For 40 years, Mary Dugan has watched her hometown of East Greenbush, New York, transform from a sleepy rural community into a bustling Albany suburb, its once solitary forests now peppered with stripmalls and daily traffic jams.

It’s a transition Dugan hasn’t minded. But when the utility company that supplies gas to the region proposed tearing up the road a mile from her one-story ranch to install a new pipeline, Dugan put her foot down. 

She protested and wrote letters along with her neighbors until the town board formally opposed the project.

“I’m not an activist. I’m not even sure I’m an environmentalist. But I don’t want a pipeline,” she said. “I don’t want the Hudson River messed with and I’m worried about safety.”

Back in February 2019, National Grid, a natural gas and electric utility, applied for a permit to build a small 7.3-mile natural gas pipeline across several towns in New York’s Upper Hudson River Valley. It would make it easier to transfer gas in the Albany area between two large interstate pipelines. 

Anticipating quick approval by state regulators, the utility—which also services New York City and Long Island—expected to begin construction by fall 2019.  

Already into January 2020, however, the pipeline—dubbed the E37 Reliability and Resiliency Project—has yet to get approval, and could become the latest casualty in the escalating fight over the future of New York’s energy economy. 

Facing resistance from residents who don’t want a pipeline crossing their land under any conditions, and state lawmakers who have made ambitious climate pledges to reduce New York’s reliance on fossil fuels, utility companies appear to be struggling to get even the smallest projects built. 

Climate activists, meanwhile, say utilities are using a “segmentation” strategy to enhance profits and expand the capacity of large interstate pipelines through small local segments like E37. They want the Federal Energy Regulatory Commission, which typically gets involved only in interstate pipelines, to regulate them. A protest is planned for Thursday in Albany, at which activists say they will present Gov. Andrew Cuomo with a petition opposing the pipeline.  

Patrick Stella, National Grid’s Upstate New York communications manager, responded that the E37 pipeline is not the result of any such strategy and is intended to close a 30-mile loop around Albany for greater efficiency. “The primary driver for this, and all of National Grid’s proposed projects, is, and always has been, safety, reliability and meeting customer need,” he said.

Even Small Pipeline Segments Could Impact New York’s Emissions Targets  

Major pipeline proposals to transport gas from Pennsylvania’s shale fields into New York and surrounding states have become a flashpoint in the Northeast in the battle over fracking and climate change. 

Two of the biggest such pipelines—the Williams project carrying gas from Pennsylgvania through northern New Jersey, and the proposed Constitution pipeline from Pennsylvaqnia through western New York—were denied environmental permits by New York regulators in 2019 because of public health concerns, dealing a major blow to National Grid and other utilities that would have received gas from them. 

National Grid argued that without those pipelines, it wouldn’t be able to meet exploding energy demand in New York. 

Smaller lines like E37 require much fewer regulatory approvals and typically have escaped public scrutiny. But they’re part of a growing web of smaller pipelines that weave together the country’s major gas pipelines and play an integral role in helping companies deliver their product. 

Some environmental activists are now expanding their focus to fight smaller lines, arguing that segmentation allows  fossil fuel companies to expand the capacity of major pipelines while avoiding federal oversight in a way that leads to increased fracking in Pennsylvania’s Marcellus shale.  

“We had the sense that since a lot of the larger pipelines are having trouble, that companies are going to start doing these smaller pipelines—what we call segmenting,” said Becky Meier, a co-founder of Stop New York Fracked Gas Pipeline (SNYFGP), a volunteer advocacy group that was heavily involved in fighting the Williams pipeline. “This could be the beginning of a new strategy on the utility companies’ side.”

Meier’s group, along with dozens of advocacy groups and public officials, are challenging E37, saying that building the line is inconsistent with New York’s ambitious climate law that requires the state to get all of its electricity from carbon-free sources by 2040 and reach net-zero emissions by 2050. And how New York rules on the pipeline could be an early indicator of whether the state will be able to meet those goals.

“If the state has any possibility of meeting those goals, it has to essentially prohibit the introduction of any additional fossil fuel infrastructure into the state immediately,” said Eleanor Stein, a climate change law professor at Albany Law School and a former administrative judge for the New York State Public Services Commission (PSC).

Maya Van Rossum, who runs the Delaware Riverkeeper Network, another environmental group, said smaller segments of pipelines don’t operate in isolation, but expand already existing lines. When smaller lines connect larger ones, “that’s passing gas from one to the other and really magnifying down the line the capacity of a pipeline,” she said. 

Van Rossum said that because of that magnifying effect, E37 and any other line that expands an interstate pipeline should be regulated by FERC. “I am sure this is a very intentional growth strategy for the two pipelines that are involved,” Van Rossum said.

