The natural gas pipeline expansion project Maine regulators picked as the leading candidate to reduce regional energy prices has withdrawn its plans from the federal permitting process.
Enbridge, which purchased Spectra Energy in February, on Thursday notified Maine regulators that it withdrew its project from consideration by the Federal Energy Regulatory Commission.
The company said it’s stepping back from the project until other New England states follow Maine’s lead in creating a way for electricity customers to pay for capacity on a regional gas pipeline.
Enbridge’s announcement comes as regional grid operators continue to express concerns that the increasingly gas-reliant New England power grid does not have sufficient access to natural gas supplies.
The project would expand capacity on Enbridge’s line running from eastern Pennsylvania to Massachusetts, where it connects with the Maritimes & Northeast Pipeline, which passes through Maine to the Canadian Maritimes.
The company’s project met with significant challenges in securing financial support from other New England states, notably Massachusetts. In August 2016, the Massachusetts Supreme Court blocked utilities from charging ratepayers for gas pipeline construction.
Gaining that kind of support is also a condition for access to any funds from Maine ratepayers, at a cost of up to $75 million a year, for 20 years. At full value, that would deliver up to $1.5 billion from Maine customers to pipeline companies, with the idea that the additional capacity would reduce electricity prices that spike when gas supplies are short.
The benefits of such a contract were controversial with Maine regulators, as staff at the Maine Public Utilities Commission cautioned in June 2016 that it would not benefit electricity customers. Commissioners disagreed, with Commissioner Bruce Williamson calling the staff analysis “naive.”
As Enbridge turns to seeking regional “alignment” on policies backstopping pipeline construction, Maine lawmakers earlier this year decided to give such projects more time to qualify for money from Maine ratepayers.
The 2013 Omnibus Energy Bill that allowed transfers from electricity customers to natural gas pipeline developers initially required the state to sign such a deal by Dec. 31, 2018. Seeing challenges for projects like Enbridge’s Access Northeast expansion, they approved extending that deadline to December 2020 in a bill Gov. Paul LePage signed into law in April.
Regulators are separately considering whether to have ratepayers support natural gas storage projects, which would hold natural gas for times of peak demand. A consulting firm in January found backing such projects wouldn’t be worth it for ratepayers, but its calculations looked quite different without the Access Northeast project in the mix.
The Maine PUC in May agreed with that report and decided not to support any of the proposed natural gas storage arrangements.
Without it, the study found seven of the 11 projects could have a net benefit for Maine electricity customers.