Public Utilities Commission Hearing July 22 on Pipeline Contract

Regulators have scheduled a hearing to consider approving a contract between Liberty Utilities and Kinder Morgan, evidence the energy infrastructure company needs to show there is a demand for natural gas in the region.

On July 22, the staff of the Public Utilities Commission (PUC) will consider the terms of a settlement agreement reached June 26 for Liberty Utilities’ long-term purchase of gas carried on Kinder Morgan’s pipeline, according to Anne Ross, general counsel for the PUC.

Liberty announced the corporation signed a 20-year agreement with Kinder Morgan to transport up to 115,000 dekatherms per day (Dth/d) of lower cost natural gas to its New Hampshire customers on the proposed pipeline project in November 2014, then filed a petition for approval of the agreement with the PUC on Dec. 31, 2014.

The company has said the agreement will enhance the reliability of its natural gas system in New Hampshire and lower electric prices, enhancing the overall reliability of the electric grid in New England.

But opponents to the pipeline argue the scope of the project is far more extensive than what is needed to support demand for natural gas in the region and lower electricity costs – a concern that was supported in testimony from the PUC’s expert witness and the agency’s consumer advocate, who oppose the deal.

Melissa Whitten, a consultant for La Capra Associates, recommended the PUC deny the Precedent Agreement with Kinder Morgan as the company’s filing “fails to support the premise that on-system demand growth will offset excess capacity under this purchase agreement in the time frame and magnitude presented in the preceding.”

“The filing is not accompanied by sufficient evidence to allow the Commission to determine that the company requires the full 115,000 Dth/day of firm capacity to meet a reasonable estimate of design-day demand going forward; and the filing is notably lacking in an adequately-developed cost-benefit analysis of the purchase agreement to support its claim that the purchase agreement is the ‘best cost,’ or least-cost option for ratepayers,” she testified.

Agreeing with Whitten’s analysis, Dr. Pradip Chattopadhyay, Assistant Consumer Advocate/Rate and Market Policy director, testified he does not think Liberty has demonstrated that the 20-year, 115,000 Dth/day capacity contract with Northeast Energy Direct is appropriate.

Kinder Morgan has at least three other clients with situations similar to Liberty Utilities.

“Assuming that Kinder Morgan has double booked those clients in a similar manner, it is likely that Kinder Morgan’s stated commitments for the pipeline capacity is not 60 percent of a 30-inch pipeline, but something more in the order of 45 to 50 percent of a 30-inch pipeline capacity. This is well below Kinder Morgan’s goals and should not be permitted,” Homer Shannon of 15 Autumn St. in Windham wrote in a letter to legislators in Londonderry and neighboring communities.

Addressing concerns the agreement would leave Liberty with excess capacity, the terms of the settlement reached on June 29 include financial penalties for Liberty should the company’s customer demand fail to grow as it is saying it will.

Ross said those opposing the settlement and plan will have an opportunity to present their arguments at the July 22 hearing; and likewise, the parties who reached the settlement will have a chance to defend it.

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