The state is launching an investigation into whether New Jersey has enough natural gas capacity to serve its customers over the next decade, a probe that could alter whether an expansion of new pipelines continues.
The proceeding, sought by both gas utilities and conservation groups opposed to the buildout in recent years, aims to answer whether there is enough capacity in the pipeline system and what ‘’nonpipeline’’ solutions can reduce stress on the system during times of peak demand.
The bigger-picture issue for critics of the pipeline expansion is how to rein in policies to ensure six million people in New Jersey rely on gas to heat their homes, and align them more with the Murphy administration’s clean-energy agenda and goals to reduce emissions contributing to climate change.
“Now, more the ever, we should be vigilant about not wasting precious resources on unneeded projects,’’ said Tom Gilbert, campaign director for energy, climate and natural resources for the New Jersey Conservation Foundation. “Gas experts have shown that New Jersey has a surplus of available natural gas today and at any point in the foreseeable future.’’
Natural gas reliability
That view was contested by New Jersey Natural Gas (NJNG), who hired Levitan & Associates to determine interstate natural gas pipeline capacity available in the state. The study found that additional interstate pipeline capacity is needed to ensure reliability.
“Importantly, this observation by Levitan is not to just support increased demand or customer growth — it is critical to mitigate reliability risks for New Jersey’s constrained natural gas market,’’ according to Jayana Shah, managing director of gas supply for the Wall Township utility in a filing last fall.
NJNG is in the middle of two major pipeline fights — the Southern Reliability Line, to bring redundancy to its customers by building a pipeline through parts of the Pinelands, and the PennEast project, which would bring cheap natural gas from Pennsylvania into New Jersey on a 130-mile project that would end in Mercer County.
“Interstate gas supply to New Jersey is fully subscribed, as reflected in independent studies and the testimony of the state’s gas utilities,’’ said Kevin Roberts, a spokesman for NJNG. The utility is pleased the state Board of Public Utilities is moving forward to answer questions raised by the Levitan study, Roberts said.
The board plans to hire a new consultant to look at the Levitan analysis, as well as a study done for the New Jersey Conservation Foundation and the Environmental Defense Fund (EDF), which disputed some of the findings in the utility consultant’s report.
BPU president Joseph Fiordaliso noted the importance of natural gas in achieving the administration’s clean-energy agenda and climate change goals. “We’ve been getting conflicting assessments,’’ he said at a meeting earlier this month, adding the consultant can give the agency an accurate assessment of the gas capacity markets.
The issue has implications for consumers and businesses, as well. Cheap natural gas has steeply lowered heating bills and manufacturing costs for the industry. The lower gas costs have been an important component in allowing New Jersey to pursue its clean-energy agenda without sharply spiking customers’ utility bills.
In essence, the Levitan analysis found the natural gas market constrained in New Jersey and possible curtailments or restrictions on interstate pipeline capacity to the state could pose public safety issues.
Undercounting supply sources
But the two environmental groups argue the analysis undercounted significant capacity available to utilities and those independent gas suppliers who convince customers to leave their incumbent utility supplier.
“The Levitan report is more notable for what it omits than for what it includes, suggesting the analysis was narrowly structured to support a preconceived thesis — that new pipeline capacity is needed — without considering several sources of supply that currently targets deliveries to the New Jersey and New York area,’’ said Erin Murphy, an attorney for the EDF in a filing last October.
For instance, Murphy mentioned the Texas Eastern Transmission pipeline has stranded capacity available because of constraints on delivering it to the New York-based Consolidated Edison. The Levitan report fails to account for that capacity as an option for New Jersey’s utilities, Murphy said.
Others argued it makes little sense to continue to build out new pipelines and gas infrastructure given the state’s goal of 100% clean energy by mid-century and goal of reducing carbon pollution 80% below 2006 levels by 2050.
“We can’t afford to have stranded assets and build out unneeded infrastructure,’’ said Gilbert, referring to pipelines that are paid by ratepayers and no longer useful.
In the future, the two conservation groups argued gas distributors should be required to demonstrate their gas portfolio decisions are consistent with state climate policy and greenhouse-gas reduction goals.
‘’It’s really important that policy put all the risk on developers and investors,’’ said Barbara Blumenthal, research director for the New Jersey Conservation Foundation.