Environmentalists laud Mass. court ruling rejecting public subsidies for natural gas pipeline expansion

BOSTON – Environmentalists rejoiced on Wednesday when the Massachusetts Supreme Judicial Court said it is unlawful for state energy regulators to approve long-term, ratepayer-backed contracts with energy distribution companies to pay for natural gas pipeline expansion.
Retiring Massachusetts Supreme Court Justice Robert J. Cordy wrote in a 37-page decision that the state Department of Public Utilities’ authorization of any long-term contracts, subsidized by ratepayers, would violate the 1997 Restructuring Act, a law that separated the three utility services of generation, transmission and distribution, and deregulated the generation component in the interest of competition.
“[We] conclude that the order is invalid in light of the statutory language and purpose of [the Restructuring Act], because, among other things, it would undermine the main objectives of the act and re-expose ratepayers to the type of financial risks from which the legislature sought to protect them,” Cordy wrote.
The decision is significant for the region, as energy companies are trying to expand natural gas pipelines throughout New England. The move is opposed by environmentalists, but supported by many public officials. The latter argues pipeline expansion could reduce heating and electricity bills for ratepayers, as it would increase the supply of natural gas for the region, which is typically cheaper than other energy resources.
In the lawsuit, the plaintiffs, including ENGIE Gas & LNG LLC and the Conservation Law Foundation, also contended that the defendant, the Department of Public Utilities, violated the state’s Administrative Procedures Act. But Cordy and the Supreme Court disagreed, focusing the case specifically on the Restructuring Act. Environmentalists count the decision as a win.
“This is an incredibly important and timely decision,” said David Ismay, the lead attorney for CLF on the case. “Today our highest court affirmed Massachusetts’ commitment to an open energy future by rejecting the [Mass. Gov. Charles D.] Baker administration’s attempt to subsidize … the dying fossil fuel industry.”
The Restructuring Act states that “[n]o gas or electric company shall hereafter enter into a contract for the purchase of gas or electricity covering a period in excess of one year without the approval of the department, unless such contract contains a provision subjecting the price to be paid thereunder for gas or electricity to review and determine by the department in any proceeding brought under.”
Public utility regulators argued that the approval of long-term contracts would be allowable under the statute. The plaintiffs disagreed and the court ruled in favor of the latter.
The CLF, in a statement, says this decision takes the cost of any such expansion off the shoulders of ratepayers and places it back onto the energy companies, which – according to the decision – are wary to build new pipeline capacity “without having long-term contracts in place.”

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