The Best Case Against PennEast yet

My consulting firm did an analysis of the Purpose and Need and Alternatives sections of the DEIS during the DEIS comment period, and found a number of issues and deficiencies with it. The analysis was commissioned by a couple of groups, but was signed by a much larger consortium of organizations opposed to the pipeline.  You can read a summary and get a link to the entire submission from the firm’s website.

One of the most amazing findings to me was who made the best case against PennEast.  There are a lots of good candidates for this title – the Skipping Stone studies, NJCF comments, the Delaware Riverkeepeer’s commissioned research, and of course the NJ Rate Counsel’s stellar submission all come to mind.

But as good as all those sources are, there was one set that was even better.

To me, the strongest case against PennEast comes from the owners of the company themselves.

Yes, that’s right, PennEast’s own owners.  Specifically, what I’m talking about is the companies’ statements to the SEC in the form of their  yearly 10K filings.  Every year, public companies have to file a form 10K with the government that details their financial position, and outlines their operational parameters, risks, and any other relevant information the public should know about the company and its health.

Several of the PennEast owners detail their regulated utilities natural gas supplies as part of their filings. And that’s where it gets interesting.

South Jersey Industries, a 20% owner in PennEast, has a subsidiary named South Jersey Gas.  That subsidiary has several pages of details on their natural gas long term precedent agreements, the pipeline that supply them, and their peak day requirements.  SJG very convincingly outlines their systems’ breadth and resiliency and concludes “SJG projects that it has adequate supplies and interstate pipeline entitlements to meet its design requirements“.

New Jersey Natural Gas, another 20% owner and the largest customer of PennEast, doesn’t bother with page after page of data.  They just come out and say it:

In fiscal 2015, NJNG purchased natural gas from approximately 86 suppliers under contracts ranging from one day to one year and purchased over 10 percent of its natural gas from two suppliers. NJNG believes the loss of these suppliers would not have a material adverse impact on its results of operations, financial position or cash flows as an adequate number of alternative suppliers exist. NJNG believes that its supply strategy should adequately meet its expected firm load over the next several years.

UGI Corporation – the PennEast 20% owner and project manager – has this to say in their filings:

Gas Utility meets its service requirements by utilizing a diverse mix of natural gas purchase contracts with marketers and producers, along with storage and transportation service contracts. These arrangements enable Gas Utility to purchase gas from Gulf Coast, Mid-Continent, Appalachian and Marcellus sources. For the transportation and storage function, Gas Utility has long-term agreements with a number of pipeline companies, including Texas Eastern Transmission, LP, Columbia Gas Transmission, LLC, Transcontinental Gas Pipeline Company, LLC, Dominion Transmission, Inc., ANR Pipeline Company, and Tennessee Gas Pipeline Company, L.L.C.

They conclude with this statement:

Gas Utility anticipates having adequate pipeline capacity, peaking services and other sources of supply available to it to meet the full requirements of all firm customers on its system through fiscal year 2016. Supply mix is diversified, market priced, and delivered pursuant to a number of long-term and short-term primary firm transportation and storage arrangements, including transportation contracts held by some of Gas Utility’s larger customers.”

The statements of all three companies are the same going back several years – it’s an reassuring affirmation that they are all good, their supplies are highly diversified and more than adequate, and they have no single points of failure to worry about.

So the next time someone tells you that we need PennEast, you set ’em straight.  Here it is straight from the owner’s mouths:

South Jersey Gas, New jersey Natural Gas, and UGI Utility all say “we don’t need PennEast”.

Published by

Mike Spille

I'm a thinker, an analyzer, a synthesizer. Maybe not in that order. I live in West Amwell NJ with my wife Kristina, our two kids Day and Z, our two dogs Fern and Cinna, and two cats Ponce de Leon and Xavier.

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