New Jersey's ratepayer advocate has taken a stand against the $1.2 billion PennEast Pipeline, questioning whether the project that would deliver Marcellus Shale natural gas to nearly every major utility in the state is necessary.
The New Jersey Division of Rate Counsel this week filed comments with federal regulators asserting that existing pipeline infrastructure could adequately serve the state's gas customers.
"PennEast has failed to demonstrate that the project is in fact 'needed,' " a lawyer for the Rate Counsel wrote in a filing to the Federal Energy Regulatory Commission (FERC), among thousands of public comments submitted on PennEast's draft environmental-impact statement.
Pipeline opponents, who have mobilized resistance along its 119-mile route, have raised fears about safety, local environmental damage, and the climate-change implications of consuming more fossil fuels. The ratepayer advocate's arguments are focused mainly on whether the pipeline makes economic sense.
The project's developer, a subsidiary of UGI Corp. of Valley Forge, says that 90 percent of its capacity is committed to utilities and large customers along the route from northeastern Pennsylvania to New Jersey, showing there is a need for the 1 billion cubic feet of gas a day that it would deliver.
"FERC has done a thorough analysis and determined not only that need exists, but that other pipeline solutions, including looping [additional capacity], would not solve the regional energy needs the PennEast Pipeline is designed to meet," said Pat Kornick, a project spokeswoman.
Kornick also said the New Jersey Board of Public Utilities agrees that additional pipeline infrastructure is needed to enhance reliability and access to lower-cost energy resources.
Many themes cited in a March study commissioned by the New Jersey Conservation Foundation, which has opposed the pipeline, were echoed in the Rate Counsel's filing. The foundation's study, written by energy consultant Stepping Stone, said sufficient pipeline capacity exists to meet current needs even when demand is the highest. It said the PennEast pipeline would increase customer rates, not lower them.
The Rate Counsel's filing cited the expert opinion of David E. Dismukes, director of policy analysis at the Center for Energy Studies at Louisiana State University. Dismukes said he had not seen any evidence that the existing gas-supply resources will become a challenge after 2020.
The filing noted that affiliates of five large utilities that have signed up for two-thirds of the pipeline's capacity -- PSE&G, South Jersey Gas, New Jersey Natural Gas, Elizabethtown Gas, and UGI -- are also investors in the PennEast project and have a financial interest in getting it built. The ratepayer advocate argued an independent evaluation was needed.
Kornick said utility customers are still protected by state utility regulators, which require distribution companies to purchase their fuel on a least-cost basis. The utilities will have to show state regulators that gas delivered through the PennEast pipeline is cheaper than gas obtained through other means.
FERC now needs to consider thousands of comments filed by Monday's deadline on the draft environmental-impact statement, which concluded that the pipeline would cause some adverse impacts but that most could be mitigated. The agency is expected to make a final decision on the project next year.
The pipeline also must undergo separate public hearings next year before the Delaware River Basin Commission, the multistate agency that manages water resources in the Delaware watershed.