THE COMMONWEALTH OF MASSACHUSETTS

OFFICE OF THE ATTORNEY GENERAL

ONE ASHBURTON PLACE
BOSTON, MASSACHUSETTS 02108
(617) 727-2200
(617) 727-4765 TTY
www.mass.gov/ago

July 17, 2015

Mark D. Marini, Secretary
Department of Public Utilities
One South Station, 5th Floor
Boston, MA 02110
Re:

The Berkshire Gas Company, D.P.U. 15-48

Dear Secretary Marini:

Enclosed for filing in the above-captioned matter please find the Attorney Generals
Initial Brief. Please contact me if you have any questions. Thank you for your attention to this
matter.
Sincerely,
/s/ Matthew E. Saunders
Matthew E. Saunders
Assistant Attorney General
Massachusetts Attorney General
Office of Ratepayer Advocacy
One Ashburton Place
Boston, MA 02108
(617) 727-2200
Enclosures
cc:

Service List

COMMONWEALTH OF MASSACHUSETTS
DEPARTMENT OF PUBLIC UTILITIES

Petition of The Berkshire Gas Company for

Approval of a Precedent Agreement with
Tennessee Gas Pipeline Company, LLC,
pursuant to G.L. c. 164, 94A

D.P.U. 15-48

ATTORNEY GENERALS INITIAL BRIEF

I.

INTRODUCTION
On April 21, 2015, pursuant to G.L. c. 164, 94A, The Berkshire Gas Company

(Company) filed a petition with the Department of Public Utilities (Department) for
approval of the Companys precedent agreement for a 20-year firm transportation contract with
Tennessee Gas Pipeline Company, L.L.C. (Berkshire Petition).1 The terms of the precedent
agreement (PA) provide for transportation service on the proposed expansion of an interstate
pipeline running from Wright, New York (Wright) to Dracut, Massachusetts (Dracut),
known as the Northeast Energy Direct Project (NED Project). Per the PA, the Company is
apportioned up to 36,000 dekatherms (Dth) per day of transportation capacity on the NED
Project.2

According to the Company, the NED Project is expected to go into service on

November 1, 2018.3 The Department docketed this petition as D.P.U. 15-48.

On April 27, 2015, the Attorney Generals Office ("AGO") intervened as of right
pursuant to G.L. c. 12, 11E(a). On May 15, 2015, the hearing officer granted full-party status
1

See Petition of The Berkshire Gas Company for Approval of a Precedent Agreement with Tennessee
Gas Pipeline Company, LLC, pursuant to G.L. c. 164, 94A, D.P.U. 15-48 (April 21, 2015).

2
3

Id. at 2, 4; see also, BGC-JMB-1, at 10:24-26.

Attachment BGC-JMB-1(a), at 63, 2.2 - Commencement of Service.

to Massachusetts Department of Energy Resources, Conservation Law Foundation, and Portland

Natural Gas Transmission System. The Department conducted two days of evidentiary hearings
from June 25, 2015, to June 26, 2015.
As addressed further below, the Department should not approve the Berkshire Petition asfiled because the Company has failed to demonstrate that the PA is consistent with the public
interest.

First, the Company has failed to demonstrate that the PA is consistent with the

Companys portfolio objectives because (a) the Companys forecast of design day and design
winter demand is not consistent with the standard of review for a forecast and supply plan; and
(b) the Companys inclusion of anticipated reverse migration of capacity-exempt customers in its
estimated design peak day requirement is inappropriate, and results in an overstatement of the
total contract quantity. Second, the Company has failed to consider a reasonable range of
alternatives. Specifically, the Company did not adequately consider not only energy efficiency
goals but also an expansion of on-system LNG facilities. Third, the Company has failed to
demonstrate that the PA compares favorably to alternatives by overstating the NED Projects
price and diversity advantages.
II.

BACKGROUND
The Company provides gas service to customers located in Berkshire, Franklin, and

Hampshire counties in western Massachusetts.

