A recent report published by Oil Change International highlights the failure of regulators to protect ratepayers against utility affiliate-backed contracts for new pipeline capacity -in other words, when a regulated utility acts as both the developer and customer for a new pipeline. It’s a widespread and growing issue. Case in point: Con Ed’s investment in the proposed Mountain Valley Pipeline in West Virginia and Virginia, hundreds of miles from Con Ed’s New York service territory.
Con Ed claims that signing up for transportation service on the pipeline will result in cost savings for customers. But the day Con Ed signed up as a pipeline customer, the company also formed a new “midstream” entity to invest in the pipeline. The new unregulated entity shares the same corporate parent as the regulated utility, but operates under significantly different rules and legal obligations. This transactional structure means that Con Ed’s ratepayers would be on the hook for paying for the project, while Con Ed’s midstream arm will enjoy a return in excess of risk. From the company standpoint, it’s heads-I-win, tails-you-lose. Read More