Eversource and National Grid, the two biggest utilities in the state, are shelving a $3.2 billion natural gas pipeline project known as Access Northeast until they can find a way to pay for it.
Their partner in the project, pipeline operator Enbridge Inc., notified the Federal Energy Regulatory Commission Thursday of the decision to withdraw the application for the project.
The companies argue that the pipeline expansion is needed to bring cheaper natural gas to the region’s power plants, particularly on cold days, when demand rises. But they need more time to build political support for legislation that would allow the costs to be shouldered by electricity customers.
In August, the state Supreme Judicial Court struck down a plan put forward by the Baker administration to have electricity ratepayers pick up the tab for the pipeline expansion, ruling it wasn’t permissible under state law. As a result, other New England states put similar proposals on hold.
“Once we work through the legislative [support], we’ll be able to reengage the FERC filing process and be back on track,” said Brian McKerlie, a vice president at Enbridge.
Access Northeast is the second massive natural-gas project in New England to be shelved because of financing problems. Kinder Morgan suspended a major pipeline plan last year.
Natural gas expansion has become one of the most hot-button issues in Massachusetts politics, with opponents fighting pipelines at every turn. Three smaller, previously approved projects — a proposed Enbridge compressor station in Weymouth, a recently completed Enbridge pipeline through West Roxbury, and a Kinder Morgan spur in Sandisfield — were not directly affected by last year’s SJC ruling.
McKerlie said the hope was to start construction next year on Access Northeast, a 125-mile project that mostly involves replacing pipes with larger ones in Massachusetts and Connecticut to expand the capacity of Enbridge’s Algonquin Gas Transmission line.
In Massachusetts, the project would mainly involve municipalities west and south of Boston, from West Boylston down to Canton. Construction would have taken as long as three years. But now the timing is unclear.
McKerlie said Enbridge’s acquisition in February of Spectra Energy, the pipeline company that had been leading the charge for Access Northeast, had nothing to do with the decision to withdraw from the federal review process.
Last year’s Massachusetts court decision was a setback for the two utilities, but they said at the time that they would continue to seek a way to pay for Access Northeast.
They say Access Northeast could reduce electric bills by as much as $1 billion a year across New England. They argue that a new infusion of lower-cost natural gas would more than offset the cost of a tariff, allowing power plants to burn gas on cold days, when that gas is often diverted for heating and isn’t available for making electricity.
Critics argue that electricity ratepayers would see their bills skyrocket to help pay for the natural gas expansion. They say less expensive or more environmentally friendly solutions — more renewable power, for example, or liquefied natural gas storage and shipments — are available.
The Conservation Law Foundation, whose lawsuit led to the SJC decision, didn’t seem ready to celebrate on Thursday.
“It’s positive news [and] reflects that the region has moved on and natural gas is not finding the opportunities or the welcome that it expected in New England,” said Greg Cunningham, a vice president at the Boston environmental group. “We, however, expect there will be an ongoing presence of Spectra and Kinder Morgan at our state houses and interacting with ISO New England over the next year.”
Grid operator ISO New England, which is responsible for making sure the six states have enough electricity, remains concerned about the region’s increased reliance on natural gas as older coal-fired and nuclear power plants shut down. The utilities will play up that concern as they lobby for a change in state law that could allow Access Northeast to go forward.
“It’s clear that the New England ISO is gravely concerned about reliability in the region,” said John Flynn, a senior vice president at National Grid. “The need for this project is not in doubt. . . . Hopefully, we can get cooler heads to prevail and get the votes we need.”
The partners could find a tough audience at the State House. The Senate last summer voted to oppose any effort to pass on natural gas pipeline costs to electricity customers. House leaders could be more amenable, but dozens of rank-and-file members last year signed a petition opposing natural gas expansion efforts.
“That unanimous vote in the Senate last year, that’s a tough one,” said Dan Dolan, president of the New England Power Generators Association. “I don’t know how you convince them. And frankly, the politics have moved more in that direction [of opposing natural gas].”
Lee Olivier, executive vice president at Eversource, said the partners also need legislation passed in New Hampshire, but not in the other New England states.
“We’re in the outreach process, speaking with legislators and listening to legislators about what they would like to see,” Olivier said.
Olivier said the companies could go directly to the FERC to seek approval to charge electricity ratepayers but prefer to work with state officials first.
Typically, the costs of smaller pipeline projects can be passed on to residents and businesses that use natural gas for heating. But the Access Northeast partners say they prefer to spread the project’s expense over the much larger number of electricity customers in the region, instead of trying to impose it on the smaller group of gas users. The focus of Access Northeast, they said, is on providing fuel for power plants, not for heating homes.
Ian Bowles, managing director at WindSail Capital Group, said finding the right mechanism to pay for Access Northeast isn’t simple.
“I think more gas in the region is a good insurance policy as we make a transition to clean energy,” said Bowles, a former state energy secretary. “I don’t think it’s important enough that I want to subsidize it.”