Tariff

Landscape_11All New Hampshire Electricity Customers may be forced to pay an additional tariff on their electric bills to underwrite this private corporate enterprise which Wall Street has projected will generate enormous profits for Kinder Morgan and the out-of-state gas producers and sellers.
Elaboration:
Actually all of New England, not just the NH grid, will be saddled with paying for new natural gas pipelines through a proposed new charge on electric bills. Over the winter of 2014, in closed door meetings (1), the DPU president Ann Berwick, along with her counterparts around the region sitting on the New England States Committee on Electricity (NESCOE), pitched the idea of an electricity tariff to subsidize new pipeline construction and asked ISO-NE’s for help in filing a tariff (2).

NESCOE asked for public comment from The New England Power Pool (NEPOOL) on the proposed tariff by June or July of 2014. A vote was scheduled for August 29th but was delayed by a month. If approved ISO-NE could file at FERC for the tariff in the September/October 2014 time frame. However, protest and interveners could likely delay approval by many months if the response is strong opposition. Furthermore, NESCOE and the governors of New England could still decide to hold off on the tariff until further studies are completed. Opposition in Massachusetts has requested that a study be performed on the low growth scenario associated with the Black & Veatch Gas-Electric Study Phase III Report summarized here (6).

NH Senator, Peggy Gilmour, in a letter to a member of this pipeline organization and the towns of Hollis and Brookline dated August 15th 2014, stated the following about the tariff:

“the idea that a for profit company could take land held in trust by conservation easements, secured by the raising of private funds, is outrageous. And, it flies in the face of well-balanced environmental policy.” (3)

It is ironic that these regional FERC committees (i.e., NESCOE (4) and ISO-NE (5) are also funded by an electricity tariff to the tune of $141 million dollars/year, yet they are dominated by fossil fuel industry that has no concern for green solutions that interest the people.

While it is unprecedented that the cost of a pipeline should be socialized by electric rate payers, its design helps fund the purchase of gas capacity for electric generation. Power generators would otherwise be reluctant to get locked into long term contracts that reserve space on a gas pipeline. It can be debated that this also creates artificial demand for natural gas.

While banning the tariff would be a great start to dismantling this project, it is a separate element from the Kinder Morgan project itself. If Kinder Morgan were to sign enough local distribution companies (LDCs) for home heating fuel and acquire enough export-related contracts, they wouldn’t actually need the tariff, which is strictly tied to electric generation. So, efforts to simply ban the tariff may not be enough to stop the project.

Counter:
Pipeline projects are expensive. The overhead associated with infrastructure development is burdensome to the pipeline companies. Why should they be forced to bear the burden of infrastructure expense when the company is providing a utility service to the ratepayers who are reaping the benefits of cheap, clean and reliable natural gas? We need gas and these companies are doing us a service by building this infrastructure for our future.

Rebuttal:
The tariff should not be allowed to happen. Public money to fund a private enterprise is not appropriate. This should be funded by issuing bonds. In this way private citizens could invest in the project by buying the bonds that would fund the project. Those same citizens would later profit from the bonds when they payout their return. This would force Kinder Morgan to share the huge profits they stand to make with investors who fronted the money by buying the bonds. The idea that a private company should get a free ride to do what they want to do on the backs of electric rate payers, some of whom are outright opposed to that enterprise, is obscene. This should never ever be allowed to happen. Here is another, more palatable proposal from a Massachusetts municipal group (7).

As New Hampshire is, on average, a donor state for electricity and has no power companies signing up for gas fuel from the new pipeline (the only contract for NH is Liberty Utilities which is a DLC for home heating fuel), rate payers would be funding a pipeline so that other states in N.E. could utilize the supply.

To justify the tariff, you must first justify:

  1. Need (as opposed to “demand”)
  2. Affordability (the benefit of the fuel source)
  3. Availability (reliability of the supply)
  4. Convenience (the adverse environmental effects on the globe and communities can be justified)

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