PSEG Files with FERC to Stop Pipeline Expansion Project in New England

But opponents of PennEast argue some of company’s objections can also be made against the proposed pipeline, which PSEG backs

natural gas power plant
Public Service Enterprise Group is trying to block a plan to expand a natural-gas pipeline in New England, arguing it will unreasonably suppress prices in the electricity market there.

In a filing with the Federal Energy Regulatory Commission, PSEG companies contend that the move, initiated by four states in the region, is not driven by reliability needs and that the gas would be rarely used by the utilities that would own the pipeline.

“It’s purely a scheme to suppress wholesale power prices,’’ the company argued in a filing with the federal agency last month. The case is “virtually indistinguishable’’ from a previous case before FERC involving New Jersey’s efforts to subsidize new power plant construction in the state, an effort struck down by both the agency and the U.S. Supreme Court, the filing said.

The filing, however, caught the interest of critics of the proposed PennEast pipeline, a 118-mile conduit from Pennsylvania to New Jersey. They argue that PSEG advances many of the same arguments opponents have made about that proposal, including supplying pipeline capacity far in excess of what is demanded by the marketplace.

“There’s a lot of hypocrisy on the part of PSEG,’’ said Michael Spille, a founder of West Amwell Citizens Against the Pipeline, noting that the company is a sponsor of PennEast. “Here, they are saying it’s unfair competition,’’ Spille said, referring to the New England case, known as the Access Northeast pipeline.

But Michael Jennings, a spokesman for PSEG, said the group’s claims are completely baseless.

“We are not arguing that the proposed New England pipeline should not be built,’’ Jennings said. “Our concern is whether the pipeline, which would receive significant subsidies, would compromise the region’s wholesale power markets.’’

The filing by PSEG, along with NextExtra Energy Resources LLC, a renewable energy company, is not unusual for a power supplier, analysts said.

“This is kind of standard,’’ said Paul Patterson, an energy analyst with Glenrock Associates. “Generators are concerned with attempts to increase supply more than it would without subsidies.’’

PSEG was one of several suppliers that challenged an effort by the Christie administration to spur new power plant construction in New Jersey by awarding ratepayer subsidies to generators. The courts blocked the program, and four new natural-gas power plants were built or are being built without the subsidies.

In New York state, several power suppliers are challenging a proposal by regulators there to award hundreds of millions of dollars in subsidies to four nuclear power plants in an effort to keep them open. The subsidies, in the form of zero-emission credits, are designed to encourage carbon-free ways of producing electricity to combat climate change.

PSEG is talking about seeking similar subsidies in New Jersey for its own fleet of nuclear power plants, three located in South Jersey. It has not filed as an intervener in the New York case.

In New England, utilities in Massachusetts, Rhode Island, New Hampshire, and Connecticut are pushing the pipeline proposal. Under the proposal, they would buy capacity in an expanded pipeline, and then release it into the marketplace, flooding it with excess gas, according to PSEG.

The aim is to drive down winter gas-heating prices as well as wholesale power prices. PSEG, one of the biggest power suppliers in the mid-Atlantic, has two power plants in Connecticut, serving the New England region.

In its filing in the New England case, PSEG noted Access Northeast is 60 percent owned by four regulated electric utilities, which have contracted for most of the capacity. The pipeline capacity purchases will substantially benefit affiliates and corporate parents of the utilities, the company argued.

PennEast opponents argued the same would be true in the case of that project, where much of the shipping capacity has been reserved for the owners of the pipeline. They will secure a new, guaranteed revenue stream for the parent companies “off the backs of their captive ratepayers,’’ the WACAP argued.