The Supreme Judicial Court dealt a blow on Wednesday to Gov. Charlie Baker’s efforts to increase the flow of natural gas to the region, ruling that utilities cannot ask electric ratepayers to help finance the construction of gas pipelines.
The decision immediately threw the future of a proposed major new gas pipeline project – Access Northeast – into question, and will force the Baker administration to rethink its energy strategy as it prepares to execute on a new law authorizing the purchase of large-scale hydropower and offshore wind resources.
In an opinion written by recently retired Justice Robert Cordy, the state’s top court said the pipeline tariff would “re-expose ratepayers to the very types of risks that the Legislature sought to protect them from” with a 1997 law restructuring the electricity market.
The ruling marked a significant win for environmental groups and policy leaders on Beacon Hill who have argued that additional natural gas capacity is not required to meet the region’s energy demand, and would run counter to the state’s goals of decreasing reliance on fossil fuels and reducing greenhouse gas emissions.
The Department of Public Utilities in October 2015 concluded that it had the authority under existing law to approve long-term contracts by utilities like Eversource and National Grid for the purchase of natural gas capacity that would allow for the cost of pipeline construction to be passed on to ratepayers.
By creating a financing mechanism for expanded pipeline capacity, energy officials were seeking to improve access to cheap gas and limit the state’s exposure to price spikes during period of high consumption when expensive power on the spot market has to be purchased to meet demand.
Engie Gas & LNG, which ships liquefied natural gas into the Boston area, and the Conservation Law Foundation challenged the new rules in court.
“We continue to believe that Massachusetts and New England’s natural gas capacity needs can be met most efficiently by existing LNG infrastructure available to the region, diversifying the region’s portfolio into renewables, and continuing to encourage and reward energy efficiency and energy storage,” ENGIE Gas & LNG said in a statement.
A spokesman for Baker’s energy and environmental affairs office said the administration continues to believe that additional natural gas capacity will be needed to meet demand without raising costs for consumers.
“Massachusetts has some of the highest electricity rates in the nation and without additional gas capacities and a diverse energy portfolio, the trends will continue to rise overtime,” Energy and Environmental Affairs spokesman Peter Lorenz said.
The Department of Public Utilities on Wednesday suspended all evidentiary hearings regarding contracts for gas capacity until it can fully review the decision.
