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Cuomo Gives National Grid 14 Days To Hook Up New Customers Or Lose Franchise

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In his months-long war of words with National Grid, Governor Andrew Cuomo has repeatedly threatened to revoke the utility’s franchise, saying it must reverse its refusal to hook up new customers or make a stronger case for the moratorium.

On Tuesday, Cuomo said he was done threatening.

In an open letter to National Grid leaders, he gave a 14-day notice of intent “to have New York State move to revoke National Grid’s certificate to operate its downstate gas franchise.”

“The ‘moratorium’ is either a fabricated device or a lack of competence.” Cuomo wrote. “There is no legitimate need for it in the first place.”

National Grid said in a statement it will “review and respond accordingly within the timeframe outlined in the letter.”

At issue is the fate of 2,600 pending applications for gas hookups, which translates to 20,000 residential and commercial units. National Grid says it can’t take on new customers unless it expands its supply of natural gas – and that the only affordable and sustainable way to do that is with the proposed North East Supply Enhancement, also called NESE or the Williams Pipeline, after the company which would develop it. The state’s Department of Environmental Conservation has rejected application permits for the pipeline.

The bigger picture is New York’s increasing political and economic investment in fighting climate change by reducing emissions. In the closing days of 2019, the legislature passed the Climate Leadership and Community Protection Act, an ambitious plan that requires 70 percent of the state’s electricity to come from renewable energy by 2030 and 100 percent by 2040. Currently, New York is at 28 percent.

Cuomo in the letter repeated earlier refrains: that National Grid should have considered other options for increasing supply besides the pipeline.

“Gas can be trucked, shipped, or barged, and other infrastructure could be proposed or additional unloading facilities installed,” he said – although his administration rejected a 2015 proposal for barging in liquified natural gas.

In an interview last month with Gothamist/WNYC, National Grid President John Bruckner said those alternatives are insufficient.

“Those are temporary solutions to get you through with peak demands,” Bruckner said. “They’re not suitable to bring on new customer load and then have a strategy of hope that that will be enough for the future.”

Sam Andrus, who heads the natural gas practice at IHS, an energy consultancy, agrees. Monitoring pipeline flows in real time, he says much of the northeast is at full capacity at the moment, as temperatures drop for winter’s premature arrival.

“You need more pipeline capacity to send out more volume,” Andrus said. “One can dispute which pipeline route may be the better route, but the issue remains that you need more capacity.”

Technically, it would fall to the state’s Public Service Commission to revoke National Grid’s “certificate of public convenience and necessity.” Cuomo has in the past made the same threat to Con Edison and to Charter, the cable television company.

The PSC has never revoked a franchise – but that doesn’t mean it shouldn’t, according to Eleanor Stein, a former administrative judge at the PSC and a law professor at the University of Albany.

“They have an obligation to serve all customers, and that’s the underpinning of their franchise,” she said. “So it’s a dubious legal position for a utility to say, ‘We’re not going to serve several thousand customers.’ Regardless of the reason, that’s an existential conflict that undercuts their franchise.”

Cuomo in his letter also said National Grid should be doing more to reduce demand for gas and invest in cleaner technologies and resources.

“Electric service and demand response measures could be proposed. Heat pumps and renewable sources could be proposed,” he wrote. “These options should have been explored and weighed by National Grid and made public for consumers to evaluate before National Grid denied gas service.”

Professor Thomas Bourgeois, of Pace University Law School’s Energy and Climate Center, compared National Grid’s quandary to a challenge state regulators posed to Con Edison several years ago, when the utility wanted to build a new electrical substation in New York City.

“The commission challenged them to NOT build a more-than-a-billion-dollar piece of infrastructure that rate-payers would be paying off for 40 years,” Bourgeois said, noting that Con Ed was able to come up with enough ways to reduce demand to avoid building the substation. “We’re not there on the gas side yet, but it’s really important we find alternatives and at least postpone if not eliminate the need for the pipeline.”

Cuomo left open the possibility of a reprieve, once again, concluding his letter, “please advise me of any considerations I have overlooked, or present meaningful and immediate remedial actions you would propose, within 14 days.”



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