The Companys service territory is non-

contiguous, with the Western Division in Berkshire County, and the Eastern Division in
Franklin and Hampshire Counties.4 Tennessee Gas Pipeline Company, L.L.C. (TGP) has the
only pipeline physically located within the Companys service area. In addition to TGP, the
Company uses on-system peaking resources (i.e., liquefied propone (LP) and liquefied natural
4

BGC-JMB-1, at 7:8-12.

gas (LNG)) to serve its territory. In March 2015, the Company imposed a moratorium in its
Eastern Division, effectively prohibiting natural gas distribution service to new customers or
expanded service to existing customers.5
The Company avers that the NED Project will include a new interconnect in the northern
portion of the Eastern division that will provide a secondary feed to the region, thereby
eliminating distribution system constraints.6 Further, the contemplated NED pipeline path will
intersect with the Companys existing North Adams Lateral, providing enhanced deliverability in
the Western Division.7 The Company also claims that the NED Project will allow the Company
to eliminate dispatch of its LP and LNG resources for distribution system pressure support.8
The Company is part of a group of local distribution companies (LDCs), referred to as
the LDC consortium, that have agreed to participate in the NED Project as anchor shippers. The
LDCs negotiated rates that are nearly identical, but for the dedicated city-gate stations and the
yet to be constructed laterals, which dictated a slightly different rate for each LDC.9 The
negotiated terms and conditions are set forth in the PA, which include price and non-price terms
as well as conditions precedent for TGP. The price negotiated by the Company includes the
construction of new city-gate stations, upgrades to existing city-gate stations, new market area
laterals and a minimum operating pressure of at least 200 psi.10

Id. at 6:17-23.

Id. at 17:14-16.

Id. at 17:20-21.

Id. at 19:2-4.

Id. at 10:3-9.

10

See generally, Exh. BGC-JMB-1.

The PA specifies for each LDC the specific combination of mainline capacity (Shipper
TQ) and associated facilities to be included in the negotiated rate.11 The specifics of the
Shipper TQ are not part of public record at this time.12 However, the Company confirmed that
the negotiated rate for firm capacity from Wright to Dracut is based on a maximum daily
quantity (MDQ) of 36,000 Dth/day, including the cost of the aforementioned new city-gate
facilities, serving both divisions in North Adams and Pittsfield, Massachusetts.13
The total contract quantity of 36,000 Dth/day is based on an assessment of the design
peak day requirement need to meet demand from the following sources:
NED Capacity Projected Design Peak Day Requirement14
Dth/day

Description

20,000 Existing planning load growth over 10+ years

6,000 Large special contract customer planning facility expansion
10,000 Capacity-exempt customer reverse migration
36,000 Total
In order to determine planning load design day requirements through the planning period,
the Company used the base case demand forecast from its most recently filed forecast and supply
plan15 for the years 2014/15 through 2018/19 (the first year of the NED Project), and calculated
the average annual design day growth rate over the forecast period, which equals 2.38 percent.16

11

Exh. BGC-JMB-1(a), Section 2 (a) Commencement of Service, at 5-6.

12

Id. at 5-8.

13

Exh. BGC-JMB-1, at 10:24-11:4.

14

Id. at 11:7-12:19.

15

Petition of The Berkshire Gas Company to the Department of Public Utilities for review and approval
of its Long-Range Forecast and Supply Plan for the split years 2014/15 to 2018/19, pursuant to G.L. c.
164, 69I, D.P.U. 14-98 (August 4, 2014).

16

Exh. BGC-JMB 1(c); see also, Companys Response to D.P.U. 1-5 (May 22, 2015).

To develop a base case demand forecast to match the ten year time horizon, the Company
applied this annual increase (2.38 percent) to the base case demand forecast value for 2018/19 to
obtain annual design peak day demand requirements through 2024.17 The results of this trend
projection are shown below.18

The Companys calculation of design peak day requirements in its PA includes the
expansion requirements of a large, special contract customer, which are anticipated to be
between 5,000 to 6,000 Dth/day.19 In addition, the Companys calculation of design peak day
requirements includes 10,000 Dth/day to account for the migration of capacity-exempt
customers.20
The Company considered alternative options to NED capacity, including exploratory
discussions with Spectra Energys regarding the Atlantic Bridge project, on-system peaking
services, and long-term reliance on third-party seasonal city-gate delivered resources.
Ultimately, the Company rejected these alternatives as being not reasonable, viable alternatives
to the NED Project.21

17

Exh. BGC-JMB-1, at 11:16-19.

18

Exh. BGC-JMB-1(c).

19

Exh. BGC-JMB-1, at 11:21-24.

20

Id. at 12:6-9.

21

Id. at 15:15-16-24.

Based on the Companys assessment of its need for incremental capacity, the enhanced
reliability of the NED Project, as well as a favorable negotiated rate and access to lower cost gas
supply commodity, the Company maintains that the Department should approve the PA.22
III.

