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Consumers charged up to $20b nationwide, $1.5b in Massachusetts alone over decade; Senator drafting legislation to encourage pipeline updates
WASHINGTON (August 1, 2013) - Leaky natural gas pipelines are costing American consumers tens of billions of dollars for fuel that never reaches their homes, a new report released by Senator Edward J. Markey (D-Mass.) finds. Consumers in Massachusetts alone have paid up to $1.5 billion in extra charges from 2000-2011 because companies are not replacing tens of thousands of miles of old pipelines, risking more dangerous explosions, releasing massive amounts of climate-altering pollution, and squandering an important domestic resource.
The report, "America Pays for Gas Leaks", finds that in many cases natural gas companies are not replacing their old pipeline infrastructure and passing along the costs of lost gas to consumers. In 2011 alone, gas distribution companies reported releasing 69 billion cubic feet of natural gas to the atmosphere. That is almost enough to meet the state of Maine's gas needs for a year and equal to the annual carbon dioxide emissions of about six million automobiles.
Nationally, consumers paid at least $20 billion from 2000-2011 for gas that was unaccounted for and never used. And from 2002 to 2012, almost 800 significant incidents on gas distribution pipelines — including several hundred explosions — killed 116 people, injured 465 others, and caused more than $800 million in property damage.
"Consumers are already paying expensive energy bills. They shouldn't have to pay for billions of dollars in fuel that never even makes it to their homes," said Senator Markey. "Every leaky pipeline is like a hole in consumers' pockets. We need to speed up the replacement of old natural gas infrastructure to reduce accidents, pollution, and waste."
The report uses Massachusetts as a case study, finding that a few companies are responsible for the lion's share of leaks. Three companies, Boston Gas, Colonial Gas, and Nstar Gas, accounted for 80 percent of these passed-on costs from 2000-2011.
As a group, Boston Gas customers paid the most, covering an estimated $352 to $781 million in unaccounted for gas costs, followed by Nstar Gas customers at $109 to $229 million, and Colonial Gas customers at $92 to $221 million.
On a per customer basis, Westfield Gas & Electric customers paid the most (about $304 to $2,426 per customer) because of the company's small customer base relative to its unaccounted for gas levels. Boston Gas, New England Gas, Nstar Gas and Essex Gas customers each paid over $370 to $875 on average in lost and unaccounted for gas costs from 2000-2011.
The report also found that natural gas releases in Massachusetts accounted for between 45 and 58 percent of the commonwealth's methane emissions for large, stationary facilities and is hindering Governor Deval Patrick's efforts to reduce climate emissions in the state. State law requires Massachusetts to reduce greenhouse gas emissions to 25 percent below 1990 levels by 2020, yet these leaks could impede those efforts. Natural gas companies could reduce their emissions in Massachusetts to 25 percent below 1990 levels by replacing about 777 miles of cast iron mains (the most leak-prone pipe material).
Governor Patrick has already instituted plans to address these problems and the Massachusetts legislature is currently considering repair timeframes for all non-hazardous leaks. Thirty-three states, including Massachusetts, have infrastructure replacement programs targeting cast iron and bare steel pipelines that allow companies to recover costs for replacing their leak-prone pipelines. However, companies may have little incentive to use these programs to accelerate pipeline replacement so long as they can still pass costs on to customers for lost gas.
Senator Markey is drafting legislation to address some of the shortfalls in federal and state policies, like speeding up cost-recovery programs for companies, like Massachusetts currently offers. Massachusetts residents stand to realize $156 million in net benefits over 10 years from the companies participating in the commonwealth's infrastructure replacement program.
"If we plug some of the regulatory and consumer protection holes, we'll get more of these money-wasting leaks plugged as well," said Senator Markey. "Natural gas is too valuable of a domestic resource to just allow it to float away, and it is too volatile a gas to allow these risks to continue."