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Pipeline-Starved New York City Avoids Natural Gas Shortages this Winter, but May Face Problems in the Future

New York City made it through another winter without any serious natural gas shortages, but it may not be so lucky next year.

National Grid, the natural gas utility serving nearly 2 million customers in the New York metropolitan area, is one of two companies that unsuccessfully sought approval for a new pipeline to bring much needed additional natural gas into the city. However, its $1.8 billion-dollar project was rejected by the state in 2019, largely on climate change grounds.

New York was able to do so by invoking its veto authority pursuant to section 401 of the Clean Water Act. This authority gives states impacted by a proposed project the opportunity to reject it if they believe it threatens water quality. New York is one of the states misusing this provision to stop fossil fuel related projects, even if there is no genuine water quality concern. The Trump EPA has since proposed a rule  clarifying that the Clean Water Act is exactly what it says it is and that its veto authority can only be used to address water quality issues.

In any event, without additional pipeline capacity, National Grid was forced to adopt a moratorium on new natural gas hookups. In response, Governor Andrew Cuomo, insisting that no new pipeline capacity was needed and was merely an excuse for National Grid’s incompetence, threatened to revoke the utility’s license. The company relented, dropped its moratorium, and reached a settlement with the state.

Thus, National Grid must find ways to serve its market without turning down new customers and without additional pipeline capacity. Among other things, it is trying to secure approval for expanded capacity to bring more compressed natural gas (CNG) into the city from trucks during times of peak winter demand. This entails upgrading the facilities that offload the CNG and put it into the system. However, as with new pipeline capacity, doing so is also seen as an expansion of fossil fuel infrastructure and as such is virulently opposed by Cuomo, New York Mayor Bill de Blasio, and other state and city officials.

For this reason, attorney Adam Schuman, chosen by the city to oversee the settlement agreement, believes that this critical part of National Grid’s plan for dealing with future shortages is in “some doubt.”

National Grid may be stuck with the few options acceptable to state and city officials, such as energy efficiency programs and efforts to convince natural gas customers to switch to electricity. The utility is understandably uncertain about their effectiveness in balancing the limited supply with growing demand. This winter was milder than average, but the city’s residents and businesses may not be as fortunate next winter or the one after that.

It should be noted that National Grid’s proposed natural gas pipeline project would not only provide much-needed additional natural gas but would also generate many good paying construction jobs. This is why labor unions are furious with the state over its actions. Streamlining the red tape that is holding back energy infrastructure projects has been a major goal of the Trump administration, and doing so now could be especially helpful in jumpstarting the post-coronavirus economy.