STANDARD OF REVIEW
In evaluating a gas utilitys resource options for the acquisition of commodity resources

as well as for the acquisition of capacity under G.L. c. 164, 94A, the Department examines
whether the acquisition of the resource is consistent with the public interest.23 In order to
demonstrate that the proposed acquisition of a resource that provides commodity or incremental
resources is consistent with the public interest, an LDC must show that the acquisition: (1) is
consistent with the companys portfolio objectives; and (2) compares favorably to the range of
alternative options reasonably available to the company at the time of the acquisition or contract
negotiation.24
To substantiate that a resource is consistent with the companys portfolio objectives, the
company may refer to the portfolio objectives established in its most recent Departmentapproved forecast and requirements plan or in a recent review of supply contracts under G.L. c.
164, 94A, or the Company may describe its objectives in the filing accompanying the resource
proposal.25 In comparing the proposed resource acquisition to current market offerings, the
Department examines relevant price and non-price attributes of each contract to ensure a
contribution to the strength of the overall supply portfolio.26 As part of the review of price and

22

Berkshire Petition, at 4.

23

See G.L. c. 164, 94A; Commonwealth Gas Company, D.P.U. 94-174-A at 27 (1996).

24

Commonwealth Gas Company, D.P.U. 94-174-A at 27 (1996).

25

Id.

26

Id. at 28.

non-price attributes, the Department considers whether the pricing terms are competitive with
those of the broad range of capacity, storage, and commodity options that were available to the
LDC at the time of the acquisition, as well as those opportunities that were available to other
LDCs in the region.27 Also, the Department determines whether the acquisition satisfies the
LDCs non-price objectives, including, but not limited to, flexibility of nominations and
reliability and diversity of supplies.28
IV.

ARGUMENT
A.

The Company Failed to Demonstrate that the PA is Consistent with the

Companys Portfolio Objectives

In establishing that a resource is consistent with a companys portfolio objectives, an

LDC may refer to the portfolio objectives established in a recently approved forecast and
requirements plan or in a recent review of supply contracts under G.L. c. 164, 94A, or the LDC
may describe its objectives in the filing accompanying the resource proposal.29

Here, to

demonstrate that its plan to contract for capacity on the NED pipeline is consistent with the
Companys portfolio objectives, the Company relies on the portfolio objectives set forth in its
recently filed, but not yet approved, forecast and supply plan, D.P.U. 14-98.30

27

Id.

28

Id. at 29.

29

Id. at 27.
See Petition of The Berkshire Gas Company to the Department of Public Utilities for review and
approval of its Long-Range Forecast and Supply Plan for the split years 2014/15 to 2018/19, pursuant to
G.L. c. 164, 69I, D.P.U. 14-98 (August 4, 2014). See also, BGC-JMB-1, at 5:16-18.

30

1.

Reliance on the Companys 2014 Forecast and Supply Plan

The Department should reject the Companys reliance on its 2014 forecast and supply
plan, even with an updated demand forecast, for several reasons. First, the Companys updated
demand forecast is not constructed from a Department-approved forecast and supply plan.31,32
Second, the Company assumes a need of 20,000 Dth/day of additional capacity to meet
its planning load requirement,33 exclusive of a large, special contract customer requirement and
capacity-exempt reverse migration. However, the difference in base case demand between the
planning load design day requirements and the estimated future design day requirements does
not bear that out.34

The base case demand for 2014/15 (i.e., planning load design day

requirements) is 56,735 Dth/day.35 The base case demand predicted for 2023/24 (i.e., estimated
future design day requirements) is 70,119 Dth/day.36 The difference in base case demand
between planning load design day requirements and estimated future design day requirements is
13,384 Dth/day, not 20,000 Dth/day.
31

The Department has not issued an order in D.P.U. 14-98. Further, in the instant case, the Company
maintains that it will construct a jurisdictional city-gate metering station but those costs were not included
in D.P.U. 14-98. Tr. Vol.3, at 65:1-67:3 (June 26, 2015).

