Access Northeast - Laying the Groundwork for Pipelines in New England

Enbridge, more specifically Algonquin Gas Transmission, has chosen to continue pursuing the development of the Access Northeast project. Although supported by various shippers throughout its proposed route, the project fell victim to decisions made by the public service commissions of New England. But with the New Hampshire Supreme Court reversing the New Hampshire Public Utilities Commission's decision, there may yet be hope for the project, which continues to garner support from New England utilities feeling the pinch at the New York state border. Enbridge admits its success hinges on its ability to navigate the misaligned energy policies among states in the Northeast. So what is there to do?

The Project - Then & Now

The Access Northeast project was pre-filed with FERC in November 2015 with an estimated in-service date of November 1, 2018, and was intended to upgrade and expand the Algonquin pipeline system and provide a liquefied natural gas (LNG) storage facility in New England able to deliver, on peak days, up to 925,000 dekatherms per day of natural gas. The project initially involved the construction of 96.8 miles of pipeline and looping, as well as a 26.8 mile lateral, additional compression, and two LNG storage tanks throughout New York, Massachusetts, Connecticut and Rhode Island. A little over a year ago, Algonquin withdrew its project from pre-filing review at the FERC, stating that the region currently lacks a consistent energy policy that would allow contracting for natural gas pipeline capacity by the shippers.

At this point, it is unclear if the physical breadth of the project has changed. However, the expected capacity is now described as "up to 900,000 dekatherms per day." Currently, Enbridge aims to have the project in-service "in 2020+," but has not yet made any moves to get the project in front of FERC again. Considering the median duration from pre-filing to the issuance of a Certificate is 1.8 years, as shown in the chart below, this projected in-service date may be optimistic.While Enbridge has yet to hold its quarterly earnings call, in its most recent public presentation on July 12, 2018, the project was not listed in the company's Enterprise-wide Secured Growth Project Inventory.

Certificate Proceeding Duration

Demonstrating Need

Algonquin executed memoranda of understanding with seven electric distribution companies related to firm transportation service to deliver new natural gas supplies to the electric distribution companies' service areas, with an initial project in-service date of November 1, 2018. These electric distribution companies are subsidiaries of Eversource Energy and National Grid.

Additionally, Algonquin held an open season for the Access Northeast project from February 18, 2015 through May 1, 2015. Central Maine Power Company submitted a bid to secure firm transportation service to deliver new natural gas supplies on the same initial projected in-service date.

Forging Ahead

Interest from the utilities of New England has remained constant, despite the project's legal pitfalls. Both National Grid and Eversource Energy chose to join Enbridge as developers of the project. And Algonquin asserts that it "will continue working with state and federal agencies, as well as other stakeholders, to help address the energy policy inconsistencies that are currently preventing the region from achieving significant reliability and cost benefits from the utilization of affordable and environmentally friendly and reliable energy resources." When the necessary alignment has been achieved, Algonquin plans to revisit the FERC's pre-filing review process.

But where do each of these states stand on the introduction of additional natural gas supplies?

In May, the New Hampshire Supreme Court reversed the New Hampshire PUC's October 2016 decision that did not allow electric customers to pay for pipeline capacity on behalf of power generators. On the flipside, the Supreme Judicial Court of Massachusetts overturned a gas-electric harmonization plan approved by the Massachusetts Department of Public Utilities (DPU). The DPU approved a plan to allow electric distribution companies in the state to enter into long-term capacity contracts and then release their contracted capacity to electric generators or back into the market.

While this judicial precedent may pose a hurdle that needs to be overcome prior to pre-filing, New York continues to pose issues that may arise later in the project's permitting. The New York State Department of Environmental Conservation continues to deny Section 401 Clean Water Act permits delegated to the state by federal statute. Most recently, the Section 401 Clean Water Act permit for Transcontinental Gas Pipe Line's Northeast Supply Enhancement project was denied without prejudice in April.

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