Motion to Intervene of East Tennessee Group under RP13-558.

WACAP - ANALYZING PENNEAST PURPOSE AND NEED Analyzing the PennEast Purpose and Need Prepared by: Michael Spille, West Amwell Citizens Against the Pipeline (WACAP) westamwellcap@gmail.com October 27, 2015 WACAP - ANALYZING PENNEAST PURPOSE AND NEED TABLE OF CONTENTS Table of Contents 2 1. EXECUTIVE SUMMARY 3 2. Historical Residential Natural gas prices in NJ 4 3. Future Gas Prices in New Jersey 7 4. Electrical Prices in NJ 8 5. Pipeline overcapacity projections 9 6. Criticism of the penneast concentric study 10 7. LNG Exports 15 8. LNG Export Effects on natural gas markets 18 9. Midstream strategies and displacement 21 10. Corporate Filings and Investor Presentations 23 11. The no Action Alternative 28 12. Conclusion 30 ! of ! 30 2 WACAP - ANALYZING PENNEAST PURPOSE AND NEED 1. EXECUTIVE SUMMARY The PennEast Pipeline Company, LLC has stated that the predominant purpose of their pipeline is to bring low cost natural gas to consumers and businesses in Pennsylvania and New Jersey. In the media and their web site they have focused solely on PA and NJ consumers, and indicate the natural gas from PennEast will not be used anywhere else. In their FERC application they paint a somewhat broader picture, and talk about supplying gas to surrounding states, supply reliability, and price stability. Investors into the individual member companies get yet a third view, one that is focused around the potential for new midstream business for most of the PennEast partner companies. In all cases PennEast asserts that this is a demand-driven project. In contrast to PennEasts claims, the research shows that New Jersey is well-served by natural gas already. The state enjoys some of the lowest prices in the country for residential natural gas. Recent issues with capacity constraints have been largely fixed, and PennEast owners themselves have indicated in their most recent filings that PennEast gas will be used to displace existing supplies, not to supply new demand. This is a critical point that should be underscored. PennEast is not building this pipeline to meet new demand. No such demand exists. Instead, they are building it so they can avoid paying shipping charges on existing pipelines, and instead pocket those charges for themselves. This is a new revenue stream for the member companies on the order of $289 million/year. In addition, the companies can resell the gas theyve committed to via the precedent agreements to third parties during periods of low consumption. This is a practice that NJR and SJI already do extensively today to help generate their profits, and which they can accelerate once PennEast is ...