January 19, 2020
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Proposed inland storage sites add to Maine natural gas review

PORTLAND, Maine — After regulators sort out whether Maine electricity customers should pay up to $75 million annually to help fund expanded natural gas pipeline capacity, they may have another question before them: whether ratepayers should help pay for natural gas storage facilities.

The joint venture Northern LNG, which led the push for Maine regulators to consider natural gas storage, has designs on such facilities in Brewer or Rumford.

A bill that became law earlier this month allows the Maine Public Utilities Commission to have ratepayers fund contracts with liquified natural gas storage facilities, an expansion of the authority granted to the commission under a broad 2013 energy bill.

James Cote, a lobbyist working with the project, said much remains undecided about the future of either the Brewer or Rumford development, including market conditions and regulators’ decision on buying pipeline capacity.

The joint venture includes Energy Management Inc. and Clear Energy LLC, which also worked together on a natural gas generator proposal in Rockland, scuttled by local officials.

Clear Energy, owned by energy consultant Evan Coleman, also is a partner with Cianbro in a solar energy project in Pittsfield.

Cote, speaking for Northern LNG in response to a request for comment sent to Coleman, said the new contracting authority also could attract other storage proposals.

The bill allows regulators to approve annual contracts of up to $25 million for such storage but keeps a $75 million annual cap on all commitments for storage and pipeline capacity. All pipeline or storage contracts can be for terms up to 20 years, for a total commitment of up to $1.5 billion, which would be worked into electricity rates.

The idea behind both options is that electricity prices could be lower or less volatile if power generators can count on an ample supply of natural gas, which provides most of the power on the New England grid.

In the winter, gas goes first to heating uses and then to power electricity generators, which during winters colder than the one just passed led to spikes in the price, first experienced by large power customers and later by smaller commercial and residential customers.

Just like a pipeline, a storage facility could contract with generators, liquified natural gas exporters or others to supply gas.

Regulators are holding hearings this week as they move toward deciding the pipeline capacity question, weighing the costs and benefits of specific proposals from two developers, Spectra Energy and Portland Natural Gas Transmission System.

Another developer, Kinder Morgan, earlier this month scrapped a plan for a new pipeline Maine regulators also were considering.

After that proceeding is decided or after Sept. 1 — whichever comes first — regulators could open a case to solicit and consider storage proposals, exposing them to similar scrutiny as the pipeline case started about two years ago.

That timeline was a key part of the bill, LD 881, signed into law by Gov. Paul LePage on April 8, after concerns about an initial version that Central Maine Power Co. and others worried would interfere with the ongoing pipeline case.

The law also calls for a quick turnaround on evaluating storage proposals, specifying that the Public Utilities Commission cannot execute an energy storage contract after June 1, 2017.

In pushing for the gas storage bill last year, Coleman testified that Northern LNG has a proposal for a 1.2 billion-cubic-foot liquified natural gas storage facility near Emera Energy’s Rumford generator, a project designed and developed by Northern LNG partner Energy Management Inc.

Coleman estimated the project investment at about $100 million, and Maine Economic and Community Development Commissioner George Gervais put it at more than $125 million in legislative testimony last year.

Coleman wrote that the Rumford proposal had gathered support from nearby mill owner Catalyst Paper, General Electric, the Maine Department of Economic and Community Development, the Mahoosuc Land Trust, the Oxford County Commissioners and Rumford Hospital.

Those groups praised the economic benefits for the region and the Mahoosuc Land Trust said it supported the proposal for the possibility of addressing peak natural gas demand while possibly preventing construction of natural gas pipelines that executive director James Mitchell wrote “may not be needed.”

Past proposals for liquified fuel storage, such as the contentious liquified propane proposal for Searsport, have demonstrated the importance of local support in addition to the other elements that make a project possible.

Cote said the two proposed sites in Rumford and Brewer still are in development and did not have specific details, including the proposed project size or sites. Both projects also would require further governmental approvals.

 



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