New Jersey Conservation Foundation funded study that claims the $1.2 billion pipeline proposal would actually increase natural gas rates, not lower them Watch video
The proposed PennEast pipeline is unnecessary, redundant and could raise customer's rates for natural gas instead of lowering them, according to a study released Friday.
The study, funded by the New Jersey Conservation Foundation, looked at the underlying arguments in favor of building the proposed $1.2 billion natural gas pipeline and concluded there was no demand for the natural gas it would deliver and that it could increase customers' gas bills, contradicting PennEast's justification for building the structure.
The proposed 36-inch conduit would travel 114 miles from northeastern Pennsylvania to Hopewell Township. It is under consideration by the Federal Energy Regulatory Commission.
The study, conducted by Skipping Stone, an energy industry analysis company, looked at the PennEast application to the energy commission and publicly available natural gas industry data. Its major conclusions were that there already exists abundant capacity to meet natural gas customers' needs even when demand is the highest and that, if built, the PennEast pipeline would increase the rates customers pay for natural gas, not lower them.
"The whole basis upon which PennEast has hinged the purpose in need of this project does not hold water," said Tom Gilbert, of the NJ Conservation Foundation. "This study calls this project seriously into question. We hope that (the energy commission) takes notice."
The study, using says that there is 50 percent more natural gas capacity in existing infrastructure than would be needed to meet the increased customer demands during the 2013 "Polar Vortex" winter.
Pat Kornick, spokeswoman for PennEast, blasted that assertion.
"With approximately 90 percent of the capacity on the PennEast Pipeline subscribed under long-term contracts by local utilities and power generators, the market demand is clear,'' Kornick said. "The ongoing antics by those opposing natural gas development to advance their agendas does not change that fact."
The study claims that natural gas customers could be paying more for their gas if the pipeline is built because PennEast would siphon customers from existing pipeline infrastructure, forcing those companies to increase their rates to compensate for the lost revenue
"As customers shift contracts from existing pipelines to PennEast, (federal) rules permit those pipelines to file for rate increases on remaining customers to recover lost revenues," the study says. "Resulting rate increases could expose ratepayers to additional costs of over $50 Million per year."
'Corrupt, rogue agency' approves 100% of gas pipeline projects
The study recommends that the federal energy commission hold hearings "to determine what demand is being met by the proposed pipeline and whether less disruptive and more cost effective alternatives exist to meet such demand."
Kornick said the study's analysis is flawed from the start.
"The need for natural gas infrastructure is determined by projected usage, not historical data and average use," Kornick said. "The use of average annual data ignores the very real need to address dramatic price spikes and pipeline capacity constraints, such as those experienced during extreme weather conditions."
The study is the latest blow to the PennEast pipeline proposal, which has been met with voracious opposition in New Jersey.
Both Hunterdon and Mercer county governments have banned the company from surveying on public lands, joining 70 percent of New Jersey homeowners in the project's proposed path who also have refused PennEast surveyors.
Every municipality in New Jersey affected by the proposal has passed resolutions against it. And last week, the Delaware Riverkeeper Network sued the federal energy commission over its lax oversight of the PennEast application and other pipeline projects.
Keith Brown may be reached at kbrown@njadvancemedia.com. Follow him on Twitter @KBrownTrenton. Find The Times of Trenton on Facebook.