Two gas pipeline companies manipulated schedules and gas flow to make an extra $3.6 billion from Southern New England ratepayers, claims a report that has spurred investigations in Massachusetts, Connecticut and, to a much lesser extent, Rhode Island.
“We find clear patterns of withholding at a subset of delivery nodes operated by Avangrid and Eversource, the only two firms operating on the [Algonquin Gas Transmission Pipeline] pipeline,” says the report from the Environmental Defense Fund (EDF). “We estimate that capacity withholding increased average gas and electricity prices by 38 percent and 20 percent, respectively, over the three- year period we study. As a result, customers paid $3.6 billion more for electricity.”
In response to the report, Massachusetts Attorney General Maura Healey has authorized an informal investigation. A formal investigation may be forthcoming if the evidence warrants.
The Connecticut Public Utilities Regulatory Authority (PURA) has opened an official investigation. Connecticut Senator Richard Blumenthal has asked the asked the Federal Energy Regulatory Commission (FERC) to investigate as well.
In Rhode Island, “…the PUC [Public Utilities Commission] doesn’t have plans for a formal investigation, but we are keeping a close eye on the Connecticut PURA investigation,” said PUC Principal Policy Associate Todd Bianco, “Additionally, commissioners and staff are gathering and analyzing the information that’s out there right now.
“We’re also tracking for developments in other states and at FERC. Notably, the Division of Public Utilities and Carriers (DPUC) is, by statute, the agency that would represent the state’s interests before FERC. The PUC, however, intends to remain in the loop if something formal began at FERC.”
Reached for comment, DPUC Chief of Information Thomas Kogut, said, “Much like the [Public Utilities] Commission, the Division is monitoring the CT PURA investigation and related developments in the region.”
Rhode Island Attorney General Peter Kilmartin’s office has not responded to a request for comment as of this writing.
In the recent past, Senator Sheldon Whitehouse has made the argument that higher gas prices in New England are due to a lack of pipelines and “choke points” that constrain gas flow into the region. But the report from EDF indicates that a large part of the higher gas prices in our region was actually due to market manipulation.
“The Senator’s staff is following the working paper as it moves through the peer review process and will give it a close look once it’s vetted,” wrote Whitehouse’s press secretary Meaghan McCabe in response to a request for comment.
The EDF report maintains that Eversource and Avangrid exacerbated price spikes by “scheduling deliveries without actually flowing gas. This behavior blocks other firms from utilizing pipeline capacity, which artificially limits gas supply to the region and drives up gas and electricity prices.”
The EDF report authors were not sure if this manner of manipulating market scarcity is actually illegal.