Developer of subdivision in Amherst sues Berkshire Gas, alleging breach of contract over moratorium



Last modified: Friday, December 11, 2015

AMHERST — A breach-of-contract lawsuit contending that Berkshire Gas has enough natural gas to supply an Amherst subdivision, but refuses to do so because of a self-imposed moratorium, could help determine whether the utility faces legitimate capacity issues, according to the lawyer who filed the suit Thursday in Hampshire Superior Court.

Thomas Lesser, of Lesser, Newman & Nasser LLP in Northampton, said the lawsuit, filed on behalf of Tofino Associates LLC of Hadley, could determine whether Berkshire Gas is genuine in citing capacity as the reason it put the moratorium in place in late March, or instead is trying to garner support for construction of the controversial Northeast Energy Direct project proposed by Tennessee Gas Pipeline.

“In the lawsuit, we intend to find out if they have enough gas to impose a moratorium,” Lesser said. “If it turns out they have adequate gas to supply us, then they have adequate supply for others. We will find that out.”

The moratorium took effect March 27, with the gas company stating that it would not add any new customers in Hampshire County or allow any of its existing 8,000 customers in Hampshire and Franklin counties to expand their use of natural gas.

“We doubt that explanation because Berkshire Gas has a financial interest in extending the moratorium and applying pressure to having the pipeline approved, because their parent company is invested in getting the pipeline approved,” Lesser said, referring to UIL Holdings Corp., which recently purchased interest in the Kinder Morgan Energy Partners’ pipeline expansion project.

Christopher Farrell, spokesman for Berkshire Gas, responded in an email Thursday that he was unaware of the lawsuit.

In the past, Farrell has said the moratorium was put in place, not because supplies of natural gas are limited, but because the company’s ability to deliver gas to customers through the existing Tennessee Gas Pipeline, which runs from Southwick to Greenfield, is compromised by the capacity issue.

The lawsuit relates to a 2004 contract between Tofino and Berkshire Gas, which required the utility to provide natural gas to 69 homes in a development known as Amherst Woods, off Belchertown Road near the Belchertown line.

“Tofino Associates and Berkshire Gas entered into a contract that obligated Berkshire Gas to provide gas to lots within an Amherst subdivision,” Lesser said.

Lesser said Tofino spent more than $260,000 on the arrangement with Berkshire Gas to provide gas connections, at no cost to homeowners, except for those residents whose homes were more than 125 feet from the road. In those cases, they would pay prevailing costs for the added length of the connection.

The alleged breach of contract came after Berkshire Gas supplied just 35 homes, with others who have purchased lots being denied service, which has diminished the value of their property, according to the lawsuit.

“By denying gas service, Berkshire Gas has violated the contract that it entered into with Tofino Associates,” the lawsuit states. “Tofino Associates is unable to sell additional lots or homes in the subdivision for the same price that it would have been able to if buyers would have access to gas service.”

The lawsuit requests unspecified compensatory damages, punitive damages, attorney fees, costs and other relief deemed appropriate by the court.

Other projects

The moratorium has affected projects throughout the region. In Hadley, the new Texas Roadhouse restaurant on Route 9 was unable to get natural gas, and instead is using large propane tanks on site. In Amherst, the Olympia Place student housing project off East Pleasant Street will also be heated by propane.

David Ryan, a real estate agent with Coldwell Banker Upton-Massamont in Northampton, said consumers have looked favorably at natural gas because it has been both cheap and efficient.

“Developers I’ve worked with say gas is the preferred method of heating for a house,” Ryan said.

The lawsuit could help provide more detailed information about natural gas capacity, something the Northampton City Council sought in June when it adopted a resolution that called on natural gas companies to “embrace complete transparency” in substantiating claims that their current gas delivery system is at capacity. The resolution also requested that the companies consider alternative solutions to the pipeline, such as upgrading existing infrastructure, and that the Department of Public Utilities consider the pipeline within “the broader context of the Commonwealth’s energy future.”

But Ryan O’Donnell, the Ward 3 city councilor who helped draft the resolution, said in the months since then there has been no evidence that Columbia Gas, which supplies Northampton, or Berkshire Gas has made any effort to prove publicly there is a supply deficit.

“We have heard lots of silence,” O’Donnell said. “It’s pretty disappointing, especially in light of the attorney general’s report coming out and its finding questioning whether an interstate pipeline is needed.”

The gas companies also claim that the pipeline would save money for people who use natural gas, but there is no evidence of this, O’Donnell said.

“It’s troubling in the face of all this, the data and research, there’s not even a conversation taking place. To me, it’s disrespectful to the ratepayers,” O’Donnell said.

Scott Merzbach can be reached at smerzbach@gazettenet.com.




 


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