Business

Electric customers can be charged for natural gas, state rules

Governor Charlie Baker’s administration has opened the doors wide to a new approach for the state’s electric utilities: Charging their customers for natural gas.

The state Department of Public Utilities issued a ruling on Friday determining that the agency has the legal authority to review and approve contracts for natural gas capacity filed by electric companies. If the agency approves these contracts, costs would be passed on to electricity customers.

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That means that even if you use heating oil to warm your house in the winter, you could end up playing a small part in paying to bring more natural gas into the region.

The goal, though, would be to actually lower electricity bills by expanding the amount of natural gas that’s available to New England’s power plants, particularly on cold days, theoretically curbing the price spikes that occur when gas has to be purchased on the spot market on those days. (The gas contracts could be used to help finance the construction of new pipelines.) The state DPU ruled that the electric utilities must show that the electric pricing benefits warrant the expense of the natural gas contracts.

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The state’s two biggest energy utilities — National Grid and Eversource Energy — deliver natural gas and electricity to their customers but they have not in the past passed on the cost of obtaining natural gas to their electricity customers since the electric generation industry was deregulated in the 1990s. The DPU ruling on Friday was intended to show the legal justification for doing so.

Kinder Morgan’s Tennessee Gas subsidiary issued a statement saying the DPU ruling is an important step toward ensuring that power plants have reliable access to the fuel they need. (Natural gas is used to generate more than half of New England’s electricity.)

Tennessee Gas said the order should benefit consumers as interstate pipeline companies — Kinder Morgan is one of the biggest in the country, and is looking to build a new pipeline into the region — compete to provide natural gas to electricity generators.

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Environmental groups such as the Conservation Law Foundation have argued against this approach, in part because they don’t want to add extra natural gas pipeline capacity in the state. GDF Suez Energy North America, the company that owns the Everett liquefied natural gas terminal, also lobbied against this. The company, a subsidiary of French energy giant Engie, argues that existing stores of LNG can help offset natural gas shortages on the coldest days without the added expense of a new pipeline.

“We need energy policy that protects consumers and the environment, and this does neither,” Joel Wool, an energy advocate at Clean Water Action, said in an e-mail.

Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.
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