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Robinson: National Fuel CEO fights back against 'lousy' regulation

Ronald J. Tanski is frustrated.

The CEO of National Fuel Gas Co. feels the Amherst-based energy company is being treated more harshly by state regulators than other utilities in the state after regulators rejected National Fuel's plans for a major pipeline expansion and slashed its utility rate hike request by 86 percent.

He feels ignored by top state officials, including Gov. Andrew M. Cuomo.

He thinks National Fuel is paying the price for a highly charged political fight that pits supporters of conventional energy sources, like Tanski, against backers of renewable energy, who think wind, solar and hydropower are the power sources of the future and decry investments in fossil fuels.

And he's fighting back. Tanski, in a conference call with industry analysts, called out both Cuomo and DEC Commissioner Basil Seggos for not returning his phone calls over the past three months.

"I know he's a busy guy. I just want to talk to him for 10 minutes," Tanski said during an interview last week, noting that he placed his first call to Cuomo on Feb. 1. "I'm just not getting any answers whatsoever."

He complained that National Fuel is "getting lousy regulatory treatment in New York State."

The PSC decision on National Fuel's delivery rates puts a limit on how much the utility can earn in New York that is the lowest of any utility in the state and the lowest for any utility in the country since the 1980s, according to S&P Global Market Intelligence.

And Tanski said if New York regulators won't support pipeline expansions that will help ship more natural gas from the shale gas fields in central and western Pennsylvania to major markets in the U.S. and Canada, then National Fuel probably will spend the $455 million it planned to spend to build its Northern Access pipeline through New York on other pipeline projects in states like Pennsylvania, where the regulatory climate is friendlier.

"Let's be clear, we'd still love to achieve some sort of negotiated solution for that project, but when the governor won't take 10 minutes to respond to repeated requests from the CEO of a New York-headquartered company with 1,200 employees in the state, and the commissioner of the DEC won't return my calls, I mean, who are we going to negotiate with?" Tanski said during the conference call.

Those are fighting words, especially because Cuomo and Seggos are the two New York officials who have the most power to make life pleasant – or miserable – for a company like National Fuel, with its highly regulated pipeline and utility operations in the state.

The Cuomo administration, when asked to comment, deferred to the DEC. “All decisions are made after rigorous agency review and based on the facts and the science. National Fuel was informed of this process but failed to meet New York's strict water quality standards and then filed suit,” said Sean Mahar, a DEC spokesman.

But Tanski also thinks the fight is about more than National Fuel. The rejection of its Northern Access pipeline is the result of statewide policies that have made it difficult for natural gas pipeline projects to proceed, including the Constitution pipeline, which would have brought more natural gas from Pennsylvania into New York. Just as they did with the Northern Access expansion, state regulators blocked the Constitution pipeline by calling it a threat to water quality.

"I think it's political. Certain groups want this as a lightning rod," Tanski said in the interview. "It's 'We have to stop fracking. We have to do it any way we can.' They couldn't stop fracking. So now they want to stop pipelines."

Cuomo, for his part, said last month that he's not opposed  to pipelines, "as long as they're done well and done correctly. ... Realistically, you have to move fuel, so a pipeline is the safest way – if it's done right."

But Cuomo, during a meeting last month with reporters and editors at The Buffalo News, also said the environmental risks of the 97-mile Northern Access project outweighed the 1,000 temporary construction jobs and the five permanent jobs the pipeline would have created.

"The risk to the environment and the water quality and degradation to the environment outweighed the five permanent jobs," Cuomo said.

Tanski disagrees. National Fuel already has taken the DEC to federal appeals court to try to overturn its denial, even though a successful appeal still will mean the earliest that the pipeline now could be put into service would be the spring or fall of 2020. National Fuel already has spent $68 million on the project.

"The message I'm trying to send to them is: We're a local company. We'd like to grow the business and we want to make a $500 million investment in New York State," Tanski said. "The message we're getting back is that pipelines are unpopular and we wish they would go away."

National Fuel calls DEC's denial of pipeline project 'troubling'

National Fuel also plans to look at expanding its pipeline network in Pennsylvania, where the prices that drillers, including National Fuel, can get for their natural gas has been depressed because there aren't enough pipelines to carry the fuel to major U.S. markets. That's been great news for Buffalo Niagara residents, whose winter heating bills are half as much as they were a decade ago, but it also has slowed drilling in Pennsylvania's shale gas region.

As more pipeline capacity has pushed into Pennsylvania, from projects like the Rover pipeline that goes through West Virginia, Pennsylvania and Ohio, Marcellus region gas prices have risen since late last summer, prompting National Fuel and other drillers to cautiously start bringing more wells on line.

"If you have an unfriendly climate that doesn't welcome investments and makes it almost impossible to undertake in a businesslike fashion, sure, we'll be looking elsewhere," Tanski said. "If we can't invest in New York, the path is either west through Pennsylvania, south through Pennsylvania., or down the East Coast."

Tanski said National Fuel remains tied to its Buffalo roots, but he also warned that if the company's operations in Pennsylvania and elsewhere grow in significance, jobs eventually could follow the flow of the company's investment dollars.

"We'd love to be part of the renaissance of Buffalo," Tanski said. "But if we're being chased out or shouted down at every turn, I guess you have to take a look at that."

National Fuel pipeline would cut through 192 WNY streams

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