UGI and NJR Energy Services Pulling out of Phase 1 is a smoking gun FERC can’t ignore

Today, 13 groups and individuals filed a Motion with FERC demanding that PennEast reveal the true nature of the precedent agreements attached to Phase 1 and Phase 2 of the project.  The need for this is crystal clear as PennEast has left a smoking gun in plain site on this topic: Two of its members have pulled out of Phase 1 for no logical reason.  The only reason for them to do so is because they no longer need the gas they contracted for back in 2015 and 2018.

A link to the motion is here.

The Motion is long because it follows the evolution of precedent agreements from the original application through the PA Route amendment in 2019 to the new Phase 1/Phase 2 shenanigans today.  But the central thesis is simple.

As of the 2019 amendment, UGI Energy Services contracted for 100,000 dekatherms/day capacity on the full project.  They would take receipt in a few places along the route in PA, including near the Appalachian Trail, and from the Hellertown Lateral.

NJR Energy Services bought the contracts for 50,000 dekatherms/day when they bought the assets that have become the Adelphia Gateway pipeline, which presumably would be delivered via the Columbia interconnect, or a new Adelphia interconnect.

Now, as you likely know, this Phase 1/Phase 2 business proposes that they build Phase 1 first, which is only in Pennsylvania, but does not go into New Jersey.  What you may not know is that Phase 1 does not stop where you think it might, but actually stops a few miles north of the Hellertown Lateral and the interconnects there.  The Hellertown lateral is not included in Phase 1 at all.

And PennEast refuses to say why.

But we do know that UGI has halved its commitments from 100,000 dekatherms/day on the original route, to only 50,000 dekatherms/day on Phase 1.

Meanwhile, NJR Energy Services has likewise dropped its commitments, from the original 50,000 then to 0 on phase 1 today (yes, 0).

While PennEast refuses to say why these two companies do not want delivery on Phase 1, it is pretty clear why: it’s because neither company needs that gas today, and probably can no longer justify entering long term contracts for it to their investors and Board of Directors.

This is the smoking gun – two PennEast owners, UGI and NJR, are unwilling to meet their full commitments on Phase 1.  Despite Phase 1 being 48% empty at this time.  And PennEast won’t even build the Hellertown Lateral in Phase 1, despite it being in PA and having nothing to do with “New Jersey Authorizations” that are blocking Phase 2.  PennEast has left evidence in plain site that the purpose and need behind this project has utterly collapsed.

As a result, FERC needs to compel PennEast to release the business justification for all precedent agreements, and to reveal the exact state of the precedent agreements for Phase 2.  Only with this information will the truth come out.


PennEast’s response to FERC’s April Data Request is a train wreck

Today I filed a Motion for Leave to Answer and Answer with FERC to PennEast’s response this week to FERC’s April Data Request.

The full filing is available here:

To put it simply, PennEast’s response is a total train wreck.  They literally do everything they can to evade legitimate Federal authority and oversight, and actually tell FERC “no, we won’t tell you that!” over and over again.  It is simply unbelievable.  Here are the major points discussed:

1) The Mill Creek Corporate Center cumulative impact response was unresponsive.

PennEast tells FERC not to worry about the Mill Creek Corporate center because – get this – they did a few google searches and don’t think much is going on with it.  Yeah, that’s right.  PennEast didn’t bother to talk to the developer or the local zoning board.  Google instead was their friend.

And here we go!

2) PennEast is incorrect that they do not need to indicate purpose and need for Phase 2.

PennEast actually has the gall to say “we don’t need to evaluate Phase 2, because its the same as what we did on CP15-558”.  They literally refuse to do any purpose and need analysis for Phase 2 at all!

Clearly, PennEast needs to actually spell out the supposed need for Phase 2.  Explicitly and in detail, not with a hand wav.

3) PennEast’s assertions that they do not need a DRBC review are incorrect.

PennEast actually spends 6 pages ranting that DRBC has no jurisdiction over them.  Completely ignoring that the DRBC has already ruled they do have jurisdiction, and cited the exact area of their Rules of Practice and Procedure that require PennEast to submit an application to them.

4) PennEast’s response to Data Request 7 should be a red flag that should immediately result in a rejection of this application.

In Data Request 7, FERC asks a number of questions around feasibility of alternatives like Adelphia and Columbia pipelines, markets that Phase 1 will service, changes in volumes of gas being moved between the original Certificate and this one, the reduction of UGI’s commitment on Phase 1, the feasibility of a smaller pipe for Phase 1, and why the Hellertown Lateral is necessary given the Church Road Interconnects.10

PennEast’s response is shocking. They effectively refuse to answer any of these questions.

5) PennEast is now admitting it is building an interconnect near an active fault.

