New Federal Data Contradict PennEast’s Claims of Cost Savings

Posted August 31, 2017

EIA Report Shows Gas Prices Rising as More Pipelines Built

Far Hills, NJ (August 31, 2017) – New data released by the U.S. Energy Information Administration (EIA) show that newly-built pipelines in the Marcellus Shale region have increased gas prices. While this benefits the pipeline companies, it hurts consumers. These findings directly contradict PennEast’s claims that its proposed gas pipeline would reduce the cost of gas for consumers.

On August 16, the EIA reported that gas prices in the Appalachian Region are increasing as a result of new pipelines.

Marcellus Drilling News, a news outlet focused on gas producers in the Marcellus Shale region, touted the 30 percent increase in gas prices relative to last year and concluded, “pipelines do make a HUGE difference in the price of natural gas!” The difference celebrated — a “HUGE” increase per the industry news outlet — benefits private industry and hurts consumers.

A letter filed today by New Jersey Conservation Foundation (NJ Conservation) on the PennEast application docket before the Federal Energy Regulatory Commission (FERC) details how these new data confirm analyses from the New Jersey Division of Rate Counsel and energy experts at Skipping Stone, which show that PennEast cannot deliver the speculative cost benefits it promises consumers and is likely to actually increase costs to consumers.

Studies by Skipping Stone concluded that building unneeded pipeline capacity into the New Jersey market will likely cost ratepayers an additional $180 to $280 million per year.

“When FERC looks beyond PennEast’s array of empty promises — like ‘lower costs for consumers’ — and examines these independent data, it will find that PennEast would increase rather than lower costs for ratepayers. These data merely confirm what is well understood, that when pipelines are built into a market with no growth and no genuine need, the pipeline does not deliver cost savings to consumers,” said Barbara Blumenthal, Ph.D., research consultant, NJ Conservation.

“These data confirm what energy experts have predicted: that promises of cost savings for consumers are figments of PennEast’s imagination. The EIA report directly contradicts PennEast’s claims that it will lower the cost of gas prices in the region. Most of the demand for this project is artificial, and is based on PennEast’s contracts with its own affiliates. If this unneeded pipeline is built, these companies would profit while New Jerseyans foot the bill,” said Tom Gilbert, campaign director, NJ Conservation and ReThink Energy NJ.

“Based on these data, PennEast’s claims of lower costs have been laid bare. They do not demonstrate any evidence of public need or benefit that FERC requires to authorize significant use of eminent domain to seize private and public land for this damaging pipeline,” said Jennifer Danis, senior staff attorney, Eastern Environmental Law Center.

The EIA data can be found here.

Find a copy of the letter filed to the docket.

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