Families and businesses in eastern Pennsylvania and New Jersey would have saved more than $890 million in energy costs had the proposed PennEast Pipeline been in place during the 2013-2014 winter, according to a key finding from a comprehensive energy market savings report and analysis released Tuesday by Concentric Energy Advisors, Inc. and PennEast Pipeline Company.

The approximately 114-mile, 36-inch diameter PennEast Pipeline will transport approximately one billion cubic feet of clean, natural gas per day – enough to serve approximately 4.7 million homes.

It would run from Dallas, Luzerne County, in northeastern Pennsylvania, to Transco’s pipeline interconnection near Pennington, Mercer County, New Jersey.

“The potential savings to energy users – our families, small businesses, government facilities and many others – thanks to the PennEast proposed capacity – is a game changer for the region,” said Peter Terranova, chairman of the PennEast Pipeline board of managers. “Imagine how the region could have benefited had nearly $900 million been injected into other parts of our local economies last winter? It is precisely why we are pursuing this project – to help ensure reliability, stable energy prices and a local economic boost.”

The study, “Estimated Energy Market Savings From Additional Pipeline Infrastructure Serving Eastern Pennsylvania and New Jersey,” examined what natural gas prices in the region that would be served by PennEast could have been in the winter of 2013-2014 if an additional 1 Bcf/day of pipeline capacity had been available.

Concentric evaluated the relationship between natural gas prices that actually occurred in eastern Pennsylvania and New Jersey relative to the natural gas demand experienced in the region each day, and the impact that additional pipeline capacity could have had by lowering natural gas prices from what otherwise occurred.

Concentric examined four primary areas of potential savings associated with additional pipeline infrastructure and lower natural gas prices in eastern Pennsylvania and New Jersey: 1) consumer savings associated with lower electric prices due to lower fuel costs for natural gas-fired electric generation; 2) savings due to natural gas electric generation displacing more costly oil-fired electric generation; 3) savings by industrial customers purchasing natural gas; and, 4) savings by customers of local distribution companies.

The biggest savings would have come from lower electric prices due to the savings achievable by natural gas-fired electric generation, where Concentric estimated electric savings in excess of $400 million due to lower market area natural gas prices.

“Additional natural gas pipeline capacity, such as proposed by PennEast, has the potential to provide significant value to energy consumers in eastern Pennsylvania and New Jersey by lowering natural gas prices during high price periods,” concluded Concentric.

Concentric’s analysis focused on the winter of 2013-2014 since this period most accurately reflects the current market dynamics, including the inclusion of Spectra ’s New Jersey‐New York Expansion project and Transco’s Northeast Supply Link – both completed in late 2013.

The study also notes that absent additional infrastructure, and with growing natural gas demand, the high natural gas prices experienced in the winter of 2013-2014, as well as those this winter, will continue.

“The findings of Concentric’s report underscore the enormous and broad positive impacts of the proposed PennEast Pipeline,” Terranova said. “When you combine the estimated economic impact of $1.6 billion from construction with $23 million in annual operations, and then add potential annual savings of nearly $900 million resulting from increased supply for the 2017-2018 winter, PennEast’s value to the region is easily more than $2 billion. This augments our long-term vision of continued savings and support to the communities where we live and work.”

The complete Concentric report is available online.

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3/30/2015