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Pipeline proponents tout price savings

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BY LINDELL JOHN KAY
Staff Writer

Sunday, January 14, 2018

Completion of an interstate pipeline through Nash County will keep natural gas prices from spiking during deep freezes like Eastern North Carolina experienced last week, according to local officials and utility company representatives.

Natural gas is an openly-traded commodity with its price based on supply and demand. Utilities like Rocky Mount set rates accounting for transportation costs. The Atlantic Coast Pipeline will reduce customers’ exposure to natural gas market volatility and provide the capacity needed to support the growing North Carolina market, said Duke Energy spokeswoman Tammie McGee.

“The state’s lack of pipeline infrastructure has real consequences for customers’ pocketbooks across the state,” McGee said, adding Rocky Mount's recent increase in natural gas prices is prime example why the pipeline matters to everyday people.

Rocky Mount Utilities provides natural gas to city customers. The recent prolonged colder temperatures caused significant increases in the demand for natural gas for residential heating and electricity generation for businesses, which drastically increased the cost of pipeline capacity to transport natural gas, said Rich Worsinger, the city's director of Energy Resources.

In response to the higher transportation prices, the city's utility increased the Purchased Gas Adjustment from $0.00 to $0.30, yielding a residential gas rate of $1.41646 per therm for the first 10 therms and $1.15183 per therm for more than 10 therms. The increase to the PGA means the cost of using 100 therms for a residential customer this winter will increase from $121.83 to $151.83.

The extreme cold and spikes in natural gas usage in the region over the past two weeks demonstrates in dramatic fashion the real and urgent need for the Atlantic Coast Pipeline, said Aaron Ruby, media relations manager for Dominion Energy, which is building the pipeline with Duke Energy and other utility companies.

Constraints on the Transco pipeline in North Carolina sent natural gas prices soaring from $3 per dekatherm in late December to an all-time record high of $175 at the end of last week. Public utilities in North Carolina depended on this single pipeline for 100 percent of the state’s supply.

Natural gas prices in the Appalachian region where the Atlantic Coast Pipeline would originate remained low, trading between $4 and $6 per dekatherm during the cold spell.

“The problem is we don’t have the pipeline infrastructure to deliver these lower-cost supplies to consumers in Virginia and North Carolina,” Ruby said. “While we’re still calculating the impact, having access to a lower-cost source would have saved consumers in our region hundreds of millions of dollars in fuel costs over just the last couple weeks.”

Utility companies have said for a long time that the pipelines serving North Carolina are stretched too thin and cannot handle the coldest winter days.

“Our economy isn’t going to grow if we have to curtail our industries whenever it gets cold, or if consumer prices skyrocket when our pipelines are overstrained,” Ruby said.

Duke and Dominion contend new infrastructure is the only way to solve the shortage.

“The Atlantic Coast Pipeline will open up access to lower-cost supplies in Virginia and North Carolina — access we currently do not have — and it will make service more reliable for consumers, especially when they need it the most on the coldest winter days,” Ruby said.