Mass. DPU Rules It Has Authority To Approve Contracts Between Electric Utilities, Gas Pipelines To Boost Gas Capacity

The Massachusetts DPU issued an order finding that it has authority to review and approve contracts entered into by electric distribution companies to expand natural gas pipeline capacity

A Department of Energy Resources Framework envisions electric distribution companies contracting with pipelines to expand capacity, with such capacity later made available to generators who otherwise are unwilling to fund capacity expansion themselves, given their merchant nature.

In addition to finding it has legal authority to approve such contracts, the DPU set forth several criteria for its review of any applications by EDCs to contract for gas pipeline capacity.

Notably, the DPU said that, "the filing must demonstrate that the electric pricing benefits associated with the contract warrant expenditure of the contract costs. Such demonstration should be based on a quantitative analysis of the benefits and costs associated with the contracted resource(s) to the maximum extent practicable."

Additionally, "a filing must include a description of the method of ratemaking the EDC proposes for recovery of costs that it will incur under the proposed contract and, if applicable, the crediting of revenues that it will accrue pursuant to any capacity use/release strategy. A filing must also include a description of efforts that the EDC has undertaken or will undertake to recover contract costs regionally," the DPU said

D.P.U. 15-37