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Natural Gas Leaks Cost Central Massachusetts Consumers Millions

Thursday, August 22, 2013


Massachusetts residents are paying the price for thousands of leaky gas pipelines throughout the state.

Leaks in natural gas pipelines have cost Central Massachusetts consumers millions of dollars in the last decade, according to two reports recently published by the Conservation Law Foundation and Senator Edward Markey. Overall, the reports say, Massachusetts’s consumers have shelled out between $640 million and $1.5 billion dollars over that time period. In addition to hitting consumers’ wallets, the leaks have potentially harmful consequences for the environment and public safety.

According to experts at the Massachusetts Department of Public Utilities (DPU), an aging infrastructure is to blame, while ratepayers continue to foot the bill for gas that never reaches their homes.

Thousands of leaks

“Our study was focused on Boston, and we found over 3,300 leaks in the pipelines,” said Boston University Professor Nathan Phillips, who collaborated on the Conservation Law Foundation study. “The situation is similar across at least the Eastern seaboard, and cities across Massachusetts. We would expect the same in Worcester.”

The Conservation Law Foundation study, originally published last November, mirrors the finding of Senator Markey’s study that was published on August 1st. Both studies focused on Massachusetts, though Markey’s study used the Bay State as a test case to discuss the national issue. Pipelines are regulated at the state and federal level, and both reports recommend significant policy changes.

Mary-Leah Assad, Acting Communications Director at the Massachusetts Executive Office of Energy and Environmental Affairs said, "there is currently no reliable methodology to measure the cost of gas leaks. Many factors may affect the calculation, including: meter accuracy; meter reading schedule (an increase in time between meter reads can increase the variance between measured system receipts and deliveries); condition of distribution system/leaks; damages to pipes by third parties; gas theft or tampering with utility equipment; and scheduled operational venting and purging activities during maintenance and construction activities."

This lack of fool-proof methodology is acknowlegded in both reports, though they contend that evidence points to environmental and consumer costs being substantial.

“We have to shift the financial incentives and who bears the costs so that the utilities are incentivized to fix the leaks,” said Phillips.

Consumers paying the price

Current law allows natural gas companies to place the entire cost of leaked natural gas on consumers, who the Conservation Law Foundation estimates pay $38.8 million per year for gas that never reaches their homes. According to Markey’s study, these costs are particularly high in states like Massachusetts, which have older infrastructure with more potential leaks.

Photo: Conservation Law Foundation

“The reason why pipelines are allowed to recover lost and unaccounted for gas is that no matter how carefully a pipeline is operated, a certain amount of gas will inevitably be lost as a result of leakage, condensation, expansion, or contraction,” said Tamara Young-Allen of the Federal Energy Regulatory Commission, the independent agency tasked with regulating the transmission of electricity, natural gas, and oil.

“Under the Natural Gas Act of 1938, the Commission must allow pipelines to recover prudently incurred costs of providing service,” she said.

“The Department of Public Utilities (DPU) has introduced a rate mechanism, referred to as a Targeted Infrastructure Recovery Factor (TIRF), to incentivize the gas distribution companies to replace aging infrastructure, such as cast iron and unprotected steel, at an accelerated rate,” said Assad. “The TIRF allows the gas distribution companies to adjust rates annually to recover capital investments associated with the replacement of leak-prone mains, services and associated facilities.”

Despite the current rate structure, Young-Allen stressed that natural gas consumers do have recourse.

“Pipelines must file with the Commission to recover their costs of lost and unaccounted for gas,” she said.  “Customers can and do protest those filings.  Where significant issues are raised about the level of a pipeline’s lost and unaccounted for gas, the Commission may look further into the matter.” 

When asked how many filings were protested in Central Massachusetts, Young-Allen replied that statistical information was only gathered upon the Commission’s request. Data on how many filings were protested overall were also unavailable.

In addition to the financial consequences, “they have environmental impacts at the point of the leak and then implications for the entire global climate,” said Phillips.

Significant environmental and health risks

At the point of the leak, vegetation, shrubs, and trees can be damaged, with serious consequences for green infrastructure in cities and towns, he said; and the loss of green infrastructure and the urban canopy is something Worcester is well aware of given its recent battle with beetles. There is also the potential of explosions at leak sites, and the further contamination of Worcester’s air.

Photo: Conservation Law Foundation

“Methane and ethane – ozone precursors – have to mix with other things in the city into a bigger soup of chemicals,” said Phillips. “They are reactants in a photochemical set of reactions that lead to ground level ozone, the bad ozone: bad for lungs, bad for any living tissue.”

“DPU acknowledges that, like other Northeast states, we have aging infrastructure that is leak prone,” said Assad. “To address that, DPU has taken some important steps.In July 2013, the DPU hired an independent, third-party consultant to quantify the amount of gas that is lost and unaccounted for in order to review and identify methods and procedures to reduce methane emissions.”

In addition to emission reduction efforts, the DPU requires utilities to conduct quarterly leakage surveys and that leaks classified as “Grade 1” be addressed immediately. These leaks present a hazard to persons or property, said Assad. 

Yet, according to both reports, current efforts are falling woefully short.

“There is simply no way that the United States and progressive states like Massachusetts can achieve the necessary greenhouse gas reductions unless we tackle this issue,” said Shanna Cleveland, senior attorney at the Conservation Law Foundation.

Is change on the way?

“The good news is that there are clear solutions available to fix these leaks and replace these aging pipelines,” said Cleveland. “While there are costs to fixing the system, both our report and Senator Markey’s underscore the fact that there are also substantial costs to inaction.”

Both reports included policy recommendations at the state and federal level, and the Massachusetts State House in currently considering legislation that could set timelines for repairs and shift costs back to natural gas companies.

“One thing I would really like to stress is that we miss opportunities all the time to save some money by fixing our infrastructure,” said Phillips. “If the utilities and the different stakeholders could just connect the dots and say if the streets are being torn up to fix a sewer or a water pipe, then that’s the time we fix everything so much time and money would be saved.”

“All the systems in our body talk to each other and are harmonized,” he said. “Yet the city has all these systems isolated from one another.”


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