Washington – A new report from the advocacy organization Food & Water Watch illuminates internal industry analysis showing that natural gas pipeline builders have overcharged client gas suppliers – in some cases achieving up to 35 percent returns on their investments – blatantly flouting industry standards overseen by the Federal Energy Regulatory Commission (FERC). This egregious profiteering by pipeline companies directly impacts consumer energy costs. Since 2005, fracked gas-sourced power has grown from 19 to 43 percent of overall U.S. supply, while consumer electricity costs have ballooned by 74 percent during the same period. 

The opportunity for exorbitant, unchecked profiteering by pipeline developers has resulted in an epidemic of unnecessary overbuilding. Current estimates indicate a 38 percent overcapacity in gas pipelines throughout the country, along with 27 percent excess gas storage capacity. This overbuilding has translated into $179 billion in unnecessary investment — costs ultimately passed on to ratepayers. Yet this overbuilding has not resulted in any cost benefit for ratepayers – in fact the opposite. 

“Under both Democrats and Republicans, FERC has consistently abdicated its responsibility to American consumers by ignoring blatant profiteering on fracked gas pipelines that weren’t needed in the first place. FERC has rejected just two of more than 400 pipeline proposals considered since 1999. The result has been a huge fleecing of everyday families who are forced to foot the bill for these ridiculous projects when much cheaper clean energy options are easily obtainable,” said Oakley Shelton-Thomas, senior researcher at Food & Water Watch and author of the report.

Many newly proposed pipelines are in flagrant conflict with state climate laws. FERC approves pipelines on the assumption that they will remain economically useful for at least 35 years. However, state renewable energy mandates and the electrification of buildings undermine the medium- and long-term justification for more pipeline capacity.

Natural gas distribution companies are well aware of this problem. For example, in New York, Corning Gas recently sought unsuccessfully to accelerate the recovery of its existing natural gas system by saying that the New York Climate Leadership and Community Protection Act would shorten the lifespan of its system.Normally, natural gas utilities charge ratepayers for the cost of building pipelines across the life of these assets.

In the short term, increased investment in energy efficiency and renewable energy can ease the pressure on volatile natural gas systems, which grant the holders of transmission rights significant market power during periods of high demand. Over a longer period, a transition to a 100 percent renewable electricity grid has the potential to produce even more cost savings.