February 28, 2018

Federal regulator finds no pipeline manipulation

Photo | HBJ File
Photo | HBJ File
An Algonquin Gas crew works on a pipeline expansion.

Following a staff inquiry, the Federal Energy Regulatory Commission (FERC) said on Tuesday that it found no evidence that Eversource and Avangrid natural gas businesses artificially manipulated capacity on the Algonquin pipeline, driving up costs.

The review was spurred by an October report, led by the Environmental Defense Fund, that alleged that the utilities' gas ordering practices between 2013 and 2016 had artificially inflated electricity and gas prices, costing New England ratepayers an extra $3.6 billion.

Eversource has railed against the EDF report as spreading "incredibly false narratives" that are "completely unsupported by any legitimate data." In December, it threatened to sue EDF for making false statements.

FERC this week said it also found the study to be flawed.

"Commission staff took these allegations very seriously and conducted an extensive review of both publicly available and non-public data," the agency said. "On the basis of that review, staff determined that EDF's study was flawed and led to incorrect conclusions about the alleged withholding. Commission staff found no evidence of capacity withholding."

Connecticut's Public Utilities Regulatory Authority (PURA) launched its own review in October, which is ongoing.

In justifying its findings Tuesday, FERC cited an assessment of the EDF study that was commissioned by Eversource and just released to the public.

The assessment, prepared by Boston's Levitan & Associates (the same firm that recently advised PURA and the Department of Energy and Environmental Protection on Millstone Power Station's financial health), calls the EDF's findings "uninformed, baseless, and quixotic."

In the report, Levitan concludes there was no market manipulation and that Eversource would have no direct or indirect motivation to withhold gas capacity. The report also questions the $3.6 billion calculation, holding that cancellations of scheduled gas late in the day (which EDF calls "down scheduling") amounted to "an infinitesimal portion of average demand."

Levitan said EDF didn't account for the fact that the utility is required to have enough gas on hand to address weather fluctuations, back-stop delivery failures by third-party suppliers, and ensure that customers have adequate gas supply in freezing temperatures.

Eversource said the Levitan report "unequivocally disproves the inaccurate claims promoted by the Environmental Defense Fund."

Responding to the new developments, EDF's Naim Jonathan Peress, senior director of energy market policy, said EDF stands by its analysis.

"EDF has been clear from the outset," he said in a statement. "Whether intentional or not, and regardless of business motives, the scheduling decisions by these two companies had a multi-billion-dollar side-effect on New England electricity users."

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