponsors

Independent analysis finds Connecticut electric ratepayers could be forced to pay up at least $85 million to cover pipeline costs

 

February 7, 2017 – The costs of the proposed Access Northeast pipeline to transport fracked gas into Connecticut and other New England states would be more than double what pipeline sponsors claim -- $6.6 billion versus the projected $3.2 billion – according to a dramatic new report conducted by Synapse Energy Economics.

 

Furthermore, the report projects that the use of natural gas in New England, for electric generation, will decrease by 27% by 2023, compared to 2015, leaving the pipelines underused and unneeded. 

 

The report was sponsored by a coalition of environmental and consumer groups, including the Sierra Club of Connecticut, Connecticut Fund for the Environment, Sierra Club of Massachusetts, Consumers for Sensible Energy, Pipeline Awareness Network of the Northeast and Mass Energy Consumers Alliance. 

 

Rather than save consumers money, as claimed by the pipeline sponsors, the pipeline would increase costs by at least $85 million over the life of the pipeline and possibly add much as $1.9 billion, if Connecticut were to bear a higher share of the pipeline costs, to electric bills in Connecticut, according to the Synapse Report.

 

“This report tears apart every argument that the pipeline proponents have made,” said Martha Klein, Chair of Sierra Club of Connecticut.  “The pipeline costs will be more than double what the utilities claim, consumer’s electric bills will go up not down, and the pipelines will be underused and unneeded.  The people of Connecticut deserve real solutions that look to the future, not more unneeded fracked gas pipelines that contribute to global warming and harm our environment.”

 

“This study provides a reality check on the costs of Access Northeast to consumers and demonstrates that forging ahead with massive gas infrastructure expansion is incompatible with legal mandates throughout the region, said Kathryn R. Eiseman, President, Inc.  “We know that to comply with the law and sound climate policy, we must reject this gas infrastructure overbuild and double down on renewables, energy storage, and demand-side solutions -- and this study shows that.”  

 

“We are at a climate crossroads. This report unequivocally illustrates that the path of the past will continue to weigh down ratepayers and our climate with expensive and dirty infrastructure,” said Leah Schmalz, program director of Connecticut Fund for the Environment. “Rather than burdening ratepayers with a fossil fuel tax, let’s choose a vision of clean energy generated here in New England. Solar and wind can feed a robust and resilient power grid and create safe, well-paying, long-term jobs for residents.”

 

The use of natural gas will decline dramatically, according to the Synapse report, because of the region’s leadership in implementing cost-effective energy efficiency, and passing laws to require more renewable resources including renewable portfolio standards, energy efficiency standards, solar, wind and carbon dioxide caps. 

 

Beyond the projected 27% reduction in the use of natural gas for electric generation by 2023, compared to 2015, the report projects that natural gas usage will be 41 percent lower by 2030. 

 

The report also finds that cost projections by Eversource, one of the primary pipeline sponsors, ignores significant costs of the pipeline, including operations, maintenance, depreciation, and return on equity, making the true cost more than double the company’s claim -- $6.6 billion versus $3.2 billion. 

 

Contrary to the utilities’ claim that the pipeline would lower consumer rates, the Synapse report found that New England ratepayers would have to pay an additional $277 million over the lifetime of the pipeline. 

 

The pipeline sponsors had initially proposed that the pipeline construction be paid through a pipeline tax added to monthly electric bills.   The pipeline tax was overruled by the Massachusetts Supreme Court and rejected by the New Hampshire Public Utilities Commission. 

 

The pipeline tax, however, remains in place in Connecticut, meaning Connecticut ratepayers would be forced to pay for construction and any cost overruns of the pipelines as well as maintenance and operations.  A bill has been submitted by Rep. Chris Rosario of Bridgeport to ban the pipeline tax, House Bill #6546, 'An Act Concerning Prohibiting Surcharges From Being Levied On Utility Customers To Subsidize Interstate Natural Gas Pipeline Capacity’, to prohibit utility customers from being forced to subsidize the cost of interstate natural gas pipeline construction. 

 

“Our research clearly shows that ratepayers would face substantial cost increases on their utility bills,” said Pat Knight of Synapse.  “Furthermore, Connecticut ratepayers would be making an enormous investment in a pipeline that would be unneeded almost as soon as it is built, as the use of gas is displaced by mandated renewable power and energy efficiency.”

 

Synapse Energy Economics is a research and consulting firm specializing in energy, economic, and environmental topics. Since its inception in 1996, Synapse has grown to become a leader in providing rigorous analysis of the electric power and natural gas sectors for public interest and governmental clients.

The report can be accessed here:

www.synapse-energy.com/new-englands-shrinking-need-for-natural-gas