32

The Department is authorized to approve a long-range forecast if it meets the following requirements:
(1) all information relating to current activities, environmental impacts, facilities agreements, and the
Commonwealths energy policies is substantially accurate and complete; (2) projections of the gas
requirements and of the capacities for existing and proposed facilities are based on substantially accurate
historical information and reasonable statistical projection methods, and include an adequate
consideration of conservation and load management; (3) projections relating to service area, facility use,
and pooling or sharing arrangements are consistent with the approved forecasts of other gas companies
and reasonable projections of activities of other companies in the New England area; and (4) plans for the
expansion and construction of a companys new facilities are consistent with the Commonwealths
current health, environmental protection, and resource use and development policies, and are consistent
with policies stated in G.L. c. 164, 69H to provide a necessary energy supply for the Commonwealth
with a minimum impact on the environment at the lowest possible cost.

33

BGC-JMB-1, at 11:7-10.

34

BGC-JMB-1(c).

35

Id.

36

Id.

Finally, the Companys updated demand forecast is based on a trend projection applied to
the final year, 2018/19, of the forecast horizon in D.P.U. 14-98. That trend projection, which is
based on the average annual growth rate for a five-year period from 2014/15 through 2018/19, is
2.38 percent.37 However, this 2.38 percent growth rate is based on a declining trend in year-toyear growth in design peak day demand.38 A more realistic approach would be for the Company
to consider a growth rate based on the most recent two years of the DPU 14-98 forecast period,
which were 1.66 percent in 2017/18, and 1.44 percent in 2018/19. In response to record request
AG-3, the Company revised to Exh. BGC-JMB-1(c) using these lower growth rate percentages.39
The Companys revision reveals a design day MMBtu (Dth) requirement of between 66,950 Dth
using a 1.44% growth rate to 67,712 Dth using 1.67% growth rate. These results suggest that the
forecast used to support the Companys PA is inappropriate because it is overstated by as much
as 3,169 Dth.40

37

BGC-JMB-1(c); see also, Companys Response to D.P.U. 1-5.

38

See BGC-JMB-1(c) (2015/16 (3.29%), 2016/17 (3.13%), 2017/18 (1.66%), 2018/19 (1.44%)).

39

Tr. Vol.3, at 33:20-34:5; see also, Companys Response to AG-RR-3.

40

Difference between 70,119 Dth (2023/24 BGC-JMB-1(c)) and 66,950 Dth (2023/24 AG-RR-3
using a 1.44% growth rate).

10

2.

Capacity-Exempt Customers
a.

Nominating Capacity for Capacity-Exempt Customers is Beyond

the Scope of this Proceeding.

Capacity-exempt customers are either new customers who have elected to purchase gas
directly from marketers and not purchase default service gas from the gas companies, or
customers who were receiving transportation-only service prior to the unbundling of gas services
in 1998, and for whom the Gas Companies have no obligation to procure pipeline capacity.41
The PA provides for a specific MDQ of capacity solely for capacity-exempt customers.42
Indeed, the Company indicated that the incremental capacity of 36,000 Dth/day includes the
estimated design day requirements of projected reverse migrating capacity-exempt customers
(i.e., those customers that have yet to return to default service).43 To that end, the Company
made an out of model adjustment to its updated demand forecast to account for its capacityexempt customers. This adjustment added 10,000 Dth/day of load to the forecasted design day.44
Pursuant to G.L. c. 164, 69I, however, LDCs are not allowed to include the
requirements of non-firm capacity- exempt customers as part of their planning load. G.L. c. 164,
69I requires gas companies to plan and procure gas supply only for its firm, capacity eligible
customers:

41

Petition of The Berkshire Gas Company, Bay State Gas Company d/b/a Columbia Gas of
Massachusetts, Liberty Utilities (New England Natural Gas Company) Corp. d/b/a Liberty Utilities,
Boston Gas Company and Colonial Gas Company each d/b/a National Grid, NSTAR Gas Company and
Fitchburg Gas and Electric Light Company d/b/a Unitil to the Department of Public Utilities, pursuant to
G.L. c. 164, 69I and 76, for emergency authorization to plan for a portion of the Winter 2014/15 gassupply requirements of capacity-exempt transportation customers converting to Default Service between
November 1, 2014 and April 30, 2015, D.P.U. 14-111, at 2, n.1 (2014).

42

Exh. BGC-JMB-1(a) (Confidential), at 6, 48. But see, Exh. BGC-JMB-1(a) (Confidential), at 9 (The
PA provides an opt out clause, should the Department not approve the Companys petition to plan for
incremental capacity to serve capacity-exempt customers.).

43
44

Exh. BGC-JMB-1, at 12:6-9.

Id.

