Appeals court rules for utilities in $3.6B suit,

A federal appellate court left in place a lower court ruling that plaintiffs had argued allowed Eversource and Avangrid to siphon natural gas away from power plants.

A cohort of customers had claimed the practice cascaded into the rates they pay for electricity — as much as 20 percent more according to one study. They calculated it had resulted in an extra $3.6 billion being added to Connecticut electricity bills over three years.

Eversource and Avangrid sell natural gas to more than 400,000 homes and businesses in Connecticut, in addition to transmitting electricity from power plants to local distribution lines that serve some 1.6 million customers statewide.

The utilities are under intense scrutiny after customer bills spiked during this summer’s heat wave as more people stayed home during the pandemic, followed by prolonged power outages after Tropical Storm Isaias. A lawsuit filed in state court by customers seeking $1.5 billion in restitution was moved last week to U.S. District Court in New Haven.

In a separate lawsuit filed three years ago by nearly two dozen customers including individuals in Middletown, Newington, Rocky Hill and Vernon, Eversource and Avangrid were accused of squeezing out power plants looking to buy natural gas.

With the state accounting for a quarter of New England’s power consumption, the figure cited by the plaintiffs would work out to Connecticut electricity customers paying more than $500 extra each on average over that stretch.

A federal appeals court dismissed that case a year ago, but a New Hampshire firm energy marketing firm called PowerNE had pressed ahead with its own appeal, only to hit a judicial dead end itself.

Three years ago, U.S. Sen. Richard Blumenthal pressed the Federal Energy

Regulatory Commission to address the practice. Blumenthal has since introduced the MPACT Act — an acronym for “Making Pipelines Accountable to Consumers and Taxpayers” — to bring about reform in the sector.

The original suit came on the heels of a 2017 Environmental Defense Fund study critical of Eversource’s and Avangrid’s practices for reserving extra capacity on the Algonquin Gas Transmission Pipeline operated by Spectra Energy.

Plaintiffs expanded on EDF’s contention that Eversource and Avangrid routinely reserved more natural gas capacity on the Algonquin Pipeline than they needed, under “no notice” contracts that carried no penalties for last moment changes. According to the lawsuit, the utilities routinely canceled a portion of those contracts near the end of each day, preventing power plants from getting better “spot market” prices earlier in the day that excess capacity would allow.

“No one on the New England electrical grid was spared,” plaintiffs wrote in their original lawsuit. “If there is a shortage in natural gas supply, the unregulated spot price of natural gas will go up, and so .. will electricity prices.”

In its own analysis, EDF dubbed “out of date” the market mechanism plaintiffs accused Eversource and Avangrid of exploiting. But an appellate court noted last year that FERC allows the practice to ensure utilities have adequate access to fuel to meet their reasonable needs, given fluctuations in weather and other factors impacting natural gas demand.

An Eversource spokesperson labeled the EDF study on Thursday as “irresponsible and inaccurate” and defended the practice of securing natural gas excess capacity as needed.

“We do not engage in any behavior to ‘artificially constrain capacity,’” stated Caroline Pretyman, in an email response to a query. “Our fundamental public-service obligation is to assure that our gas customers do not experience service interruptions on the coldest days of the winter season . ... We are following all rules and regulations and are always acting in the best interest of our customers and communities.”

Ed Crowder, an Avangrid spokesperson, said the company is pleased that the appeals court rejected “these ill-informed and meritless claims.

“As we have said all along, Southern Connecticut Gas and Connecticut Natural Gas manage their natural gas portfolios in a manner consistent with their legal and regulatory mandate to provide safe, reliable service to customers,” Crowder said, in an emailed statement. “They must be able to do this under all weather and service conditions, and appropriately take into account their supplier-oflast-resort obligation and the many variables that can impact day-to-day customer demand.”

U.S. District Judge Denise Casper of Massachusetts dismissed the original case two years ago, citing Eversource’s and Avangrid’s defense that a legal precedent called

“filed rate doctrine” does not allow courts to interfere in prices set for energy under rules and procedures approved by the Federal Energy Regulatory Commission.

“To award monetary relief to retail electricity consumers, the [court] would be required to determine ... hypothetical rates that would have been charged but for [defendants’] purported anticompetitive conduct,” Casper wrote in her decision. “This is exactly the analysis the filed rate doctrine prohibits . ... Plaintiffs cannot escape the fact that FERC authorized the business choices that allegedly caused ... injury.”