National Grid Withdraws Controversial Pipeline Tax

By TIM FAULKNER/ecoRI News staff

National Grid has ended its controversial plan to charge its electricity customer for natural-gas pipeline projects, a concept known as the “pipeline tax.” National Grid described the plan as “entering into long-term contracts for natural gas pipeline infrastructure and capacity.” But the idea simply permits National Grid to pay for pipeline improvements and pass those costs on to ratepayers, even those who may not use natural gas.

The primary beneficiary of the pipeline tax would have been Houston-based Spectra Energy and its $3 billion Access Northeast project. A series of upgrades to its 1,129-mile Algonquin pipeline is underway, to increase the volume of natural gas delivered from the fracking fields of Pennsylvania through southern New England to terminals outside Boston.

National Grid and Eversource Energy are also partners with Spectra Energy in the Access Northeast project, and, according to a Commerce RI analysis, both companies support the pipeline expansion to meet a growing demand for natural gas as new power plants along the pipeline, such as the proposed Clear River Energy Center in Burrllville, come on-line and older ones retire.

Despite it decision to withdraw its pipeline tax, or tariff, proposal before the state Public Utilities Commission, National Grid said it supports the Access Northeast project and will look for ways to help pay for it.

"We continue to believe that the Access Northeast project offers a solution to address the region’s natural-gas constraints that will improve reliability and savings for customers primarily by upgrading existing infrastructure,” Tim Horan, president of National Grid in Rhode Island, said. “This project is critical to creating a balanced portfolio of energy solutions to get us to a clean-energy future while ensuring customers continue to have access to affordable, safe, and reliable energy.”

Environmental groups such as the Conservation Law Foundation (CLF) oppose the tax concept, saying it imposes financial burdens on ratepayers to help the fossil-fuel industry. CLF also says the tax and the projects it supports increase the threats posed by climate change.

The pipeline tax was the culmination of a 2013 agreement between New England governors to beef up energy infrastructure, such as pipelines and power lines, to import energy from outside the region. Rhode Island subsequently passed a law in 2014 that allows the state to join in these regional energy efforts.

The pipeline tax was jeopardized last August, when the Massachusetts Judicial Supreme Court declared it illegal for electric distribution companies like National Grid to impose a fee, or tariff, on their customers to pay for natural-gas projects.

Justice Robert Cordy ruled that the tariff conflicts with the state Administrative Procedure Act of 1997. The fee, he said, would “re-expose ratepayers to the types of financial risks from which the Legislature sought to protect them.”

Since that Massachusetts decision, New Hampshire and Connecticut halted similar proposals before their utility regulatory boards. In September, the Maine Public Utilities Commission said the pipeline tax could only go forward if other states approve it. Vermont isn't participating in the regional initiative.

Last September, the Rhode Island PUC declined a motion to dismiss the pipeline tax proposal, saying it would burden National Grid to re-file its docket if it can find a way around the setback in Massachusetts. Instead, the PUC scheduled a Jan. 13 hearing for an update on the filing. National Grid then withdrew the proposal without a meeting.

Across southern New England, the Access Northeast project consists of 123 miles of new pipeline, expansion or construction of eight compressor stations, including new compressor stations in Weymouth and Rehoboth, Mass., and a liquefied natural gas storage facility in Acushnet, Mass. In Rhode Island, a second expansion of the compressor station in Burrillville is the sole Access Northeast project.