NY’s Utility Regulator Got It Wrong on the NESE Pipeline

New York’s Public Service Commission (PSC) met on September 18 and issued a 142-page decision on utility National Grid’s proposed Long-Term Natural Gas Plan. Much of the decision’s text was devoted to arguing in favor of building a Northeast Supply Expansion (NESE) gas pipeline, as proposed by energy company Williams. The New York State Department of Environmental Conservation, which has direct authority to issue or deny a water quality certification for the pipeline, rejected the NESE three times in the past. But the project is now pending again before the agency.

PSC’s decision (Docket 24-G-0248) evaluating National Grid’s gas plan, recently revised to include the NESE project, was released just under two weeks after the close of the final public comment period on the revised plan—and it shows.

The PSC‘s meeting discussion focused heavily on how Winter Storm Elliott of 2022 nearly resulted in a significant failure of the gas supply system in National Grid’s downstate territory, which includes Brooklyn, Staten Island, parts of Queens, and Long Island. But it left too much analysis undone.

The decision acknowledges that the storm, a “bomb cyclone” that covered the Northeast on December 22 and subsided on December 26, did not create “design day” conditions of zero-degree weather and peak demand in New York. The supply shortage that occurred during Winter Storm Elliott was not due to too much demand, but rather a mechanical impairment within the gas supply system that prevented gas from reaching Downstate New York. The trigger was the sudden plummet in regional temperatures that froze parts of the natural gas extraction and delivery system in the Appalachian-based Marcellus and Utica gas fields that supply gas to Downstate New York. The Energy Information Administration (EIA) reports temperatures fell below 0°F in many parts of the Northeast region during Winter Storm Elliott, reducing natural gas production volumes by over 6 billion cubic feet per day.  

The gas constraint resulted from a failure of the mechanics of the gas system itself. Citing a 2023 report by the Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC), the PSC noted Winter Storm Elliott had a substantial impact on natural gas production in the Marcellus  and Utica  shale formations. The storm caused unplanned outages of natural gas wellheads due to wellhead freeze-offs and other frozen equipment, with the largest natural gas production decreases occurring in Pennsylvania, Ohio, and West Virginia. Winter Storm Elliott’s cold conditions persisted for so long in part because it was a 2,000-mile-wide storm that blanketed the eastern two-thirds of the lower 48 states.

Williams’s NESE gas pipeline would run from Pennsylvania to New York. It is reasonable to be concerned that the project would be subject to the same vulnerability as the existing gas supply system. The PSC’s decision asserted the Williams NESE pipeline would be able to gain access to gas from the states of the Gulf South oil and gas region through the Williams natural gas network. The ability of Williams generally to respond to respond to an outage in New York using its southern infrastructure needs to be scrutinized.

In a major extreme weather incident, New York likely would not be the only state in need, meaning competition for gas could be fierce and prices would likely climb. 

Even in Texas, Winter Storm Elliott wreaked some havoc. But Texas managed to weather the cold. Why? A report by the Electric Reliability Council of Texas (ERCOT) reveals two reasons: Texas’s aggressive program to winterize the natural gas extraction and delivery system on which the state relied, and the state’s substantial wind and solar power resources.

Texas learned a challenging lesson from 2021’s Winter Storm Uri, in which gas infrastructure failed and caused a blackout affecting over 4 million homes and businesses, a crisis that resulted in more than 240 deaths. Texas not only strengthened its weatherization requirements on natural gas wells, processing and storage facilities and related infrastructure, but also conducted site inspections of gas facilities deemed critical. ERCOT reported with regard to Winter Storm Elliott:

Winter Storm Elliott represented the coldest temperatures the ERCOT region has experienced since Winter Storm Uri and the second coldest temperatures over the last fifteen years. In fact, temperatures were colder than when ERCOT entered Energy Emergency Alert (EEA) on February 15, 2021, and load was more than 4,000 MW higher at the peak on December 23, 2022. Despite this, the ERCOT grid did not experience the level of generation outages as was observed during Winter Storm Uri and maintained adequate reserves throughout the cold weather period. This likely indicates that winterization efforts led by the PUCT and implemented by generation owners have had a positive impact on the ability of generators to perform under extreme cold conditions. Nevertheless, despite these efforts, a subset of generators did have cold weather-related outages. ERCOT will continue investigating the specific issues that caused these outages and report any findings to stakeholders, as appropriate.

