Rate Counsel Takes Aim at PennEast Pipeline, Argues It’s Unneeded
Consumer representative also objects to the size of the profits the project would reap if it goes into service
In a rebuke to a proposed natural-gas pipeline, the New Jersey Division of Rate Counsel argued that the applicant has failed to demonstrate the PennEast project is needed and fails to justify the profits that would be earned from it.
The 118-mile project through parts of Pennsylvania and New Jersey is under review by the Federal Energy Regulatory Commission, but has come under tough scrutiny from a number ofin comments submitted on a draft environmental impact statement.
The Division of Rate Counsel’s latest submittal repeats and refutes assertions made by a consultant for PennEast Pipeline Company LLC in a project that has become, the latest caused by dozens of modifications in the proposed route of the project.
The opposition from Stefanie Brand, the director of the rate counsel office, is significant in that it marks a departure from the Christie administration’s past support of expansion of the state’s natural-gas infrastructure, a policy incorporated into New Jersey’s Energy Master Plan.
But in the office’s latest submittal, it argued that PennEast continues to fail to demonstrate an actual need for the project, estimated to cost in excess of $1 billion.
Rate Counsel notes PennEast bases the need on the fact that several New Jersey and Pennsylvania utilities — some of which are sponsors of the project — have subscribed to 60 percent of the pipeline’s anticipated capacity.
But Rate Counsel countered that those same utilities, in annual filings to state regulators, “make plain that they have sufficient capacity without the new pipeline to meet forecasted load growth.’’
PennEast stood behind the finding of its consultant, Concentric, that demonstrate the pipeline is needed, according to Pat Kornick, a spokeswoman for the company. Ninety percent of the capacity is subscribed under long-term contracts, she said.
“The need for the pipeline infrastructure also is supported by the New Jersey Energy Master Plan, as well as the region’s power grid provider, which recently cited the PennEast pipeline as an example of infrastructure essential to supporting electric reliability,’’ Kornick said.
Rate Counsel also objected to the requested 14 percent return on equity, saying current economic conditions do not justify such a high rate of return given to other projects in the past.
Similarly, there is no guarantee ratepayers will benefit from reduced costs for natural gas, according to Rate Counsel. “PennEast has neither made any commitment nor offered a guarantee that ratepayers in the project area will have reduced costs for either commodity or transport.’’
Critics of the project applauded the Rate Counsel’s submittal.
“The state agency that represents us, the paying public, has once again concluded that the pipeline is not needed, would be unfair to consumers, and would result in profits so massive, it would be ‘like winning the lottery,’ ‘’ said Tom Gilbert, campaign director of New Jersey Conservation.
PennEast is one of more than a dozen pipeline projects proposed, pending or approved that aim to reap benefits from vast new supplies of natural gas found in shale formations in Pennsylvania and neighboring states. Those supplies have led to dramatic price drops in heating costs for residents and businesses in New Jersey, and also bolstered manufacturing operations.