Natural Gas Cutoff Hamstrings NYC Business Upstarts, New Housing

(Bloomberg) -- About $400,000. That’s how much two New York City deli owners say National Grid Plc may cost them by refusing to supply natural gas to a new burger restaurant they’re planning in Brooklyn.

The men are victims of a complex face-off between the utility that supplies gas to the metropolitan area and state regulators. New York and New Jersey have denied approvals for the $1 billion Williams Cos. pipeline expansion that National Grid has said is needed to boost their gas capacity.

Williams Cos. has vowed to reapply for approval but, in the meantime, National Grid is declining to approve any new contracts to supply gas. It’s a decision that could hamstring new businesses and housing, say support groups in New York and on Long Island.

The deli owners learned in early July the utility wouldn’t accept their application for gas. Now they say they may have to cancel their plans. “We have already hired employees, who are sitting and waiting, asking ‘When can we come into work?” Muhammad Quereshi, one of the men, said in a telephone interview. The denial, he said, leaves them to pay back $400,000 in business loans they expected would come from the new restaurant’s profits.

Nobody knows how many businesses are affected yet, but any business that wants to come in and requires natural gas -- in particular, restaurants -- will face difficulty trying to get it.

London-based National Grid won’t say how many applications it hasn’t processed. Annually, the company normally receives around 8,000 applications from commercial, industrial and residential consumers requesting natural gas service, according to Domenick Graziani, a spokesman. The utility declined to discuss The application by Quereshi and Shahbaz Warraich, saying customer information is confidential.

In the past, National Grid has said that if the pipeline project isn’t cleared by winter 2020, applications in the region can’t be processed.

In May, New York denied a key permit for the Williams Cos. pipeline, with the Department of Environmental Conservation saying it would result in water quality violations, including those caused by kicking up hazardous metals and disturbing seabed habitats. The denial was “without prejudice,” meaning the company can reapply.

Pipeline’s Proposed Path

Environmental groups have argued that the Northeast Supply Enhancement, as the pipeline is named, is unnecessary and would further New York’s reliance on fossil fuels. Williams and National Grid say the project is needed to meet demand during the winter months, when consumption of the heating fuel peaks and prices can spike.

Business advocates say that while they understand the need for environmentally-friendly alternatives to gas, the technology for renewables isn’t there yet to meet the energy needs of the region. The decision not to approved the pipeline extension is also thwarting a regional transition from heating oil to cleaner-burning gas.

"Renewable projects are a long-term play, but they’re not here yet," said Kevin Law, president and CEO of the Long Island Association. "They can’t turn on lights, heat our homes or cool our buildings for many years to come."

In notices sent to its customers, National Grid is encouraging ratepayers to sign a pre-written letter in support of the project to be automatically sent to New York Governor Andrew Cuomo, who has been a leading voice opposing pipelines. "To be clear," National Grid’s notice says, “we need this additional supply to support all new requests for natural gas, for residential, multifamily and business purposes."

The utility cutoff will “undo a lot of the success we’ve had in growing the Long Island community in the last 10 years,” Law said.

New York City and Long Island aren’t the only areas in the state facing the issue. Westchester County was put under a moratorium on new natural gas service by Consolidated Edison Inc. in March. At the time, the County projected that the construction of 16,000 homes could be suspended.

The issue has forced some developments to be redesigned to accommodate new methods of heating, said Mitchell Pally, CEO of the Long Island Builders Institute.

Pally said he expected several projects to leave the area since “it’s hard enough to develop in Long Island. Without an adequate and sustainable energy source, it will be much more difficult.”

“It’s definitely stopping development at a very base level,” said Thomas Grech, president and Chief Executive Officer of the Queens Chamber of Commerce.

To contact the reporters on this story: Millicent Dent in New York at mdent13@bloomberg.net;Sydney Price in New York at sprice86@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, ;Debarati Roy at droy5@bloomberg.net, Reg Gale, Joe Richter

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