PennEast here says “whoopsie, that fault near Church Road actually is active!  Our bad”.

Yes, they want to build next to an active fault.

6) PennEast is unresponsive on Calvary Baptist Church and Mill Creek Corporate Center traffic impacts and mitigations.

Once again, PennEast thinks google is a substitute for actual research and analysis.  They say “don’t worry about that church, we figure Sunday is their big day and we won’t work on Sunday”.  Totally ignoring the fact that the church acts as a day care center and school during the week.  D’oh!

7) PennEast is unresponsive on why the Hellertown Lateral is not part of Phase 1.

This is a big one.  PennEast refuses to say why the PA-based Hellertown lateral was pushed to Phase 2.  This makes no sense, as Hellertown has nothing to do with so called “NJ Authorizations”.

However, this is an admission by UGI that they are losing economic interest in PennEast. Hellertown was going to give them half their subscription from the original project.  By not insisting on having Hellertown in Phase 1, UGI is able to skip out on 50,000 dekatherms/day commitment.

Yeah, that’s right.  PennEast’s own project manager is running away from its original commitment.  And I bet others are too.
8) PennEast fails to provide meaningful alternatives analysis in the event that Phase 1 is constructed solely.

Basically the Alternatives PennEast puts forth make no sense.  They basically say “nope, won’t work.  Sorry!”.  Interestingly, they don’t even mention shippers in their purpose and need section here.  So maybe even PennEast is backtracking on the whole 4 shipper thing….

There are serious issues with PennEast’s April 2020 Answers on the FERC docket

Last week PennEast filed a series of Answers on the FERC docket to issues posted by the public.  This was during the initial comment period on the docket on their “abbreviated amended application” that defines this new Phase 1/Phase 2 approach that would build only the PA portion of the route in Phase 1, and would maybe/maybe not deliver complete Phase 2 in NJ at some undefined later date.

There were *alot* of problems with those answers.  This weekend I filed a response to that detailed all of the many, many issues with PennEast’s filings.  The link to the full response is below:


Here is an outline of the issues that we question (the full document has far more details):

1) The Answer Mischaracterizes the Project.

PennEast actually manages to mis-describe their own project.

2) FERC has no regulatory framework that would allow a pipeline company to keep a significant portion of a Certificated project in limbo.

PennEast has literally told FERC to put a hold on Phase 2 in NJ.  That it may or may not build it.  And that the amended application only deals with Phase 1.  There is no framework within FERC or NEPA that allows a company to file for something they may or may not do.

3) PennEast’s Citations in its answer are vague and faulty.

PennEast fails to even properly cite responses in its Answer.

4) PennEast mis-characterizes the Certificate Policy Statement’s stance on affiliate agreements.

PennEast badly mischaracterizes how the Certificate Policy Statement is meant to work.

5) PennEast erroneously indicates that 52% subscription rate amounts to “most” of the capacity being fulfilled.

PennEast fails basic English language when it tries to convince FERC that half is equal to “most” of the capacity.

6) PennEast lacks any substantial proof of demand for Phase 1.

In fact, the purpose and need story for Phase 1 is bleak indeed.  PennEast cannot find any third parties at all to help them out here.

7) Phase 1 was not “designed”, it is an attempt by PennEast to hide a new, smaller project behind its existing Certificate and avoid appropriate levels of scrutiny and review.

This Phase 1, Phase 2 business is a clear ploy by PennEast to try to sneak in Phase 1 under the original Certificate Order with almost no analysis.  This ain’t “design”.

8) PennEast has a confusing and contradictory narrative around Phase 1 precedent agreements.

PennEast is stating that the new Phase 1 subscriptions have nothing to do with the original subscriptions on the original docket.  But this makes no sense, if these are all new subscriptions then the pipe is sized all wrong.

9) PennEast is playing games with precedent agreements that should give FERC serious pause as to the true public necessity of either Phase 1 or Phase 2.

PennEast really, really does not want FERC (or anyone else) to know the real deal behind these new precedent agreements.  In fact they almost scream in their Answer that FERC cannot and should not look behind any of them to see why these deals were made in the first place.  This should be a GIANT red flag to FERC.

10) PennEast is incorrect about not overbuilding in Phase 1 and needs to do alternatives analysis around a smaller pipe and alternative compressor setups that could reduce costs.

PennEast claims nothing is overbuilt, it’s all “designed”.  This is bullshit.  By PennEast’s own admissions they need to do detailed alternatives analysis on the size of the pipe and the full compressor design for each phase.

11) PennEast’s citations of much older natural gas pipelines being allowed to bifurcate by FERC in limited situations are not relevant to this proceeding.

