PORTLAND, Maine — Analysts at the Maine Public Utilities Commission have urged commissioners against having Maine electricity customers pay for expanding regional natural gas capacity in the name of lowering electricity costs.
The staff recommendation echoes an earlier conclusion that the expenditure is not proven to be worth it for Maine ratepayers, but those findings are in disagreement with other parties in the case.
The report also suggests commissioners leave the door open to the possibility in the future, as other states consider similar measures.
“The benefits of being the ‘first mover’ in the region in terms of committing to [long-term natural gas capacity contracts] are not obvious,” the report states. “Indeed, it is likely to be more beneficial to decide whether to act … when there is greater clarity about the effects of market actions as well as activity in other states.”
With the staff recommendation in hand, other parties in the case have a June 15 deadline to respond to and challenge its findings, leading up to an expected hearing before the three-member commission later this month or in early July.
The case comes after a 2013 law allowed Maine’s public utilities commission to have electric utilities enter contracts with pipeline companies for up to $75 million in annual natural gas capacity for up to 20 years. The utilities could then recover the costs of any energy cost reduction contracts, or ECRCs, from electricity customers.
During the case, regulators have explored and debated with pipeline companies and various interest groups whether specific proposals or any such expenditures would have a worthwhile impact on electricity prices.
That’s because natural gas-fired generators produce most of New England’s power and often set the price for electricity in the regional bidding process to provide the next day’s power. That regional capacity first goes to serve heating demand, which in the winters of 2012-2013 and 2013-2014 left power generators with inadequate supplies and caused power prices to spike.
Better preparation and cheaper liquified natural gas curbed those spikes in 2014-2015, despite record-setting cold weather, and this past winter’s mild weather and more ample natural gas supply showed even a lower spike in winter prices.
Those spikes are less apparent to the average residential customer, whose power prices are set annually and represent a three-year average of bids by generators in order to smooth any year-to-year changes. Those standard offer prices declined for Central Maine Power customers and remained flat for Bangor-area Emera Maine customers in the past year, after recent declines.
The staff report issued Wednesday says that while findings in the case don’t support a conclusion about what has caused those price reductions in recent years, it is possible that changes to market rules and pending pipeline expansions ” are contributing to a mitigation of the winter price levels and volatility that resulted in the enactment” of the law allowing regulators to approve pipeline capacity contracts.
Two proposals are still vying for ratepayer support, both which would expand existing pipelines serving Maine, from Spectra Energy and the Portland Natural Gas Transmission System.
Both current projects aim to bring natural gas from the Marcellus shale region in Pennsylvania and New York east, but using different pipeline systems. Spectra’s project is fed from lines to the southwest of Maine, while the PNGTS line comes from the northwest.
The Office of the Maine Public Advocate, which represents ratepayers in PUC cases, has encouraged commissioners to enter a contract on the PNGTS line, but only for 10 percent of a regional procurement and if further analysis finds it has benefits to ratepayers.
Each company has argued, of course, that their projects will provide benefits to ratepayers and a group representing industrial energy customers has urged commissioners to approve contracts with both companies, also conditioned on help from other states.
Regionally, Massachusetts is the linchpin as the region’s largest power-consuming state and is considering its own omnibus energy bill, for which debate began Wednesday.
A third proposal in the Maine proceeding — Kinder Morgan’s Northeast Energy Direct pipeline — has been canceled and dropped out of the running, an event that factored into the staff’s consideration.
“Although [Northeast Energy Direct] has been canceled … it is likely that this demand will result in capacity additions on another project or projects,” the report stated.
The staff report concluded those investments, led by gas heating utilities, such as Bangor Gas and Unitil, stand to have some benefit for wholesale electricity prices.
The closure of the pipeline case could also clear the way for regulators to move on to a case considering whether natural gas storage facilities in Maine might be worth ratepayer support. A law passed in the last session allows the commission to begin considering proposals from at least one developer eyeing projects in Brewer or Rumford after an order is issued in the pipeline case.
Regulators could also hold off on moving directly to that case, according to PUC spokesman Harry Lanphear, who wrote in an email that it will depend on the final wording of an order in the pipeline case.