Pipeline and Energy Updates

Gov. Patrick backs away from regional effort to expand natural gas capacity
Jon Chesto
Boston Business Journal

Gov. Deval Patrick has backed away from a plan that would raise money via a tariff on the power market here.

 

 

 

 

 

The New England governors’ plan to impose a new tax on our electricity market to pay for natural gas pipeline construction was a bold proposal — one that’s never really been tried before — to solve our region’s natural gas constraint issues.

But without Massachusetts involved, it’s almost impossible to pull off.

Gov. Deval Patrick’s administration has decided to put its support for this massive infrastructure investment on hold. This decision follows the Massachusetts Legislature’s failure to approve Patrick’s “clean energy” bill, a bill that would have allowed utilities in this state to enter into long-term contracts for Canadian hydropower, with a goal of building new power lines into New England. The region’s governors, through the New England States Committee on Energy, had proposed a separate electricity tariff to help subsidize those power lines. Now, the future of both tariff proposals is up in the air.

Gov. Paul LePage in Maine tried to salvage the regional process, sending a letter last week to Patrick, imploring him to get on board with the project to bring more low-cost Marcellus Shale gas from Pennsylvania into New England. This is a huge economic issue in LePage’s home state: The operators of another pulp mill, this one in Old Town, just announced that it would close down, affecting nearly 200 jobs, in part because of high energy costs.


Here's an excerpt from the letter that LePage wrote to Patrick:

“Despite the fact that our region has made progress on the policy framework to move forward with this infrastructure, it has come to my attention that the Commonwealth of Massachusetts has decided not to continue additional natural gas capacity for New England. This is a colossal mistake. … New England desperately needs additional natural gas capacity.”

It’s unclear exactly what prompted Patrick’s new stance on expanded natural gas capacity. But it's not exactly surprising. The initial twin-tariff proposal incensed a number of environmentalists who are traditional supporters of Patrick. And Kinder Morgan’s efforts to build a new pipeline into the region from points west have sparked an outcry in numerous towns where the company would install it.

When I asked Krista Selmi, a spokeswoman for Patrick’s energy staff, about the administration’s position on expanding natural gas into the state today, she offered me a brief statement essentially saying that policymakers need to weigh the long-term impacts of pipeline expansion with the need for the natural gas:

“Massachusetts remains committed to working as a region to solve New England’s most pressing energy challenges, including the need for additional clean energy resources such as renewables and large hydro and the associated transmission as well as natural gas capacity constraints. We must, however, continue to understand the region’s evolving needs as well as both the short and the long-term impacts these infrastructure investments will have. As such, Massachusetts is reviewing existing analysis on low demand and natural gas needs necessitating a delay in filing a pipeline related tariff with the Federal Energy Regulatory Commission.”
I also reached out to LePage’s administration, to find out more about LePage's concerns. Patrick Woodcock, the director of Maine’s energy office, told me that he understands that the failure of Patrick’s clean energy legislation would have implications on the regional partnership. But that’s no reason, he said, to jettison the discussions. Woodcock said the LePage administration is deeply worried about the recent feedback it has received from Patrick’s team with regard to the natural gas pipeline tariff.

On particularly cold days during the last two winters, in particular, electricity price spikes have occurred in New England because the low-cost Marcellus Shale gas, largely from Pennsylvania, went to heating customers instead of power plants. Even if there are only a handful of days each winter with such shortages, the dynamic’s long-term effect is to drive up electricity costs across the board. (The power lines to Canada, meanwhile, would be aimed at bringing more electricity into the region to help offset the losses of power that are occurring as aging fossil fuel-fired plants are retired.)

“It’s obvious the region desperately needs additional infrastructure to bring natural gas from the Marcellus Shale into New England,” Woodcock told me. “Every winter that we miss is going to cost the region billions of dollars. The time for delay and study is over.”

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The Brayton Point power plant is being sold again, but new owner will still shut it down

Jon Chesto
Boston Business Journal

Dynegy will move ahead with plans to shut down the massive Brayton Point power plant in Somerset.

 

 

Brayton Point is getting a new owner, but it still won’t be saved from the wrecking ball.

The massive coal-fired power plant on the South Coast will be acquired by Houston’s Dynegy Inc. in a $3.45 billion deal for EquiPower Resources Corp.’s plants, a group that includes Brayton in Somerset and four others in New England. Dynegy, which reportedly had been interested in buying Brayton and two sister plants when they were on the market in 2013, is also paying $2.8 billion to buy a group of plants from Duke Energy in a separate but related deal.

EquiPower had already announced plans last fall to shut down Brayton Point, New England’s largest coal plant, by mid-2017. Now that they’re finally getting their hands on the 1,500-megawatt plant, Dynegy executives are saying that they’re going to move forward with that shutdown plan.

On a conference call today to discuss the deals, one analyst asked whether Dynegy would need to prepare for losing about $110 million in annual earnings from Brayton Point. Dynegy CFO Clint Freeland responded by saying the number is “in the ballpark.” But he noted that most of Brayton Point’s income is made in the first half of the year, so the hit essentially wouldn’t be felt at Dynegy until 2018.

The analyst then asked whether Dynegy would try to keep Brayton Point open. (After all, previous owner Dominion spent more than $1 billion on environmental upgrades before selling it off to EquiPower's parent company last year.)

Dynegy CEO Robert Flexon quickly dismissed the idea of keeping the plant running: “At this point in time, all of our assumptions and diligence have been around following the path that Brayton Point is on.”

The other EquiPower plants that Dynegy is buying have a longer life ahead of them. They all burn natural gas, which is far more cost effective — except on the coldest days in New England — than burning coal, given the ample amount of cheap gas available in the Marcellus Shale in Pennsylvania. (Getting the natural gas to power plants in New England on those frigid days has proven to be problematic, though, as heating customers typically get priority over power plants for the gas.)

In Massachusetts, Dynegy also will be acquiring the Masspower plant, a 265-megawatt gas plant in Springfield, and the Dighton Power station, a 178-megawatt plant in Dighton. (These figures are based on ratings provided on EquiServe’s website.) The firm is buying two in Connecticut as well, the 555-megawatt Milford Power plant, and the 812-megawatt Lake Road plant in Dayville.

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Response from Sen. Markey: