Natural gas service approved for Hanover
A March 5 order handed down by the New Hampshire Public Utilities Commission granted Liberty Utilities permission to provide natural gas service to customers in Hanover and Lebanon. The decision comes after opposition from some town officials on environmental grounds and with regulations to protect ratepayers from large price increases.
Liberty, which already provides electricity service in Hanover and Lebanon, filed a petition in December 2016 to expand its gas franchise — the right to provide natural gas — to those areas. The company, which is the largest natural gas distribution utility in the state, currently provides gas to regions in southern and central New Hampshire, primarily Nashua and Manchester.
As Hanover and Lebanon are not connected to its main gas pipeline network, Liberty will have to truck in natural gas in liquefied form to a planned facility in Lebanon, according to New Hampshire consumer advocate Donald Kreis. The company plans to build a pipeline distribution network spreading outwards from that facility, but Kreis said he expects Liberty to initially focus on commercial and industrial customers in Lebanon before expanding its network toward Hanover.
The towns of Hanover and Lebanon have voiced their opposition to the PUC granting Liberty an expansion of its franchise.
Citing Hanover’s “Ready for 100” pledge, which calls for the town to achieve 100 percent renewable electricity by 2030 and 100 percent renewable heat and transportation by 2050, Hanover town manager Julia Griffin testified in July 2017 that Hanover is not in support of granting the franchise.
“Fracked gas just isn’t green enough,” Griffin said in an interview with The Dartmouth, adding that Hanover would not connect any of its public facilities to Liberty’s natural gas service.
Representing Lebanon, city councilor Clifton Below told the PUC in September 2017 that natural gas is inconsistent with the town’s Master Plan, which encourages the use of renewable energies.
Dartmouth executive vice president Rick Mills also penned a letter to the PUC in July 2017 stating that “while the College takes no position on the merits of the request by Liberty Utilities,” the College has no current plans to use natural gas from Liberty.
Given Hanover and Lebanon’s commitments to sustainability, questions were raised about whether Liberty would find an adequate enough demand to justify investing in the infrastructure necessary to provide a gas service, Kreis said.
He added that the New Hampshire Office of the Consumer Advocate, which represents residential utility customers, was worried that Liberty would raise rates on its existing customers if its investment did not pay off.
According to Kreis, the OCA wanted to make sure that rates do not increase for all of the company’s other customers. If their rates increased, they would be paying for infrastructure that does not serve them, but rather serves new customers who have not “materialized in sufficient numbers.”
Addressing these concerns, the OCA, Liberty and PUC staff reached an agreement in August 2017 that required Liberty to demonstrate that it had enough customer commitments to its natural gas service in the area to cover at least half of the cost of serving these customers. According to Below, this is a more heightened level of risk protection than is usual for most gas franchise expansions. The agreement also set up a risk sharing program under which Liberty would be responsible for covering half of any revenue shortfalls and its new natural gas customers in the area would be responsible for the other half.
Griffin said that in the search for customers to commit to using its future gas service, Liberty is focusing initially on large corporate consumers. She said some of Liberty’s potential targets include Dartmouth-Hitchcock Medical Center, which currently uses natural gas that it trucks in, and businesses in the retail strip in West Lebanon.
DHMC spokesperson Mike Barwell said that the hospital has not yet been approached by Liberty about its proposed gas service.
After Liberty officially submitted its agreement to a PUC commission for review, Hanover and Lebanon were able to submit testimonies presenting their positions on the matter during the hearing on Sept. 7. Both Griffin and Below noted that their towns’ sustainability commitments were goals and not regulations, so they could not prevent private customers from purchasing gas from Liberty.
Individuals in the area also spoke during the hearing, a majority of whom opposed granting Liberty a franchise. Jonathan Chaffee, a retired executive director of the Lebanon Housing Authority who lives in West Lebanon, testified that Liberty will have difficulty attracting customers for its proposed natural gas service. He said he argued that Liberty “misrepresents the actuality of natural gas.”
“It says that it’s clean, it says that it’s green, it says that it will always be cheap,” Chaffee said.
He told the PUC that in reality, the cost of gas is widely expected to increase soon. He said he does not want people to sign up for natural gas now and later suffer large rate increases.
Beyond the economics of gas service in the area, Chaffee said he is extremely concerned with the harm that comes from fossil fuels. He emphasized that hydraulic fracturing, the method used to obtain natural gas also known as “fracking,” often causes harmful chemicals to be released into the ground, potentially resulting in damage to water supplies.
“If we’re using natural gas, we’re aiding and abetting that rape of the landscape where fracking is being done,” he said.
Six months after the hearing, the PUC handed down its order granting Liberty its franchise expansion. In addition to the original risk sharing agreement provisions, the order includes additional protections for ratepayers. Under the decision, if customer revenue falls to 40 percent of the expected costs of providing natural gas service, Liberty will be responsible for 100 percent of the revenue shortfalls.
PUC spokesperson Amanda Noonan said that the commission did not believe there were sufficient protections for ratepayers.
“They wanted to protect customers in Hanover and Lebanon and they also wanted to protect all of Liberty’s other ratepayers from the costs of this expansion,” she said.
She added that “shareholders have some responsibility and not all the risk and cost is borne by customers.”
Below, Chaffee and Griffin all expressed the belief that the increased risk imposed on Liberty may be enough of a disincentive for the company to drop its plans altogether, or at least pause before proceeding.
Griffin said that if Liberty does go ahead with the project, some small companies might find natural gas to be cost effective and consider using Liberty’s services in the short term. In the long term, however, she said she sees no downside with forgoing natural gas in the area.
A spokesperson for Liberty confirmed that the company still plans to go forward with the project. He said that Liberty already has a few large customers lined up.
“We have done a lot of preliminary outreach in these areas and there is a lot of interest,” the spokesperson said.
The spokesperson added that although natural gas is a fossil fuel, it is a very clean-burning fuel.
“It has a very small carbon footprint,” he said. “It is much cleaner than fuel oil. We think it is a very strong choice that people can make.”
Chaffee said that he disagrees with Liberty’s position on the environmental impacts of natural gas. He said that natural gas often leaks from pipelines and processing facilities. When it leaks in its natural form, he said, it is a far more potent greenhouse gas than carbon dioxide. Even if little gas leaked, he worries that if a large portion of the region switches to natural gas, it will delay the push for renewable energy sources.
“To [use natural gas] is to pretend that we have the time to fool around with increased fossil fuel use, but we don’t,” Chaffee said. “The crisis is upon us and every year that we don’t bring our fossil fuel use down is a year that plunges us deeper into climate crisis.”
Before moving forward with the project, Liberty must face the Lebanon Zoning Board to get approval for its processing facility, according to Below.