Eversource writes off its investment in Access Northeast because of Columbia Gas disaster
When fires and explosions rocked Lawrence-area homes and businesses in September, the Columbia Gas incident was bound to hurt the already-tenuous political stature of the natural gas industry around here.
Now, Eversource Energy is paying a price for the damage to the industry’s reputation: $32.9 million. That’s the pretax value of Eversource’s 40 percent stake in the proposed Access Northeast pipeline expansion project. Eversource just wrote off the full amount.
The company hasn’t officially given up on Access Northeast. But the utility’s accountants have decided, at least for now, that its share in the project is worthless. The reason? Eversource blamed the Merrimack Valley gas disaster, in a document filed Tuesday with the Securities and Exchange Commission, even though the incident didn’t take place in Eversource’s gas service territory.
Eversource and its partners in Access Northeast, National Grid and Enbridge, say the need to expand the Algonquin pipeline system’s capacity in New England remains pressing. The $3 billion-plus project would provide gas for the region’s power plants on the coldest days of the year, when most of that fuel is used to heat homes and businesses, not to generate electricity.
However, the Massachusetts Supreme Judicial Court ruled in 2016 that electric ratepayers couldn’t be forced to pay for gas pipelines. That was a major setback for Access Northeast at the time, one that could yet prove to be a fatal blow. In 2017, Algonquin owner Enbridge notified the Federal Energy Regulatory Commission that it was withdrawing its project application, essentially putting Access Northeast on the back burner.
The hope, clearly misguided now, was that lobbyists for Access Northeast would somehow work their magic and persuade the legislative leadership on Beacon Hill to pass a law that would make the project easier to finance. Several prominent business groups endorsed a new coalition, funded by the Access Northeast partners, early this year aimed at promoting expansion of the state’s natural gas supplies.
Nice try. The industry already faced a hard sell in the State House.
Other proposals — Kinder Morgan’s now-dead Northeast Energy Direct, Enbridge’s still-alive Weymouth compressor — had triggered fierce opposition in many corners of the state. If anything, lawmakers seemed inclined to make it tougher to finance gas projects, not easier. They adjourned at the end of July without dealing with the issue.
Then came the fires and explosions in the Columbia Gas system, killing one person and injuring roughly two dozen. Thousands of customers remain without heat as crews race to rebuild the compromised system.
The industry’s stock on Beacon Hill continued to sink. Eversource is now telling investors there is “significant uncertainty” about the ability to secure the legislative changes needed to finance the pipeline expansion as a result of the Columbia Gas incident.
Eversource isn’t walking away from Access Northeast. Spokeswoman Caroline Pretyman says the region remains vulnerable to electricity supply disruptions in the wintertime, with the risk increasing once the Pilgrim nuclear power plant is retired next year. Eversource executives, she says, simply “don’t see a clear path forward for the project at this time.”
Many energy industry insiders haven’t seen a clear path forward for Access Northeast in a while. It took a major calamity for Eversource to formally recognize just how politically fraught natural gas expansion has become here.