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MMWEC, other Northeast public power utilities cite advantages of public power pipeline plan


July 11, 2014

By Robert Varela
Editorial Director
The Massachusetts Municipal Wholesale Electric Co. (MMWEC) proposal for public power financing and ownership of a new natural gas pipeline into the region would provide "the greatest potential benefit to all electric consumers in the region," among competing plans for a new pipeline, said the Publicly-Owned Entities Sector of the New England Power Pool. In a July 3 memo to the New England States Committee on Electricity (NESCOE), the publicly owned entities recommended that the region’s states "remain focused on maximizing the consumer benefits of any actions that are taken with respect to the region’s fuel supply and electric infrastructure." 

MMWEC CEO Ronald DeCurzio expanded on the joint action agency’s "Consumer Model" proposal. In a July 3 letter to NESCOE, he noted that, compared with a competing proposal by investor-owned utilities, the Consumer Model would:
  • provide the best value to consumers, avoiding billions of dollars of costs that would be incurred under the IOU proposal;
  • eliminate the need for a "contract entity" to own pipeline capacity;
  • eliminate "the high level of concern over actual or apparent conflicts of interest" associated with the IOU plan, since MMWEC is subject to public records and open meeting laws; and
  • enhance the potential for public and regulatory approval of the proposal by the region’s governors for a new system for financing construction of natural gas pipelines by ensuring the governors’ plan is implemented at the lowest cost possible to consumers.
Under the Consumer Model, MMWEC would issue the debt required to finance construction of a new pipeline and would own the facilities upon completion, DeCurzio said. Construction, operation, and maintenance of the pipeline would be performed by an existing pipeline company (or companies) under contract with MMWEC. Tariff revenues, minus revenues derived from pipeline capacity sales, would be used to pay costs of ownership, which would encompass financing, debt service, and administrative expenses, he said.

The Consumer Model contemplates public ownership of pipeline capacity as well, with a capacity manager that would be under contract to MMWEC and would be subject to the strict transparency and accountability requirements of a non-profit, public entity, DeCurzio said.

New England "has clear and obvious infrastructure problems resulting from a mismatch between the mix of electric supply resources installed in the region and inadequacies in the fuel supply and delivery system needed to support these resources," the publicly owned entities said. "The root cause of these challenges is a wholesale market structure that attempts to meet reliability objectives by sending short-term price signals, without any way of considering the impact on cost to consumers, compensation to asset owners or the ability to address local state, and national public policy concerns. While the states, regulators, the electric industry and its stakeholders continue to explore better ways to balance this equation, we view the Governors’ proposal as a necessary and limited intervention into the marketplace to address electric reliability and economic issues that have risen to a crisis level in New England."
 

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