11

Every gas company . . . shall file with the department a long-range

forecast with respect to the gas requirements of its market area . . .
. Said forecast of gas requirements shall consist of the gas sendout
necessary to serve projected firm customers, and the available
supplies, for the ensuing five-year period.45
The Department and the Siting Board, however, may grant exceptions to Section 69I,
which would allow an LDC to include capacity-exempt customers in its forecast and supply plan:
The department is authorized to exempt any . . . gas company from
any or all provisions of this section upon a determination by the
department and the siting board, after notice and hearing, that an
alternative process is in the public interest.46
But here, neither the Department nor the Siting Board has conducted such a hearing to
exempt the Company from the requirements of Section 69I. Indeed, recently, the Department
rejected an LDC proposal to procure long-term incremental supply for capacity-exempt
customers.47 The Department reasoned that it is more appropriate to address the issues related to
acquisitions for capacity-exempt customers on an industry-wide basis, than company by
company.48
In D.P.U. 14-111, the Department granted the Company, and other LDCs, very limited
authorization to procure incremental gas supply only for the most recent winter, 2014/15.49 In

45

G.L. c. 164, 69I (emphasis added).

46

Id.

47

See NSTAR Gas Company, D.P.U. 14-63 (2015); Bay State Gas Company, D.T.E./D.P.U. 06-36
(2007); Bay State Gas Company, D.T.E. 02-75 (2004).

48

NSTAR Gas Company, D.P.U. 14-63, at 24 (2015). See also, Capacity Release, D.P.U. 93-141 A, at
50 (the Department stated that it will use its review of [Section 69I] forecast and supply plans, as well as
its review of LDC capacity acquisitions to ensure that pipeline capacity retained by an LDC is needed to
serve firm demand.). See also, Capacity Assignment, D.P.U./D.T.E. 04-1, at 53 (2005) and Natural Gas
Unbundling, D.T.E. 98-32 B, at 40 (1999) (the Department directed the Gas Companies to continue to
plan for and procure upstream pipeline capacity to serve firm customers).

49

Petition of The Berkshire Gas Company, Bay State Gas Company d/b/a Columbia Gas of
Massachusetts, Liberty Utilities (New England Natural Gas Company) Corp. d/b/a Liberty Utilities,
Boston Gas Company and Colonial Gas Company each d/b/a National Grid, NSTAR Gas Company and
Fitchburg Gas and Electric Light Company d/b/a Unitil to the Department of Public Utilities, pursuant to

12

granting this one season dispensation, the Department recognized the cost burden on existing gas
customers when gas companies procure additional capacity for customers who might return to
default service.50
The AGO agrees with Department that it is more appropriate to address the issue of
capacity-exempt customer planning on an industry wide basis, as stated in D.P.U. 14-63.51
However, the Department ultimately needs to implement any general findings through individual
company, G.L. c. 30A adjudicatory proceedings.

The Department should require any gas

company proposing to plan for capacity-exempt customers to justify its request in a Section 69I
forecast and supply proceeding.
The Department should reject the Companys proposal to nominate additional capacity
for the anticipated return of capacity-exempt customers to default service because it is not part of
the Companys latest Department-approved forecast and supply plan, has not been exempted
from the requirements of Section 69I, and is not in the public interest. At a minimum, in the
event the Department approves the Companys petition, the Department should direct the
Company to exclude capacity-exempt volumes from the PA.
b.

NED Capacity is Overstated Due to Projected Reverse Migration

of Capacity-Exempt Customers

For the reasons discussed above, it is not appropriate for the Company to include
anticipatory reverse migration of capacity-exempt customers in its incremental forecast customer
load. However, if the Department disagrees, then it must consider whether the Companys
G.L. c. 164, 69I and 76, for emergency authorization to plan for a portion of the Winter 2014/15 gassupply requirements of capacity-exempt transportation customers converting to Default Service between
November 1, 2014 and April 30, 2015, D.P.U. 14-111, at 16 (September 30, 2014).
50

Id.

51

Petition of NSTAR Gas Company for approval by the Department of Public Utilities of the Company's
five-year Forecast and Supply Plan, for the period November 1, 2013 through October 31, 2018, pursuant
to G.L. c. 164, 69I, D.P.U. 14-63, at 24 (April 3, 2015).

