On February 27, 2018, FERC staff completed an inquiry in which they did not uncover any evidence of anticompetitive withholding of natural gas pipeline capacity on Algonquin Gas Transmission, LLC pipeline (“Algonquin”) by New England shippers. The inquiry initially arose from allegations made by the Environmental Defense Fund (“EDF”) that Eversource Energy (“Eversource”) and Avangrid, Inc. (“Avangrid”) were artificially constraining capacity on the Algonquin. After finding that Eversource and Avangrid did not engage in anticompetitive behavior, FERC staff will not take any further action on the matter.
In November 2017, twelve New England electricity consumers filed a class action lawsuit in in the U.S. District Court of Massachusetts against Eversource and Avangrid, arguing that the energy companies raised power prices by artificially constraining capacity on Algonquin (see December 12, 2017 edition of the WER). Similar to the consumers’ claims, an EDF-sponsored article was published that also alleged natural gas pipeline capacity withholding behavior in New England. The article claimed that several different New England power companies engaged in capacity withholding behavior that allegedly increased power prices during previous winters. Additionally, the article stated 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 claimed this behavior allowed LDCs to gain greater profits as a result.
In December 2017, in response to these allegations, Eversource sent a cease and desist letter to Fred Krupp, President of EDF, and N. Jonathan Peress, EDF’s Senior Director of Energy Market Policy (see December 20, 2017 edition of the WER). Eversource directed both EDF executives to immediately stop the publication of all statements insinuating that Eversource has withheld gas pipeline capacity from the wholesale electricity market in order to earn profits from higher prices. Eversource declared that it was in compliance with state laws prohibiting such withholding behavior.
FERC staff then commenced a review of the allegations. The review was conducted by FERC’s Office of Enforcement’s Division of Analytics and Surveillance, which is tasked with monitoring wholesale natural gas and power markets for potential market manipulation and any other inappropriate behavior. FERC staff examined both publicly available and non-public data pertinent to these allegations. On review, FERC staff determined that EDF’s study was flawed and incorrectly concluded that anticompetitive withholding occurred. FERC staff also stated that they did not find any evidence of capacity withholding.
A copy of FERC’s press release on its findings is available here.