With the PennEast Pipeline held up in court, some state residents could feel the financial impact of higher energy costs this winter.
The proposed $1 billion natural gas pipeline is a joint venture by NJR Pipeline Co., SJI Midstream, Southern Company Gas, Spectra Energy Partners, and UGI Energy Services. It would run from the Marcellus shale formation in northeastern Pennsylvania approximately 120 miles through Pennsylvania to Mercer County, N.J. About two-thirds of the pipeline would be located in Pennsylvania.
The pipeline is necessary to meet the growing demands for energy in both states, experts say.
“Local utilities, like New Jersey Natural Gas, told the New Jersey Board of Public Utilities that last fall, their supply forecasts showed they may not have enough gas to meet their customer needs by 2021,” Rob Wonderling, president and CEO of the Greater Philadelphia Chamber of Commerce who serves on the chamber’s Greater Philadelphia Energy Action Team (GPEAT), wrote in a recent op-ed published in the Philadelphia Inquirer. PJM, the region’s independent power grid operator, also said the pipeline is needed for grid reliability and fuel diversity, wrote Wonderling.
The project has received the necessary federal and state regulatory and environmental permits and approvals. Last December it cleared one of the last major hurdles when the U.S. District Court for New Jersey ruled that the pipeline served the public need and granted access to properties along the route to perform the necessary surveys. The permanent easement is restricted to a 50-foot wide corridor. Landowners retain ownership and are compensated for temporary and permanent impacts.
However, state officials in New Jersey appealed the decision and it was upheld by an appellate court in September. The state appeals court ruled that the company can’t use eminent domain for properties that are farmland or open space. PennEast Pipeline Co. requested a rehearing of that decision but was denied in November. The company has brought its appeal to the U.S. Supreme Court, but for now, the project has an uncertain future.
That could be felt in consumers’ wallets this winter.
A 2018 study by Concentric Energy Advisors found that the pipeline would have saved residents of the region an estimated $435 million in energy costs last year. About $246 million of that savings would be on electric markets, where natural gas increasingly has replaced coal and oil for electric generation, while $189 million would have been from gas market savings. Further, in the past two winters it would have saved customers a total of $1.3 billion, according to the study. Area residents will likely spend another $400 million to $500 million or more in home heating costs this winter, based on past estimates.
“Policies or decisions that jack up your energy costs or utility bills are very much the same as a tax,” Mike Butler, Mid-Atlantic executive director at the Consumer Energy Alliance, said. “That’s money that would be in your pocket that isn’t.”
Without the pipeline, Butler explained, the states will likely have to import the gas from a foreign country or truck it in from another state. That’s what Con Edison plans to do in Westchester County, N.Y., where there is a natural gas shortage. And in the past two winters, utilities in New England had to import gas from Russia due to shortages. Either way, the solution is more expensive.
“That’s where we find ourselves with these very counterproductive measures. Trucking it in or shipping it in from Russia or another foreign country is not better for the environment, it’s certainly not better for the American worker and it’s not cheaper,” Butler said.
Further, the project would have an economic impact of $1.6 billion on northeastern Pennsylvania and New Jersey, according to a report by Drexel University and Econsult Solutions. That includes $890 million in construction costs and $733 million in labor costs. The project would support 12,160 jobs, including construction-related and permanent jobs. Plus, there would be more than $700 million in indirect economic impact from the purchase of local goods and services.
Low-energy costs are a real competitive advantage in terms of bringing manufacturing jobs to the state, Butler said. “We were drilling to get to these opportunities to grow these kinds of jobs and strengthen these communities for both Pennsylvania and New Jersey,” Butler said. “We’ve got the asset right here … When you can save this kind of money, and it’s better for the environment than the alternatives, it should be a no-brainer.”
Whether it’s through the courts or by adopting a different route, Butler is hopeful that the pipeline will soon become a reality. “Ultimately I think the project is too valuable and too needed to not get done.”