Client: Environmental Defense Fund
Rachel Wilson, Tyler Comings, and Liz Stanton, PhD
Applied Economics Clinic prepared a report to determine whether a 20-year contract for firm natural gas transportation on the proposed Mountain Valley Pipeline (MVP), entered into by Consolidated Edison Company of New York, Inc. (ConEd), would result in unjust and unreasonable costs to the utility's ratepayers. AEC found that recent new and expanded natural gas pipeline capacity has caused natural gas prices between regions to equilibrate, and that any expected benefit of the MVP contract was disappearing at the time that ConEd signed the transportation agreement. Narrowing basis differentials for natural gas across regions turned a net present value ratepayer benefit of more than $1 billion into an anticipated $630 million cost given current natural gas pricing. Costs of the transportation contract will be paid by New York ratepayers, and the New York Public Service Commission should consider ConEd's ownership interest in the pipeline when evaluating the cost of the agreement.