PennEast’s citations in their Answer on ancient pipelines that have been allowed to split into phases by FERC are wrong and misleading.  Those cited pipelines did not change the purpose and need of their projects at all, and critically the owners pledged to build all the phases and defined them completely.  PennEast by way of comparison waves its hands hopping it will get to Phase 2.  Some day.  Maybe.

12) PennEast contradicts itself on the feasibility of Phase 2.

PennEast simultaneously says they will build Phase 2.  Except maybe they won’t.  They can’t have it both ways.

13) PennEast fails to acknowledge the level of eminent domain required by Phase 1 and Phase 2 of these projects.  

Nowhere does PennEast acknowledge the massive level of eminent domain they are implementing in each phase.  FERC MUST force PennEast to disclose full eminent domain takings so FERC can include this in its purpose and need weighing.

14) PennEast has left many comments unanswered

Finally, PennEast has left dozens and dozens of questions completely unanswered.  This is a travesty, and FERC must see through PennEast’s ruse and deny this ridiculous “amendment”.

Letter to the DRBC to ask for a full review of PennEast

Today, a group of 12 conservation groups and grass roots community organizations posted a letter to the Delaware River Basin Commission.  In the letter, we thanked the DRBC for indicating that they would review reservoir and recreational area impacts from the recently proposed 2-phase PennEast project on FERC docket CP20-47-000, but indicated that that wasn’t enough.

According to the DRBC’s Rules of Practice and Procedure, “natural gas transmission lines and appurtenances will be deemed not to have a substantial effect on the water resources of the Basin unless such lines would involve significant disturbance of ground cover affecting water resources“.

We think this 115 mile long greenfield pipeline, contained almost entirely within the Delaware River Basin, would pose a “significant disturbance of ground cover affecting water resources”.  In fact, we think this is the understatement of the year!  To underscore this, we included an Appendix that visually catalogued some of the most distressing aspects of PennEast’s route that pose a threat to vital water resources in the region.

Please join us and write to the DRBC Executive Director and demand that the DRBC undertake a full review of the entire lengths of both Phase 1 as well as Phase 2 of this project.  His name is Steve Tambini, and his email is

Link to our the letter:

Letter to DRBC

Link to Appendix A:

Appendix A – Visual Catalog of Impacts


FERC State of the Markets Report another body blow to PennEast

While covid-19 shelter in place and PennEast commenting periods were going on, FERC quietly released their State of the Markets report.

This report is just raining bad news for PennEast. It basically indicates that demand in the North East is totally saturated, and that pipeline capacity additions in the North East are trailing off as a result. The MidWest and South now represent areas where new pipeline capacity may be needed.

It also continues the tale of prices continuing to fall, and electrical and residential gas demand remaining effectively flat. The small increase in demand is basically all coming from LNG Exports, but such exports are really a trickle compared to other users.

This is also doubly bad for PennEast because they have changed their marketing message with this 2-phase plan to be “rah rah PA, NJ sucks!”. See:

This new marketing approach is really startling in that PennEast is almost literally thumbing their nose at NJ and focusing exclusively on Philly and PA benefits only.  This is doubling down on the Adelphia Gateway connection.

Coupled with the lame 338,000 dekatherms/day commitment they have on Phase 1, this ends up presenting an incredibly weak Purpose and Need story to FERC for Phase 1.

I suspect NJDEP, US EPA, and other agencies are going to hammering pretty hard on these facts, along with the obvious overbuild Phase 1 now represents.

PennEast’s Fundamental Problem with this 2 Phase Application

As usual, PennEast has made many, many, many (many!) mistakes in its most recent application to FERC.  But one error towers above all the others, and makes this 2-phase application a complete non-starter from the get-go.

To recap, PennEast has yet another application before FERC on docket CP20-47-000.  In this docket they are now proposing to split the project into two pieces:

  • Phase 1 covers most (but not all!) of the route in PA.
  • Phase 1 includes two new interconnects south of Route 22 in PA – one for Adelphia Gateway, and one for Columbia Pipeline.  This is called the “Church Road Interconnects”
  • Phase 2 will include the Hellertown Lateral to UGI in PA, the rest of the route in Bucks County, and the full Route in NJ

PennEast is positioning this as “this proposal is exactly the same as the Certificated Route, we’re just splitting it in twain and adding in the Church Road Interconnects”.  Its application is focused solely on Phase 1, and in terms of impact it only deals with the addition of Church Road interconnect.

PennEast’s philosophy here is that they already have approval on CP15-558-000, and the only change here is the Church Road interconnects.  As such, PennEast’s application only speaks to the impact of the Church Road interconnect and nothing else.