13

estimate for projected reverse migrating capacity-exempt customers is reviewable, appropriate,

and reliable.
In its review of a companys forecast, the Department determines if the companys
projection method is reasonable based on whether the method is: (a) reviewable, that is, contains
enough information to allow a full understanding of the forecast method; (b) appropriate, that is,
technically suitable to the size and nature of the particular gas company; and (c) reliable, that is,
provides a measure of confidence that the gas companys assumptions, judgments, and data will
forecast what is most likely to occur.52
The Company acknowledges that its projected load amount for capacity-exempt
customers, 10,000 Dth/day, is at least twice as large as the Companys own experience would
suggest it should expect for reverse migration:
While the Department has not provided specific guidance with
respect to future planning for CE customers, the Company believes
that, based on its recent experience, coupled with the nature of CE
customers (municipalities, schools, nursing homes, etc.) that it
should contract for at least 50% of its CE customer requirements,
or 5,000 Dth.53
Despite admitting that the Department has not authorized the Company to include
capacity-exempt customer load in its planning requirements, the Company nevertheless includes
capacity-exempt customer load in its planning requirements. Further, the Company believes
based on experience that it should contract for 5,000 Dth for its migrating capacity-exempt
customers but chose instead to contract for 10,000 Dth.54 Indeed, the Company anticipated that
the inclusion of capacity-exempt customers in its load planning would be the subject of
52

Bay State Gas Company, D.T.E. 02-75, at 2; D.T.E. 02-17, at 2; Haverhill Gas Company, 8 DOMSC
48, at 50- 51 (1982).

53

Exh. BGC-JMB-1, 12:12-16.

54

Id.

14

Department scrutiny because it references the regulatory out provision in the PA should the
Department not approve the amount of NED capacity the Company has requested.55 Because the
Companys forecast for returning capacity-exempt customers appears to be exaggerated, the
Department should find that the Companys projection is not reliable and not consistent with
Department precedent.56
B.

Compares Favorably to the Range of Alternatives

As part of the Departments review of contracts entered into by LDCs for the acquisition
of gas and gas-related resources, the Department considers a number of factors to help it
determine whether the contract is consistent with the public interest.57 These factors include
evaluating whether the proposed contract compares favorably to the range of alternative options
reasonably available to the company and its customers. 58 As part of its alternatives analysis, the
Department examines relevant price and non-price attributes of a proposed contract to ensure a
contribution to the strength of the overall supply portfolio.59 In reviewing the relevant price
attributes of the contract, the Department considers whether the pricing terms are competitive
with those for the broad range of capacity, storage, and commodity options that were available to
the utility at the time of the acquisition, as well as with those opportunities that were available to
other utilities in the region.60 In reviewing the non-price attributes, the Department evaluates

55

Exh. BGC-JMB-1, 12:3-5.

56

See Bay State Gas Company, D.T.E. 02-75, at 2 (2004).

57

See, e.g., NSTAR Gas Company, D.P.U. 14-64, at 15-16 (2015); Liberty Utilities, D.P.U. 13-02, at 7-8
(2013).

58

Notification of New England Gas Company of extensions to seven existing Algonquin Gas
Transmission LLC long-term firm transportation contracts, D.P.U. 13-02, at 7 (September 20, 2013).

59

Commonwealth Gas Company, D.P.U. 94-174-A, at 28.

60

Id.

15

whether the acquisition satisfies other non-price objectives including, but not limited to,
flexibility of nominations, reliability and diversity of supplies.61
The Department must find that the acquisition of natural gas capacity represented by the
Berkshire Petition is in the public interest. The Department cannot do so without considering
factors such as whether the PA compares favorably to a range of alternative options available to
the Company, options that may strengthen the Companys overall portfolio by introducing more
diversity and flexibility.62
Here, the Company did not consider a reasonable range of alternatives. Specifically, the
Company failed to adequately consider the role that energy efficiency and LNG could play in
helping the Company meet its forecasted incremental capacity needs.63
1.

Energy Efficiency

As discussed above, the Company based its updated demand forecast on an extended
version of the most recent Department-approved forecast.64 The demand forecast included in
D.P.U. 14-98 included the impact of energy efficiency as a reduction in demand.65 In D.P.U. 1498, the Companys savings goals post-2015 have not been established, the Company has
assumed the same energy efficiency savings each year for the 2016 through 2019 periods will be
consistent with the dekatherm savings in 2015.66
On April 30, 2015, pursuant to G.L. c. 25, 21(b)(1), the Massachusetts LDCs provided
the Energy Efficiency Advisory Council with their projection of annual therm savings goals to be
61

Id. at 29.

