Massachusetts’ DPU allows contracts with pipeline companies to be signed

In order to reduce winter electricity prices, Massachusetts’ utility regulators shall enable power generators to sign long-term (exceeding over one year) contracts with pipeline companies.

However, this agreement has been criticised by some as being beneficial to individuals arguing for the construction of a new pipeline, proposed to run through western Massachusetts.

Nevertheless, the state Department of Public Utilities (DPU) decided that the agreements could help reduce electricity costs.

Comments on the DPU

Peter Lorenz, Executive Office of Energy and Environmental Affairs Spokesman, stated: “[The DPU] is determined that it is appropriate for the department to evaluate cost recovery of (electric utilities’) contracts for gas pipeline capacity in an open and transparent public process. By establishing a framework and standard of review focused on consumer benefits of the contracts submitted by (electric utilities), the commonwealth has advanced its ability to improve electricity grid reliability, lower and stabilise the cost of energy for ratepayers, and increase Massachusetts’ economic competitiveness.”

Criticisms

Again, individuals have criticised the contract intended to lower electricity prices, as it could require customers to indirectly shoulder the cost of constructing projects, such as the Northeast Energy Direct pipeline.

State Representative Stephen Kulik, D-Worthington stated: “This could open the door for electric ratepayers paying for gas pipeline infrastructure. I don’t think it’s appropriate for electric customers to absorb the cost of that infrastructure. It seems to me it should be paid for by the pipeline company, and if they have to reflect that investment in what they charge their direct customers, so be it. I think it’s more transparent and accountable than making ratepayers pay for the cost of the pipeline up front, and it sort of raises concerns that came up within the past year about the possibility of a tariff for customers to pay for the pipeline, whether they ultimately benefit from it or not.”

Edited from various sources by Stephanie Roker

Sources: NGI, Gazettenet

Published on 08/10/2015


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