Gas Moratorium is Over! Or is it?

“In a striking turnaround, National Grid is lifting its moratorium on natural-gas service hookups for customers in Brooklyn, Queens and on Long Island.  The utility had imposed its moratorium in May after New York and New Jersey blocked a $1 billion natural gas pipeline on environmental grounds.  National Grid said the additional capacity was needed for it to continue to provide uninterrupted service to existing customers.”  Crain’s NY Business see link for full article. 

Overall this is an excellent turn of events for developers in the region.  Many projects in development (and construction) were facing challenges on how to respond.  In some cases, the developer switched to dual fuel CHP & heating systems.  In other cases, the developers switched from natural gas to heating oilBut wait…. the devil may be in the details!  The NYS PSC summarized their findings in case 19-G-0678.

Some key dates and action items from the PSC case summary include:

  • N-Grid will continue to provide firm gas thru at least 9/1/2021 (for residential & small commercial).
  • If N-Grid is able to develop a long-term supply solution, it is expected the company would be able to continue to provide gas service to all new customers well after that date.
  • For example, as part of its Implementation Plan, National Grid proposed to expand existing demand response, non-firm, and energy efficiency programs to ensure sufficient supply to connect the initial customers denied service. National Grid’s Contingency Plan proposed to provide service to additional new customers by increasing the use of compressed natural gas (CNG) during peak supply periods (i.e., during the coldest days of the year), soliciting delivered peaking supplies, continuing to explore pipeline solutions, and deploying non-pipe solutions, such as renewable natural gas and geothermal development.
  • If unable to develop such solutions, they will be allowed to deny applications for new or expanded service for large commercial & industrial customers (C/I) seeking service by 3/31/2021.

What does this mean?

This means that large commercial/industrial customers looking for new (or expanded) service have 16 months to get connected!  If you are requesting service after 3/31/2021 you may be at risk!  If you are large C/I client, we encourage you to weigh the following:

Consider taking non-firm gas: To date, there have been few instances where non-firm gas customers experienced service interruptions. 

Consider dual fuel systems: Installing a dual fuel system may eliminate the risk of non-firm gas.  Depending on the fuel choices, you may also be able to reduce fuel costs by periodically switching to lowest cost fuel source (i.e.- natural gas versus propane).

Early Bird gets the “Gas”: While speculative at best, this 16-month window may create a stampede of load letters by developers.  This may also force projects to accelerate installations to ensure they have gas connected by 3/31/2021.    

In conclusion, the end of the moratorium is great news.  It allows current projects to proceed and provides some mid-term breathing room.  Long term is another question…as this needs to be balanced with State and Local legislation for carbon reduction.  While a new pipeline does provide the best long-term option, even if approved today this pipeline would likely not be in service by 2021 deadlines.  Especially for C/I customers, much may depend on the ability of National Grid to develop scalable non-pipe options.  There is also plenty of work needed to continue greening the grid as well as increasing the use of renewable natural gas.