62

See Commonwealth Gas Company, D.P.U. 94-174-A, at 28-29.

63

Exh. BGC-JMB-1, at 16:2-11; see also, Tr. Vol.3, at 6:12-14.

64

Supra, Section IV.A.1.

65

Berkshire Gas, D.P.U. 14-98, at 9 (August 4, 2014); see also Tr. Vol.3, at 23:2-3.

66

Berkshire Gas, D.P.U. 14-98, at 9.

16

achieved through energy efficiency efforts for the upcoming 2016-2018 three-year energy
efficiency investment plan. In response to record request AG-4, the Company provided its
projected annual therm savings for 2016, 2017, and 2018, which are forecasted to remain flat
throughout the three-year period, and are slightly lower than the Companys 2015 approved
Plan savings.67
In the three-year plan filed with the Energy Efficiency Advisory Council on April 30,
2015, [t]he Program Administrators highlight some of the most exciting innovations for th[e]
2016-2018 Plan.68 But the Company claims that it does not expect any new, innovative energy
efficiency plans for 2016-2018.69

These statements are inharmonious.

Accordingly, the

Department should direct the Company to update its projected gas savings to reflect the more
aggressive, positive energy efficiency goals set forth in the 2016-2018 Joint Statewide ThreeYear Electric and Gas Energy Efficiency Plan.
2.

On-Line LNG Peaking Facilities

The Company cited significant reliability issues with the option of increasing its reliance
on LNG.70

The Company, however, acknowledged that its LNG facility in Whately,

Massachusetts in its Greenfield Division (Whately facility) could be expanded.71 The Whately
facility currently has two LNG storage tanks at the site, but the Whately facility was approved to
accommodate five tanks.72

67

Companys Response to AG-RR-4 (July 2, 2015).

68

2016-2018 Joint Statewide Three-Year Electric and Gas Energy Efficiency Plan, at 11-12 (April 30,
2015).

69

Tr. Vol.3, at 33:10-13.

70

Id. at 80:17-19; see also, Exh. BGC-JMB-1, at 16:4-9.

71

Tr. Vol.3, at 33:14-34:4.

72

Id. at 33:23-24.

17

Department should direct the Company to conduct a cost-benefit analysis of expanding

the Whately storage facility.
3.

Price and Non-Price Attributes

The Company states that it evaluates new resources based on price and three non-price
criteria: reliability, flexibility, and diversity.73 Evidence from this proceeding, however, suggests
that the advantages of NED Market Path Segment capacity is not as robust as originally indicated
in the Companys direct testimony in support of the Berkshire Petition.
The PA anticipates that TGP may construct a Supply Path segment of the NED Project
that will allow for gas purchases in the region of TGPs Zone 4 in Pennsylvania.74 If the Supply
Path segment is built, this would bring additional volumes for delivery into the Market Path
segment at Wright.75
The Company stated that it is negotiating a separate contract with TGP for Supply Path
segment capacity.76 The Companys estimate of savings, to be passed on to customers from
securing NED capacity, are based at least in part on gaining access to lower cost supplies on a
year-round basis, using a strategy of buying gas at Wright delivered via the Constitution pipeline.
But the Company is apparently concerned about the need for additional gas supplies in order to
provide sufficient liquidity at Wright:
Additionally, the NED Project also has a second, distinct Supply
Path segment proposed to originate at one or more points on
Tennessees Line 300 in Zone 4 (Northeast Pennsylvania) and
terminate at Tennessees existing Wright, NY point. This Supply
Path would also bring a significant amount of Marcellus supplies

73

Exh. BGC-JMB-1, at 20:2-22.

74

Id. at 18:9-13.

75

Tr. Vol.3, at 35:19-23.

76

Id. at 34:13-35:5.

