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PennEast’s Response to NJ Rate Counsel Ignores Compelling Evidence That Unneeded Pipeline Would be Costly to Consumers

Posted October 17, 2016

Stockton, NJ (October 17, 2016) – ReThink Energy NJ, a nonprofit organization dedicated to reducing fossil fuel use and bringing clean, renewable energy to New Jersey, today strongly condemned flawed analysis from Concentric and PennEast regarding the lack of need for its pipeline. ReThink Energy NJ also reaffirmed its strong support of the New Jersey Division of Rate Counsel (Rate Counsel)’s grave concerns about the unneeded pipeline and excessive returns driving the project. The Rate Counsel has stated that the PennEast pipeline would be “unfair to consumers” and that the rate of return PennEast would receive is “tantamount to winning the lottery.”

Two separate expert analyses — Dr. David E. Dismukes for the Rate Counsel and Greg Lander for Skipping Stone — have concluded that there is no need for the proposed pipeline and that consumers would pay more while PennEast profits. Under FERC guidelines, pipelines should not be approved without demonstrated genuine public need. Rate Counsel and Skipping Stone both debunk claims that PennEast is designed to meet peak demand, or any current or projected demand.

“PennEast is trying to change its tune about the need for the project and ignores the fatal flaw pointed out by the Rate Counsel that self-dealing contracts between affiliated companies don’t demonstrate public need,” said Tom Gilbert, campaign director for ReThink Energy NJ and New Jersey Conservation Foundation. “The Rate Counsel completely understands what’s going on with PennEast’s pipeline: it’s not needed and provides no public benefit. PennEast should spend more time leveling with the public and less time trying to discredit solid independent analysis.”

PennEast still has not demonstrated the need for its pipeline and has even rejected a call for an evidentiary hearing where it would have to put its cards on the table and provide real evidence of the project’s necessity.

Just like PennEast’s claim of “market need” for its project, each of Concentric’s “key findings” is easily invalidated:

  • Affiliates of PennEast owners signed up for 84% of long-term capacity. Such self-dealing contracts do not demonstrate evidence of market need.
  • PennEast’s rate of return will likely result in ratepayers’ costs going up.
  • PennEast’s debt recovery cost is “tantamount to winning the lottery,” according to the Rate Counsel.
  • New Jersey’s natural gas demands are projected to be flat or decline in coming decades, and current pipeline capacity more than meets our current needs.

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