(Bloomberg) -- National Grid Plc agreed to immediately lift its ban on new natural gas hookups in New York state, backing down in its extraordinary standoff with Governor Andrew Cuomo.
After a months-long feud, the company says it’s now found ways to serve all its customers in Brooklyn, Queens and on Long Island for the next two years, according to a statement Monday. London-based National Grid will also pay $36 million in penalties, energy efficiency measures and clean-energy projects.
Cuomo called it a “victory” for utility customers. “We will not allow any business - big or small - to extort New Yorkers in order to advance its own interests,” he said in a statement.
The deal ends an unprecedented showdown that stalled thousands of construction projects in one of New York’s most populous regions as the utility refused to install gas hookups. It laid bare how fraught America’s relationship with gas has grown as states push to move away from heating oil but are leery of building infrastructure that could prolong dependence on fossil fuel.
National Grid rose 1.1% in London.
“I’m not that surprised that there’s a resolution,” Paul Patterson, an analyst at Glenrock Associates LLC, said in an interview. “It will make people feel a lot better, but in the long term we still have to see what the solutions are.”
The fight started in May after New York rejected a $1 billion pipeline expansion, which the company said was crucial to meet rising gas demand. Days later, National Grid announced it wouldn’t process any new applications for gas service until the pipeline was approved. After months of sparring, Cuomo threatened to revoke National Grid’s license if it didn’t fix the shortage by Nov. 26.
New York has rich deposits of gas. But in addition to blocking the pipeline, the state has outlawed fracking, making it difficult to produce gas locally. Such moves have crimped supply in the region, analysts say. Clean-energy advocates counter that there’s already enough gas wasted in inefficient boilers, stoves and elsewhere to accommodate new demand without new pipelines.
As part of its agreement with the state, National Grid agreed to develop a long-term plan to meet gas demand in the state by June. Regulators will appoint an independent monitor to oversee National Grid’s cooperation with the agreement.
In a statement, National Grid’s interim U.S. President Badar Khan said the company regrets that it didn’t provide more notice or explanation to the company’s customers about the moratorium.
“We appreciate the opportunity to work with the Governor’s office and the Department of Public Service to address these challenging issues,” he said.
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