18

to northeast markets. This enhanced liquidity at Wright, NY

enhances the value of the NED Project.77
In fact, the Company acknowledges that the Supply Path segment is necessary to provide
sufficient liquidity at Wright.78
The Company conclusion that the NED pipeline ranks highest in terms of the three nonprice factors of reliability, flexibility, and diversity is tenuous.79 In fact, the Companys decision
to pursue Supply Path segment capacity means that the PA, which includes only the Market Path
segment, does not provide diversity of supply. Since diversity is linked to flexibility, which is
linked to reliability, the Berkshire Petition as-filed does not provide assurance that NED capacity
is the best alternative to meet customer demand. The Department should review the Companys
impending Supply Path contract in conjunction with the Berkshire Petition before ruling on the
merits of the Berkshire Petition.
Additionally, as discussed above, the PA includes a non-price benefit of a higher
minimum delivery pressure of 200 psi at all TGP city-gates, a 100% increase over the existing
minimum delivery pressure of 100 psi. But the Company did not provide evidence that it
actually experienced any days of recorded minimum delivery pressures at or near 100 psi during
the last two winter periods.
V.

CONCLUSION
A.

Berkshire Petition

The Company has failed to demonstrate that the PA is consistent with the public interest,
and, therefore, the Department should not approve the Berkshire Petition as-filed.

77

Exh. BGC-JMB-1, at 18:9-13.

78

Tr. Vol.3, at 35:16-23.

79

Exh. BGC-JMB-1, at 20:4-23

19

In the

alternative, pursuant to 220 C.M.R. 1.11(8), the Department, on its own motion, can re-open
the record to allow the Company to provide further evidence.

Nevertheless, before the

Department may consider approving the Berkshire Petition, the Company must address the
deficiencies and uncertainties identified above, by taking the following steps:
After the Department issues an order in the Companys pending forecast and supply plan,
D.P.U. 14-98, revise the Companys updated demand forecast to include any Department
directives from D.P.U. 14-98;
Revise the Companys updated demand forecast to reflect a growth rate based of, at most
1.66 percent, rather than 2.38 percent, for the years 2019/20 through 2023/24;
Revise the amount of the incremental NED capacity to reflect only those capacity-exempt
customers who, as confirmed by the Company, returned to default service as of April 21,
2015, the date of the Berkshire Petition;
Revise the updated demand forecast to reflect the projected therm savings derived from
implementing the innovated energy efficiency programs included in the 2016-2018 Joint
Statewide Three-Year Electric and Gas Energy Efficiency Plan;
Provide a cost-benefit analysis of expanding the liquefaction and/or vaporization capacity
of its on-system Whately LNG facilities by the November 2018 target in-service date for
the NED Project;
Include the Companys impending Supply Path precedent agreement for Department
review and approval in this proceeding; and
Include in the record the AGO Study discussed below.
B.

AGO Study

To better understand the need for additional gas capacity in the New England region, the
AGO is conducting a timely regional study that will identify and evaluate options to address
electricity reliability needs, including natural gas capacity demand, in New England through
2030.
The AGO study will assess the costs and benefits, including price impacts, of each
option, consistent with the regions energy and climate goals. A key focus of the study will be
the question of whether more natural gas is needed in the region, and if so, how much more
20

capacity is needed. This study will be completed by October 2015. Thus, on July 6, 2015, the
AGO filed a motion requesting that the Department stay its ruling on the Berkshire Petition until
after the Department and other interested participants have an opportunity to review and
comment on the AGO study.
WHEREFORE, for the foregoing reasons, the Massachusetts Attorney Generals Office
respectfully requests that the Department not approve the Companys Petition, as-filed, for
approval of a firm transportation agreement with Tennessee Gas Pipeline Company, L.L.C.

Respectfully submitted,
MAURA HEALEY
ATTORNEY GENERAL
By

Dated: July 17, 2015

21

/s/ Matthew E. Saunders

Matthew E. Saunders
William Stevens
Assistant Attorneys General
Massachusetts Attorney General
Office of Ratepayer Advocacy
One Ashburton Place
Boston, Massachusetts 02108

COMMONWEALTH OF MASSACHUSETTS
DEPARTMENT OF PUBLIC UTILITIES

Petition of The Berkshire Gas Company for

Approval of a Precedent Agreement with
Tennessee Gas Pipeline Company, LLC,
pursuant to G.L. c. 164, 94A

D.P.U. 15-48

CERTIFICATE OF SERVICE
I hereby certify that I have this day served the foregoing document upon all parties of
record in this proceeding in accordance with the requirements of 220 C.M.R. 1.05(1)
(Departments Rules of Practice and Procedure). Dated at Boston this 17th day of July, 2015.

By:

22

/s/ Matthew E. Saunders

Matthew E. Saunders
Assistant Attorney General
Massachusetts Attorney General
Office of Ratepayer Advocacy
One Ashburton Place
Boston, MA 02108
(617) 727-2200