A recent report by the Texas State Auditor found the gas delivery weatherization program still needs to be strengthened, particularly to verify facility assertions about readiness. Texas can still do more.

National Grid, with support from the State of New York, should demand aggressive weatherization to fortify the gas extraction and supply system for which it is a major customer, rather than building a large, costly pipeline that would increase dependence on natural gas. The utility should also reduce gas demand further through expanded energy alternatives and efficiency measures.

Having a diversified power base is also a significant benefit to a state’s energy security. In Texas, during Winter Storm Heather of 2024, solar power provided about 20% of all power during one afternoon, while wind power supplied as much as 30% of power at some times.

The PSC’s decision expressed great concern about how long it takes to recover from a substantial loss of gas service, requiring home-to-home service to safely restart gas systems, compared with electricity, which can be restored area-wide. Given this reality, it makes more sense to expand electricity-based solutions than rely even more heavily on a gas system that is so difficult to restore if something goes wrong.

Choosing to respond to a natural gas system failure by flooding downstate New York with yet more natural gas is a step backwards. National Grid plans to use this pipeline year-round, not just as an emergency backup on a handful of days per year. The utility admits in the addendum for its long-term plan, for example, it would use some of this gas to convert more homes from oil to gas heat—rather than electrification. Such action to expand National Grid’s gas market would effectively lock in the use of fossil fuel in such homes.

Prolonging combustion of a fossil fuel inside the home would not only run counter to New York’s goal to reduce natural gas emissions, but also would allow the health risk from home indoor air contamination to persist.

The experience of Texas makes clear that effective alternatives exist to avert cold weather system failure in natural gas infrastructure, through weatherization and better management. Texas’s experience also makes clear that diversification of energy resources can make a difference.

The PSC decision seeks to assure stakeholders that gas planning is “an iterative process,” with a new long-term plan submitted three years from now, but there’s nothing iterative about a pipeline. Once it’s built, it’s there—as hard infrastructure. 

And if National Grid has its way, the NESE pipeline would already be in place by the time the next gas plan is due.

The PSC gave cost issues short shrift. It did not even attempt to discuss what would happen if costs climb. In this time of tariffs, supply issues, and employment costs, it is imperative to analyze the potential impacts of cost escalation. Rather than analyze such issues, the PSC simply assures the public they can comment on the pipeline’s impact on their gas bills in the next rate hearing, expected to be held in 2026. 

But at that point it will be too late. Williams has stated it plans to start building later this year, and it will not build this massive infrastructure for free. 

The PSC asserts the public can participate in FERC’s final evaluation of actual costs of the NESE. But again, the opportunity will come too late. Although some adjustments may be made, the NESE will already be built.

If Williams gets permits in hand, the consumers—National Grid ratepayers—will pay for the NESE.

The PSC’s own consultant stated in its Final Report (Docket 24-G-0248) that parts of National Grid’s gas forecast were inconsistent with recent trends and phenomena “such as falling use per customer due to improving appliance efficiency and other energy efficiency measures.” The PSC order directs National Grid to file a report within 90 days—by December 17—with updated design day and annual demand forecasts for its service area. 

As of today, the basic facts on gas demand in Downstate New York still are not in.

The PSC minimizes the importance of its own decision. Although the Commission “concludes that the additional firm capacity and other aspects of the Project would materially improve the reliability and resilience of the Downstate gas system,” it asserts on the same page that “the Commission has no formal role in approving or permitting the construction of NESE.”

But the disturbing two-week rush to issue a decision after submission of extensive, substantive public comments on September 5 suggests otherwise. New York’s Department of Environmental Conservation may be influenced by the PSC’s evaluation as it issues its own upcoming ruling on the NESE project application.

Given the inadequate analysis of cost escalation, gas forecasts, and practical ways to solve the problem of gas system weatherization, should a rushed decision by the PSC influence the decision that still must be made by another state agency?