Thursday, March 3, 2016

Will state officials promise your money to Kinder Morgan?

Sentinel Editorial

Anyone in business knows one of the riskiest things you can do is to commit to an expensive project without actually having the money to pay for it. It’s why banks offer loans, why governments issue bonds, and why wannabe entrepreneurs go on “Shark Tank.”
If you have enough political juice, however, it seems you can plan and carry out projects costing billions of dollars, and never risk a dime. That’s because the government will, in some cases, force your customers to take the risk for you.
What a deal!

That’s the situation at the center of the proposed Northeast Energy Direct natural gas pipeline. Kinder Morgan, the energy giant behind the project, has been lobbying for quite some time, with the help of New England electricity suppliers, to have the region’s state utilities regulators agree to force electric ratepayers to foot the bill for the $5 billion plan.

The argument goes like this: The region’s electric rates are too high because there’s not enough energy coming into the grid, which is a particular issue during peak demand because then electric companies have to buy energy on the spot market at inflated prices, so ultimately the pipeline will secure our region’s energy future, thus lowering rates for all, so why not let the customers pay for it to begin with?

We could have made that easier to comprehend with a little more judicious use of punctuation. But really, the way it reads now more accurately reflects the argument, in which several somewhat-related issues are combined to make a specious case.

It’s been a largely successful argument thus far. The state legislatures in Connecticut, Rhode Island and Maine have passed laws saying the utilities commissions in those states can force the project down ratepayers’ throats, while those in Massachusetts and New Hampshire say their regulators already have that power.
That puts the issue, here in New Hampshire, in the hands of the Public Utilities Commission. That body can put ratepayers on the hook, or it can say, no, Kinder Morgan should foot the bill and pass along its costs to utilities later, which would then pass those costs along to ratepayers.

Either way, one might conclude, the customers will eventually pay. So what’s the difference? 

There are two and they’re important.

First, the Federal Energy Regulatory Commission, which will ultimately decide whether the pipeline gets built, is now vetting Kinder Morgan’s proposal. As part of that, the company must show there is actually enough demand for its gas in the region to warrant building the pipeline. Pipeline critics contend the project isn’t needed in New England, but is attractive to the company as a way to get its natural gas from shale fields in Pennsylvania to the coast, where it would be shipped overseas or piped on to Canada. But Kinder Morgan has to make the case the gas is needed here.

Except, it doesn’t really have enough gas customers in New England to show that. But if state utilities regulators agree to pass the costs along to electric customers, it essentially makes all the ratepayers in those states de facto customers, thereby proving the demand is here.
So, the move is meant to gain FERC approval in a case where it might not otherwise be granted. According to lawyers at the Conservation Law Foundation, which is fighting to stop the project, FERC has never approved a pipeline in which the demonstrated demand for the power — by way of signed contracts — was as low as in this case.

 Historically, projects gaining FERC approval have had three-quarters or more of their capacity under contract. Without the New England ratepayers as a “customer,” Kinder Morgan has, according to the CLF, less than half its capacity under contract. Thus, the states are stepping in to help guarantee the project’s success before FERC.

Which brings us to the second issue with this scheme.

It’s important that Kinder Morgan doesn’t have the pipeline’s gas accounted for, because it points to the risk involved in building it. What if actual demand never materializes? Then ratepayers will be on the hook for an ill-conceived project many didn’t want to begin with.

Further, the company, whose recent financial problems have been widely documented, might not have the ability to borrow the funds for a $5 billion project without a guaranteed return. Generally, that’s how lending works. If you want to borrow money, you have to prove you can repay it. The burden should fall solely on Kinder Morgan to show it can pay its own way.
If not, the pipeline shouldn’t move ahead on money lifted from the pockets of ratepayers by their state officials.


Anonymous said...

someone should take you to task for your pedicurist, you never reveal your sources!

too many idiots in town said...

^ Are you an idiot? Do you even know what the word pedicurist means?
As I see it, and it is plainly revealed, this is a copy and paste from the Sentinel Editorial page in an attempt to provide people who do not subscribe to the Sentinel or who think that the Pipeline Coalition and this blog are full of crap, an open look into the shenanigans Kinder Morgan is using to pull the wool over the eyes of elected officials who will determine if we all get screwed while KM gets rich.
How much cleared does it have to be for you?

Anonymous said...

Well researched and documented is what I say and one of the key reasons we need to pass the Warrant Article to provide $15,000 to the 17 town pipeline coalition legal fund who want to prevent this happening. Kinder Morgan is spending a fortune "buying" our state and we will pay the price. Eversource sent out a bunch of bull in the bill that began a rate hike saying unless we fund a pipeline for natural gas the bill would go up more. Threatening us NH rate payers. Now they want us to pay to build it too?????

Anonymous said...

To anonymous at 8;26 am, it clearly says SENTINEL EDITORIAL. Thank you Informer for posting this.

Anonymous said...

i was mentioning the added comment by the Informer that are truly taken from someone else's comments without given credit. Some People do not have a clue or ideas of their own or what the pipeline means or what harm it has on the environment they mimic other people like the actions of monkeys. Monkey sees as monkeys do!

the Winchester Informer said...

To the misinformed "monkey" above. All of the content in the subject on this post was taken directly from the Sentinel's Editorial page and reposted "exactly" as written.
We simply highlighted certain context in either color or bold print to catch the readers attention to facts .. and you're right, people act like animals when they don't agree with others opinions that contradict their own .. Go grab a banana and chill.