On November 16, 2017, twelve New England electricity consumers (“Plaintiffs”) filed a class action lawsuit in in the U.S. District Court of Massachusetts against two large New England energy companies, Eversource Energy (“Eversource”) and Avangrid, Inc. (“Avangrid”), arguing that they raised power prices by artificially constraining capacity on the Algonquin Gas Transmission Pipeline (“Algonquin”).  Specifically, the Plaintiffs argue that for the past three years, Eversource and Avangrid have increased power prices by 20% by reserving more capacity than was needed on Algonquin with the intent to cancel the reservation when it was too late for the pipeline capacity to be resold to other market participants.  Plaintiffs allege that this behavior was a misuse of Eversource’s and Avangrid’s market power, in violation of state and federal unjust enrichment, consumer protection and antitrust laws.

In addressing the accusations against Eversource and Avangrid concerning potential capacity-withholding behavior, Plaintiffs seek relief under state and federal law for $3.6 billion in damages, reflecting the amount of electricity pricing New England customers were allegedly overcharged from 2013-2016.  Plaintiffs allege unjust enrichment, state consumer protection and antitrust law violations against Eversource, claiming that Eversource enjoyed significant profits during the years of alleged capacity-withholding and in doing so, also impacted commerce and consumers.  Similar claims of unjust enrichment, state consumer protection and antitrust law violations have been alleged against Avangrid.  In addition to these claims, Plaintiffs also brought federal antitrust law claims against both Eversource and Avangrid.

Similar to Plaintiffs’ claims, a recently-published article sponsored by the Environmental Defense Fund (“EDF”) also alleges natural gas pipeline capacity withholding behavior in New England.  According to the authors of the article, several different New England power companies have engaged in capacity withholding behavior, which they allege has contributed to an increase in power prices during previous winters.  The article also claims that local distribution companies (“LDCs”) regularly restricted capacity by scheduling deliveries without actually flowing gas that would have otherwise been made available to other shippers. The authors claim that these actions led to increased power prices, allowing LDCs to end up with greater profits as a result.  According to the authors, revenue-sharing rules, set by state public commissions and which limit the ability of gas companies in New England to profit from their excess contracts, are likely to have contributed in past capacity-withholding behavior.

American Gas Association President, Dave McCurdy wrote a letter to the Wall Street Journal in response to a recent editorial written by EDF President Fred Krupp, in which Krupp painted local utilities as gamers of the natural gas market.  In the letter, McCurdy highlights the need for pipelines to maintain safe operating margins and firm interstate pipeline capacity, particularly on cold winter days.  McCurdy explains that “[b]y necessity, pipeline systems are designed to meet demand that peaks on a handful of days each winter.  This means the margin on capacity constrained pipelines, such as those in New England, on those few peak days is likely much lower still.”   McCurdy also emphasizes the priorities of natural gas companies in New England, which are to plan diligently to ensure customers’ needs are satisfied and that grid reliability is also maintained.  In conclusion, McCurdy explained that despite Krupp’s views, gas providers are focused on and prepared for peak demand.

A copy of the complaint against Eversource and Avangrid is available here.