The mistake here is simple – PennEast is saying “CP20-47 is just like CP15-558, just split into two”.  But that is not true.  The problem PennEast has here is that they have indicated repeatedly that Phase 2 may never happen.  In both the main application as well as Resource Report 1, PennEast again and again indicates that Phase 2 may never be built.  They similarly stress that Phase 1 is independent of Phase 2 entirely.

So let’s look at what that means.  The original Certificated Route was around 115 miles long, with 1.1 million dekatherms/day capacity, and was 90% subscribed with 990,000 dekatherms/day of capacity spoken for.  Eminent domain rates were technically unknown at the time FERC approved it (we know better, but whatever).  FERC ruled the benefits of this project outweighed the negatives (again, we know better, but stay with me).

Now PennEast is proposing a ~68 mile long pipeline in PA only.  It has just 650,000 dekatherms/day of capacity.  And only 338,000 dekatherms/day are spoken for.  With only 4 shippers on this phase.

Critically, these four shippers were also on the original project.  1, UGI, is a PA-only company.  But their dedicated amount for Phase 1 is half of what it was for the original project.  This is because Phase 1 inexplicably omits the Hellertown lateral.

The other three shippers on Phase 1 are NJ based companies, all affiliates of PennEast (Elizabethtown gas, New Jersey Natural Gas, and South Jersey Gas).  They have a total of 288,000 dekatherms/day of subscriptions on Phase 1.  Now, Phase 1 doesn’t hit NJ directly, but it does hit it indirectly.  Etown gas could get its volume from the new Columbia interconnect at Church Road.  NJNG and SJG can get their volumes from the new Adelphia gateway interconnects.

The problem for PennEast here is that this 288,000 dekatherms/day of volume is coming through a brand new interconnect that did not exist in the original project.

Here are the myriad problems that PennEast faces because of this approach:

  • Phase 1 has only 338,000 dekatherms/day of commitment. That leaves 48% of Phase 1 unsubscribed too.  This is terrible from a “purpose and need” perspective for Phase 1.  At a minimum, it makes Phase 1 look oversized.  They are overbuilding Phase 1 in anticipation of Phase 2.  But since Phase 2 may never happen, this is classic overbuilding, a big no-no at FERC.
  • Phase 1 has 228,000 dekatherms/day going through a new set of interconnects.  This is effectively stealing capacity from Phase 2. This has many implications for Phase 2:
    • Phase 2 pipe may be too big.  With more volumes handled via Phase 1 and 3rd party pipelines, Phase 2 could likely be a smaller pipe.
    • Phase 2 route may be too long.  With NJNG’s full subscription of 180,000 dekatherms/day of gas being delivered now via Phase 1 instead of via the NJ interconnects on the original route, the whole NJ route is called into question.
    • PennEast has not stated how this project bifurcation has impacted their original precedent agreements.  In particular, what guarantees to do they have for Phase 2?  Do they have any at all?  What we can see is, at the least, they’ve lost 288,000 dekatherms/day in NJ to the new interconnects in PA for Phase 1.
  • There’s more!  For FERC to properly gauge benefits for each phase vs. impacts, it needs those impacts clearly labeled.   In its CP20-47 application, PennEast fails to give a detailed list of what is Phase 1 and what is Phase 2 in the EIS.  PennEast needs to resubmit their entire set of environmental reports with everything clearly labeled as Phase 1 or Phase 2.
  • The whole question of eminent domain is now crystal clear.  PennEast has sued 198 landowners, 48 in PA and 148 in NJ.  This needs to be posted by PennEast to the new docket so FERC can take these takings into account.
  • These takings are now severely imbalanced between Phase 1 and Phase 2.  Phase 1 has less eminent domain (48 cases) but more volume (650,000 dekatherms/day).  Phase 2 has three times as many eminent domain cases (150) but only 450,000 dektherms/day of volume.
  • Worse, we have zero precedent agreements specified for Phase 2!

In essence, what PennEast has done is take one big pipeline with one big set of pros and cons, and split it into two unequal pipelines with different benefits and different drawbacks.  And we know one of them may not be built at all, so they HAVE to be weighed independently.

We also have a hidden smoking gun in all this mess.  Why is PennEast not including the Hellertown Lateral in Phase 1?  Why is UGI, a fully PA-based business, only contracting for 50,000 dekatherms/day in Phase 1, as opposed to the 100,000 dekatherms/day they contracted along the original route?  Why is UGI so gun shy all of a sudden?  COULD IT BE THAT UGI CAN NO LONGER JUSTIFY 100,000 DEKATHERMS/DAY OF COMMITMENT?

Could be that this is the smoking gun hidden in all this – PennEast’s actual project manager and main sponsor in this debacle has just halved its commitment in buying capacity.