Editor’s note: This commentary is by Mike Ryan, who worked for 25 years in management at Digital Equipment Corp., followed by several years working as an independent consultant. He is retired and lives in Hyde Park.
[I] would first like to thank John Herrick for his openness and willingness to update the second half of his VTDigger article of Sept. 3, 2014. The new version is available here and I would encourage you to read it.
Picking up where this article leaves off I would like to let you know that I have met with Chris Recchia (Department of Public Service commissioner), Joe Rose and Matt Cota in July and that since that time we have been working together in what I would describe as a loose coalition. The important point is that we are all trying to work toward a solution and I have been able to maintain my independence looking out for the interests of individual consumers like myself.
Problem definition
In the light of all of the evidence I have gleaned as a result of my research, it is now very easy to summarize the cause of the problems we faced with propane prices last year and which we may be faced with again this year.
• The pipeline, rail and refining infrastructure that had been used historically to satisfy domestic needs suddenly had a new and very large customer – exports.
• Product supply from the new U.S. fracking enterprises was far greater than the domestic market could consume and there was nowhere to store it.
• Since exports of propane and other derivative products are not regulated, the industry gave priority to the use of the existing infrastructure to supporting the more profitable exports.
• By definition, this infrastructure was totally inadequate to meet all domestic and export needs. There was no shortage of propane except for the fact that the infrastructure to get the propane to where it was needed was inadequate.
• It seems we had done all of this drilling and fracking without properly expanding the infrastructure to get all needs delivered.
• It is still not clear to me how decisions to allocate priorities to infrastructure usage have been getting made. It seems like a mess.
Anyway, this is where we are right now. We must try to find solutions.
Solutions Being Explored
The most promising initiatives that were possibly open to us until very recently were:
• Dealers and consumers increasing propane storage in the state as much as possible and trying to keep these facilities full as much as possible. Dealers have been increasing their storage capacity all summer long. Some consumers have been doing the same but cost and cash flow is a concern. It will be ongoing.
• Getting regulatory and legislative approval for the reopening of the salt cavern propane storage facility at Finger Lakes, New York. This would solve the problem for the whole of the Northeast if we could make it happen.
It is clear to me that getting our Vermont senators to co-sponsor the bill would be very helpful in getting the bill to the Senate floor.
Status: It is now four years since this effort got started. There is lots of local opposition. Hearings are pending but not yet scheduled. Not clear whether Gov. Andrew Cuomo will support it. Nothing is likely to happen until after the election. In any case it will not help us this year.
• Put pressure on TEPPCO to prioritize propane for Northeast consumers until adequate additional infrastructure is in place to cope with exports.
Status: My understanding is that the Federal Energy Regulatory Commission allowed TEPPCO to use the pipeline for exports providing domestic consumers could also be served. Our Washington delegation may yet need to force the issue on this.
New Initiative — I am hopeful!
In the last several days a very promising new initiative has emerged in the form of a U.S. Senate bill sponsored by Sen. Al Franken, D-Minn., and co-sponsored by Sens. Rob Portman, R-Ohio, and Tammy Baldwin, D-Wisc. The bill is S.2762 Propane Supply and Security Act 2014. Full details can be found on this link.
These three states experienced the same problems last winter that we did here in Vermont, maybe worse. It is not surprising that the measures advocated in the bill are designed therefore to solve our problems. I have looked into the bill and it is quite clear that if we could get this bill expanded to include specific details for the Northeast in addition to the Midwest and then get it enacted, it would solve our problems.
It is also clear to me as it is with Joe Rose and Matt Cota and their industry organizations that getting our Vermont senators to co-sponsor the bill would be very helpful in getting the bill to the Senate floor. Both Joe and Matt’s organizations are pushing to get this done and we need to help them. I plan to email and call the offices of Sens. Bernie Sanders and Patrick Leahy to ask them to co-sponsor this bill. I would ask all of you VTDigger readers to do the same.
I would also ask that you pass this information and request on to your interested/concerned families and friends asking them to do the same. Use Facebook or any other social media to get the message out.
This is not a political issue. It will be a bipartisan bill; there are already co-sponsors from both parties. If we can get it done, it will relieve us all of a lot of stress and probably save us all a lot of money this winter and for future winters. It will enable exports to take place without compromising the interests of domestic consumers.
