Builders won’t build new natural gas pipes to New England unless they have “long term contracts”.  Electric generators use gas intermittently – on the coldest days – when it is very expensive.  For electric generators to sign those long term contracts, rate payers would be on the hook.

The Department of Public Utilities issued an order allowing electric distribution companies to enter into these long term contracts for natural gas.  LNG importers and the anti-fossil fuel Conservation Law Foundation sued.

In deciding if it was ok for the DPU to issue this order, the Massachusetts Supreme Judicial Court in ENGIE GAS & LNG v DPU looked to a 1997 law that broke up the utility generating business to make it more competitive and less of a monopoly.  The challenged order permitted  electric distribution companies to enter these (ratepayer-backed) gas contracts because, the DPU argued, it was in the public interest, because the law did not explicitly prohibit it and because distributors were not deregulated as generators were.

The Court claimed the right to say what lawmakers meant and decided that the DPU is due only deference not abdication.  The Court looked at the text of the restructuring law, and at its purpose.  The electric and gas businesses have been regulated differently since the 1920’s the Court found. The 1997 law was passed to remove electric distribution companies from the business of electric generation.  The law does not allow electric distributors to get around prohibitions applying to gas companies.  The DPU’s gas pipe order went the wrong way, against the spirit of the restructuring law which law was meant to protect consumers from construction costs of generators.

Someone could enter long term contracts for gas but the electric distribution companies could not get that right from the DPU.  These contracts run for 20 years; there have been and undoubtedly will be lots of changes to the electricity industry in the next 20 years.