Connecticut backs out of regional natural gas plan

Connecticut is pulling back from a regional effort to boost the availability of natural gas in New England after neighboring states became unable to split the costs of building pipeline or storage infrastructure.

Connecticut's Department of Energy and Environmental Protection (DEEP) yesterday canceled a request for proposals it issued as part of that effort, dealing the latest blow to a multistate attempt to reduce the region's high electricity and natural gas prices. Spectra Energy, TransCanada, Repsol and Engie were among the companies that submitted proposals in response to the request.

Connecticut, Massachusetts, New Hampshire, Rhode Island and Maine have been involved in a joint effort to direct state electric utilities to sign contracts to bring more gas into the region. That would help meet growing demand from gas-fired power plants, which largely buy gas on the spot market and have declined to sign long-term contracts that would support new pipeline capacity.

But the Massachusetts Supreme Court dealt a major blow to that effort after ruling in August that state utility regulators could not approve such a contract. Massachusetts is the largest energy user in New England and was expected to help pay for projects that might cost $3bn. New Hampshire utility regulators this month reached a similar ruling.

Connecticut DEEP said those rulings have "materially reduced" the ability for costs of projects to be shared among ratepayers and that the problem of regional infrastructure is "greater than one state can solve alone." Because of this, DEEP said it was canceling the request for proposals but noted it could issue new requests in the future.

Connecticut received seven proposals in response to its request. Among those plans were Spectra Energy's proposed 900mn cf/d Access Northeast pipeline and a joint request from TransCanada and the Portland Natural Gas Transmission System to deliver up to 300mn cf/d into the region. Repsol and Engie both proposed using LNG regasification terminals to deliver gas to the region.

Spectra said it was disappointed with DEEP's decision but encouraged that the agency left open the possibility of issuing future requests for proposals related to natural gas infrastructure.

"Simply put, the regional pipelines are running full and demand is growing, which exacerbates the possibility of electric black-outs and shortages of natural gas for home heating," Spectra said.

Repsol, Engie and TransCanada did not immediately respond for comment.