FERC Shows Its Hand

Report Finds “No Evidence” of Capacity Withholding in New England

On February 27, the Federal Energy Regulatory Commission (FERC) issued an official news release stating that a FERC staff inquiry had found “no evidence of anticompetitive withholding of natural gas pipeline capacity on Algonquin Gas Transmission by New England shippers.” FERC “will take no further action on the matter,” the release continued.

“The inquiry arose out of allegations made by the Environmental Defense Fund (EDF) in an August 2017 white paper, which asserted that local gas distribution companies in New England had engaged in practices to withhold pipeline capacity on the Algonquin system in order to drive up gas and/or power prices in the region,” FERC said. This official statement might be construed as odd, considering that EDF’s white paper made no such assertion.

Although the EDF report showed that the practice of pipeline capacity withholding regularly led to price increases, it did not state that this was the utilities’ goal. (EDITOR’S NOTE: See “New England Utilities Accused of Pipeline Manipulation,” Oil & Energy Volume 19, Issue 10, November/December 2017, print ed.)

In related news, a class action suit filed by the law firm, Hagens Berman Sobol Shapiro LLP, on behalf of residents in the six New England states, claims “millions of residents paid artificially high electricity prices due to a scheme by Eversource, Avangrid and their subsidiary utility companies.” That case is ongoing, as is a separate review launched in October 2017 by the Connecticut Public Utilities Review Authority (PURA).

EDF Senior Director of Energy Market Policy N. Jonathan Peress said his organization stands by its findings. “Whether intentional or not, and regardless of business motives, the scheduling decisions by these two companies had a multi-billion-dollar side-effect on New England electricity users,” he said in a statement.

On December 11, 2017, Eversource Energy sent a cease and desist letter demanding EDF remove the aforementioned white paper, Vertical Market Power in Interconnected Natural Gas and Electricity Markets, from the internet. As of press time, it is still available on the EDF website.

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