Further talks in Boston

UPDATE: At the July 30 meeting with the Governor we gained a commitment to further study of the Low Demand Scenario.

At Tuesday’s meeting energy policy meeting with Mass. Energy & Environmental Affairs officials with the Department of Energy, intention to follow through on that commitment was stated by Undersecretary Energy Mark Sylvia.  After a long presentation on the state’s energy picture, the attendees (MassPLAN, BEAT, No Fracked Gas in Mass, Toxics Action, Clean Water Action and members of close to a dozen conservation and land trust groups such as Sierra Club, Mass. Audubon, Nashoba Conservation Trust, Mt. Grace and many others) participated in a long question and answer session, during which we questioned the departments’ own calculations and studies. They were generally cooperative and open to discussion, even though we disagreed on many of their conclusions.

They confirmed that the month-long stall in the vote on the tariff was because the Clean Energy Resources Bill did not pass, making the tariff entirely about gas pipelines, the need for which needs to be revisited, a possibility alluded to by the Governor and Sec. Bartlett in our July 30 meeting.  The nature of the tariff was further explained – that it’s still being shaped and a vote on it delayed for at least a month while the dust settles. The short description of it is that it would allow electric generation companies to recoup costs for guaranteed access to pipeline capacity.
*More technical explanation of the tariff below*

The upshot of this is that if Kinder Morgan’s reports of Local Distribution contracts (gas for heating & cooking) are accurate, plus the other contracts they have not yet made public, are adequate to cover their costs, they could go ahead with the project without any tariff helping them clinch contracts with electric generation companies. That also means that the tariff would not apply to any gas that would go for export, although the other economic impacts of competing in with the global gas markets would far overshadow any domestic energy use tariff anyway.

The next step in this process will be determining what structure and scope the study of the Low Demand Scenario will take and whose input will be involved. They restated a commitment to make it open and transparent and to welcome input from stakeholders through meetings like the one we were in. We’ll be talking with them about how to make sure groups like ours can help determine not only what is studied, but hopefully who gets to be on the panel to conduct the study, and what form the methods of communication between the department and the general public will take.

*How the tariff would come to be and how it might work*
(as explained by MassPLAN exec. committee member Ken Hartledge of Nashoba Trust)

1. ISO-NE Transmission Sub Committee vote (ie NEPOOL)
2. ISO-NE Market Committee vote – as far as we can understand it, neither of the above require approval for IO-NE to go to FERC…
3. ISO-NE files with FERC
4. FERC reviews and if approved…
5. NESCOE (or someone still unclear) issues RFP for gas in 200mcf/d increments up to 600mcf/d expressly for power generation
6. The gas would be purchased by one entity (TBD) from KM and distributed to the power generators via a capacity manager
7. Gas transmission and usage costs would be allocated to each state, yearly, and then onward allocated to the power generators
8. The generators would be able to recover the transmission and gas costs from ratepayers via tariff

It seems like the “cost recovery” is not just building the pipe. It would be for surveying, buying land, mitigating environmental impacts etc and then constructing it PLUS 25 years of maintenance and administration PLUS up to 14% ROE.  KM also includes in their tariff application that if they have to recover green house emissions the cost will be passed on to the buyer.  One way or another we bear all the expenses at some point.