A Whiskey Tango Foxtrot Moment for Natural Gas in NH

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Power to the People is NH Consumer Advocate D. Maurice Kreis’ column about what happens long before you turn on the lights. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere. This column is brought to you by a unique news collaboration between InDepthNh.org and Manchester Ink Link.  


Liberty Utilities is on the march, working hard to grow its natural gas empire in New Hampshire. What’s a ratepayer advocate to do? What does the public interest require?

The questions are anything but abstract at this point. Last week, the Public Utilities Commission (PUC) held a hearing on Liberty’s latest expansion request: a bid for a utility franchise to provide natural gas service to Lebanon and Hanover.

In February, Liberty won PUC approval for a franchise to serve Pelham and Windham, neighboring communities in southeastern New Hampshire that are near the so-called Concord Lateral, the backbone of New Hampshire’s natural gas pipeline network.

Serving Hanover and Lebanon is a different kettle of fish altogether; the two Upper Valley communities on the Connecticut River are far from the existing distribution network and Liberty will have to truck natural gas to any system it builds there.

Of even greater potential importance is the divergent public reaction to Liberty’s plans. Town officials in Pelham and Windham were unequivocal supporters of having a natural gas utility.

In the Upper Valley, the two municipalities oppose the petition and grassroots activists have intervened in the PUC proceeding to argue that the only good natural gas is no natural gas – i.e., that given the need to act decisively to reduce greenhouse gases in the atmosphere we have no business doing anything to double down on fossil fuel.

In this sense, Liberty’s proposal for Hanover and Lebanon is less like the Windham and Pelham deal and more like the recently completed Addison Natural Gas Project in Vermont. When Vermont Gas Systems first proposed extending its pipeline network south from Burlington in 2012, the utility expected dancing in the streets.

What it got was outspoken and principled opposition, as affected landowners and municipal officials found common purpose with climate activists, particularly those of college age, who perceived that the establishment was doing little to reduce our collective reliance on fossil fuels.

Our counterparts in Vermont, at the Department of Public Service, got plenty of grief for supporting the pipeline there. If you’re a ratepayer advocate, it never feels good to be at cross purposes with grassroots activists.

Nevertheless, on September 1 we signed a settlement agreement with Liberty Utilities, switching our outlook as the official representative of residential utility customers from negative to positive with respect to a natural gas utility franchise for Lebanon and Hanover. At last week’s hearing, we joined the utility and the Staff of the PUC in asking the Commission to approve Liberty’s proposal. As a famous euphemism would have it: Whiskey Tango Foxtrot?

Our analysis suggested the truly vulnerable here are not folks in Hanover and Lebanon but, rather, existing natural gas customers of Liberty Utilities in other New Hampshire communities. That’s because under ordinary principles of utility rate-setting the investment Liberty makes in natural gas infrastructure would go into so-called “rate base,” meaning that all of the utility’s natural gas customers will provide the utility with a return on, and a return of, its investment.

Ordinarily, that’s a good thing – more customers covering a utility’s fixed costs means lower rates for everyone. But that presupposes there will be enough new natural gas usage in Lebanon and Hanover to make the existing customers whole and then some.

We’re skeptical.

The biggest customer in the realm – Dartmouth College – told the PUC by letter that it has no position on the franchise request, has no plans to use natural gas and has adopted a “Sustainability Roadmap” that “focuses on renewable resources.”

No evidence surfaced at the hearing of any other “anchor” customers signing up even though several, including Dartmouth-Hitchcock Medical Center, Hypertherm, and Timken Aerospace, would be sufficiently big energy users to make the project look economically viable.

Activists have promised to campaign energetically to persuade their neighbors to spurn Liberty’s offer of natural gas conversion. Among them is Jonathan Chaffee of Lebanon, a PhD biologist who also served as executive director of the Lebanon Housing Authority for 15 years – meaning that he’s got deep ties to the community as well as an ability to marshal scientific evidence.

“Natural gas is a non-renewable fuel that is as bad or worse for the environment as other fossil fuel choices,” he testified.

In these circumstances, the interests of all residential customers in New Hampshire are well-served by establishing a useful precedent when it comes to natural gas utilities in expansion mode. Under the proposed settlement, almost all of the business risk associated with such an expansion is placed where it belongs – with the owners of the company and not its customers.

Larger questions loom when it comes to natural gas in New Hampshire.

They concern transmission projects – big pipelines used to move natural gas at the wholesale level into New England from wells in places like Texas and Pennsylvania. Last year, Kinder Morgan pulled the plug on the controversial Northeast Direct pipeline that would have cut across southern New Hampshire.

Liberty had plans to use the Kinder Morgan pipeline to acquire supply. What will it do instead? Meantime, natural gas is used to generate half of our electricity, but so far the state’s biggest electric utility, Eversource, has been thwarted in its effort to build a big pipeline across southern New England and place the costs in electric rates.

So let the door-to-door debate begin – in Hanover and Lebanon, and elsewhere. Whether prices soar, or climate chaos ensues, investor-owned utilities can always be counted on to maximize profits while striving to transfer business risk to their customers. We are pleased that Liberty Utilities, at least, understands there are limits to how much risk its customers should bear.

 

 

Consumer Advocate, NH Office of the Consumer Advocate. Concord, NH.