National Grid Says E37 is Needed to Meet Increasing Demand

National Grid’s E37 would run from the town of Bethlehem, under the Hudson River and northeast through East Greenbush to North Greenbush. At a little over 7 miles, the pipeline wouldn’t provide a significant increase in gas capacity on its own.

But if completed, E37 would close what National Grid refers to as the “Albany loop,” a series of natural gas pipelines it operates that stretch more than 30 miles around New York’s Albany region in a horseshoe shape. The loop is fed by two larger interstate pipelines regulated by FERC, one operated by Dominion Energy Transmission Inc. (DETI), and the other by  Tennessee Gas Pipeline (TGP) . 

By closing the loop, gas moving between Bethlehem and Troy, New York, would travel only 7 miles instead of about 30. It would also give National Grid more flexibility regarding which line it uses to bring gas into the region. That would allow National Grid to provide an additional 40 million cubic feet of gas per day to the area, bringing its total capacity to about 680 million cubic feet per day for its 260,000 customers in the region.

National Grid said the additional capacity and flexibility is needed to avoid service disruptions and meet New York’s surging energy demands. In the Capital Region, the company said, it expects demand to rise more than 10 percent in the next decade.

Overall, natural gas consumption in the United States increased 26 percent between 2008 and 2018, according to data from the United States Energy Information Administration, driven by the fracking boom that unleashed an abundance of low-cost shale gas. And in New York, natural gas and oil altogether make up nearly 60 percent of the state’s heating needs, up from 47 percent 20 years ago.  

Some activists and former state officials argue the utility’s projections aren’t accurate. Suzanne Mattei, an energy policy consultant and a former regional director of the New York State Department of Environmental Conservation, said one indication that projection is off is that residential and commercial gas consumption in the U.S. is projected to remain flat through 2050. Mattei made the same argument when she issued a report opposing the Williams pipeline last year. 

“In Eastern Upstate New York,” Stella, the National Grid spokesman, said in an email, “we need to ensure the near-term resiliency and reliability of our gas system for existing customers and we see increased demand for natural gas and other energy sources based on the economic growth in the region.” 

Utilities Generate Income Through Capital Investments on Pipelines

Beyond the dispute over whether demand for gas is rising, pipeline opponents argue that smaller segments such as E37 have become an important means for utilities to increase profits. 

Robert Wood, an organizer with 350 Brooklyn, a climate change activist group, said E37 is more about National Grid securing another capital investment project and increasing its customer base than it is about meeting rising gas demand.

While regulated utilities do make money on the energy they sell, they don’t control the cost of the fuel and cannot easily raise their rates as market prices fluctuate. “Fuel costs are a straight pass through,” said Michael O’Boyle, director of electricity policy for Energy Innovation, a clean energy advocacy group, “meaning, they don’t earn a margin or a profit on those fuel costs in general.”

Instead, many utilities, including National Grid, rely on capital investment projects to generate the kind of income needed to pay back shareholders and reinvest in company growth, O’Boyle said. When a utility invests in an infrastructure project, like a pipeline, it earns a regulated rate of return on that project.

In 2017, National Grid reported $3.3 billion of capital investment projects in the U.S., according to its most recent annual report. And the company has been significantly ramping up its capital investments in New York, with plans to invest a total of $2.5 billion in infrastructure projects through 2020 in upstate New York alone.

O’Boyle said it’s in the utilities’ best interest to claim demand is growing, specifically because it allows them to invest more in infrastructure.

“It’s a virtuous cycle,” he said. “You want demand for your product to grow, so you can invest more in the capital infrastructure that delivers that product, which then allows you to take shareholder dollars and reinvest it in a valuable project, which will grow your value over time.”

National Grid’s Stella said that the E37 pipeline is designed as a vehicle for meeting customer need, not increasing regulated infrasructure revenues. 

A Town Board Members Says East Greenbush Wouldn’t Benefit from E37

E37 has gleaned a fair amount of local resistance. Last year, both town boards of Bethlehem and East Greenbush passed resolutions opposing the pipeline—a symbolic act, but one that would likely be considered by the PSC, which is in charge of approving the project’s permit.

In East Greenbush, where the vast majority of E37 would be built, the project was received with notable skepticism from residents like Mary Dugan who don’t trust National Grid to safeguard their property or the environment.

“I’m not opposed to the line, but when you say that you’re going to do things for the residents and communities, I have yet to see that in 40 years living here,” East Greenbush resident Halsey Betters said at a public hearing in April.

For town board member Tina Tierney, East Greenbush would bear all the risks and burdens of the pipeline without reaping any benefits.

“There were no service disruptions, there were no businesses that were waiting for hookups … There were no issues with service in our community,” Tierney said.

As of December, the PSC said it hasn’t reached a decision on E37, and that public comments are still being accepted and reviewed. Along with public testimony, the commission will also consider the positions of National Grid, as well as the state’s Department of Environmental Conservation, Department of Public Service and Department of Agriculture and Markets.