Legislators Use Budget Maneuver to Halt Hogan’s Key Settlement Conditions in Proposed Merger Case Between Washington Gas & Light and AltaGas
Maneuver Delays Hogan’s Gas Expansion Plans at Least One Year and Could Likely Lead to Investments in Energy Efficiency and Pipeline Leak Repairs Instead of Promoting Expanded Gas Use and New Pipelines as Preferred by Hogan
ANNAPOLIS, MD – With a final merger decision involving Washington Gas & Light coming as soon as today, Maryland environmental leaders announced this morning that they have worked with state legislators to successfully blunt a plan by Governor Larry Hogan to spend $100 million to significantly expand gas combustion and new pipelines in the state.
The $100 million expenditure — financed mostly by Maryland ratepayers — was inserted by Hogan into a merger deal struck between WG&L and AltaGas in December. But in the waning days of the recently ended General Assembly session in Annapolis, lawmakers approved language in the state budget stipulating that all settlement money in the gas merger must first gain explicit approval from state lawmakers. The merger, which still faces final approval by D.C. regulators this week, could thus free up $100 million that the legislature could redirect toward energy efficiency improvements for homes and businesses instead of incentivizing more gas pipelines and combustion as preferred by Hogan.
“The Maryland General Assembly has stood up to Governor Hogan to protect the environment, protect consumers, and protect landowners from potentially intrusive new gas pipelines,” said Mike Tidwell, Director of the CCAN Action Fund. “Our state needs to burn fewer fossil fuels, not more. The General Assembly’s budget action allows Maryland citizens to have a say in a rational energy policy based on energy efficiency, climate protection, and lower energy bills. Governor Hogan should listen to those citizens, not to a Canadian gas company bent on securing an expanded market for fracked gas drilled in neighboring states.”
Governor Hogan’s plan to “kick-start” greater gas use in Maryland, announced last December by Hogan and Canadian gas company AltaGas, drew sharp criticism from environmental groups statewide as well as the Maryland Office of People’s Council (on behalf of consumers). The settlement plan would use $100 million in mostly ratepayer money to help gas companies build more pipelines throughout the state and otherwise facilitate greater consumption of gas. Most of the gas, environmentalists point out, would come from fracking wells in Pennsylvania. The Maryland General Assembly banned fracking drilling within the state in 2017, passing a bill signed by Hogan.
Meanwhile, in January, environmental advocates and their allies began working with leading legislators to give the General Assembly a clear say on how any settlement money could be spent in the merger between Washington Gas and AltaGas. With the support of many lawmakers, including House Appropriations Committee Chair Maggie McIntosh and Senate Budget and Taxation Committee Vice Chair Richard Madaleno, key language was added to the final Budget Reconciliation and Financing Act (BuRFA). That language, appearing on page 18 of the BuRFA, paragraph 8, says, “Adds a provision requiring any fund provided to State agencies as a result of conditions of an approved merger between AltaGas Ltd. and WGL Holdings, Inc. to be appropriated through the State budget or other legislation.”
This means what it says. No settlement money can be spent by agencies until the Governor submits a budget to the General Assembly proposing the expenditure or the General Assembly passes a separate bill authorizing the expenditure. If the merger gets final approval from regulators and money is transferred from AltaGas to the state, that money could not be spent by the Maryland Energy Administration, for example, unless the General Assembly agrees to appropriate it through the 2019 budget process or the General Assembly passes a separate bill authorizing it. If the Governor, in his 2019 budget, proposes spending settlement money on building controversial new gas pipelines across the state to incentivize more gas use, the General Assembly could strip the spending from the budget.
The intention of environmental and consumer advocates is to encourage the Governor to submit a 2019 budget that applies any settlement money toward a combination of efforts to 1) help homes and businesses use less gas through efficiency investment and 2) invest in efforts like those in New Jersey where utilities are incentivized to identify and repair major gas leaks in existing pipelines. These efforts would benefit consumers, reduce pollution, and create jobs all at the same time. They would also allow the state to make progress toward reducing greenhouse gas emissions per its commitment to the Paris Climate Accord, since fracked gas from Pennsylvania is now documented in recent studies to be as harmful as coal for the global atmosphere.