Oilheat Associations Challenge Utility Projects

Oilheat Associations Challenge Utility Projects

Heating oil associations are continuing to challenge the aggressive expansionist policies of natural gas utilities across New England.

The Connecticut Energy Marketers Association (CEMA) has gone back to court to challenge a judge’s decision that the state’s natural gas expansion plan does not violate the Connecticut Environmental Protection Act (CEPA).

Last October, CEMA had sued the Department of Energy and Environmental Protection (DEEP), claiming they had failed to comply with CEPA. CEMA had claimed in its suit that that the state’s Comprehensive Energy Strategy (CES), which calls for the construction of 900 miles of new natural gas pipelines and the conversion of 300,000 homes and businesses from heating oil/Bioheat® fuel to natural gas, would cause significant environmental damage and therefore would require an environmental impact evaluation (EIE). DEEP asked the court to dismiss the case claiming that the CEPA did not apply to the CES. In July, the Court ruled in favor of DEEP’s motion on the grounds that the CES itself does not cause environmental damage.

In response to the ruling, CEMA’s Executive Committee in consultation with the Board of Directors authorized the association to appeal the decision based on the Court’s mischaracterization of CEMA’s arguments, which the Court claimed that CES is not an “action that will have a significant impact on the environment.” CEMA had argued that the conversion and expansion proposed in the CES constituted a series of planned activities that would have a significant adverse impact on the environment. Because the activities were proposed to be undertaken by DEEP, the activities constitute an “action” under Connecticut law that requires an EIE. “Whenever one of our members wants to install storage, they are required to pull permits and jump through hoops,” said Christian Herb, CEMA’s President.

“It is CEMA’s responsibility to do everything in our power to promote and protect your business,” CEMA wrote in a letter to members. “Since the environmental laws of the state apply to your company, we will continue fight to make sure that utilities have to comply with the law also.”

CEMA’s appeal is scheduled for a hearing this month, according to Herb.

Deceptive Advertising

The Connecticut association is also challenging utilities in the state on their advertising practices. “The utilities advertise aggressively about how much money people can save by converting to gas, but the information they use is highly inaccurate,” Herb said. As heating oil prices have fallen, the natural gas price advantage has vanished, but some of the utilities continue on advertise with inaccurate claims about potential savings. “It’s not that they are off by a little. They are off by a dollar a gallon,” he added.

Herb has contacted the Attorney General’s office, the Public Utilities Regulatory Authority, the Department of Consumer Protection and the Officer of Consumer Counsel to protest the advertisements.

Meanwhile in Vermont, the Vermont Gas expansion plan is facing serious obstacles related to cost overruns, according to Vermont Fuel Dealers Association (VFDA) Executive Director Matt Cota. The state’s Public Service Board (PSB) is revisiting its earlier approval of the expansion plan, which calls for building 41 miles of pipeline to serve new customers between Colchester to Middlebury in western Vermont.

The Board approved the project with a price tag of $87 million, but the utility has twice filed for cost increases and is now seeking authorization to pass on up to $154 in project costs to ratepayers. The Vermont chapter of the American Association of Retired Persons (AARP) has emerged as an outspoken critic of the project. AARP says retirees in the state could wind up paying for the pipelines without ever seeing any rate reductions, according to Cota.

The Department of Public Service and Vermont Gas have memorandum of understanding (MOU) that expires on January 8, 2016, but the PSB (a separate entity) is continuing its review of the project, and the MOU could expire before the PSB finishes its work. If the MOU expires, the contract between Vermont Gas and the contractor building the pipeline could be in jeopardy, according to Cota.

With PSB re-examining the project, VFDA is arguing against the pipeline on economic grounds. Vermont Gas made its case for building the pipeline with ratepayer subsidies by focusing on the commodity costs, and that argument is now defunct, according to Cota. They also did not factor in the costs of fuel conversion when projecting customer savings. “When you look closely at conversion costs, the actual payback is 30 to 50 years, and that bolsters the ARRP argument,” he said. “People won’t want to switch.”

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