For months, the utility that provides gas to Long Island and parts of New York City refused to activate gas hookups for both new and returning customers, casting some real estate developments into limbo.
The utility’s moratorium triggered a political standoff that intensified this month, when Gov. Andrew M. Cuomo issued a threat: either the company, National Grid, turn the gas on for all its potential customers, or the state would pull its license to operate in southern New York.
The threat apparently worked. On Monday, the governor and National Grid announced an agreement that would restore gas service to customers and applicants the utility had previously rejected.
Under the deal, National Grid will lift its moratorium immediately. It will have 30 days to provide gas hookups to all residential customers and small businesses who seek them, and 45 days to restore service to larger commercial projects, officials said.
The utility also agreed to pay $36 million in penalties, with $7 million meant to directly compensate people who were affected by the moratorium.
“This agreement is a victory for customers,” Mr. Cuomo said in a statement. “National Grid will pay a significant penalty for its failure to address the supply issue, its abuse of its customers, and the adverse economic impact they have caused.”
The standoff between National Grid and Mr. Cuomo’s administration began in May, after New York regulators blocked the construction of a much-disputed $1 billion pipeline that would have run 37 miles from Pennsylvania to New Jersey and New York.
At the time, National Grid, which provides gas to 1.8 million customers in New York City and on Long Island, said the pipeline was crucial to meeting a rising demand for natural gas amid booming development in southern New York.
Natural gas consumption in the United States increased 31 percent between 2009 and 2018, according to data from the United States Energy Information Administration. Industry analysts have predicted the demand to continue to rise, since natural gas is both cheaper and cleaner than traditional heating oil.
Even as the available supply of natural gas has also increased, energy companies in the Northeast have been concerned about their capacity to provide service, since the bulk of natural gas production is produced far from the region.
After the pipeline’s construction was halted, National Grid said it did not see a way to supply new gas service and halted new hookups. In the time since, the company refused at least 2,000 requests for service.
As part of the agreement announced on Monday, National Grid said it had identified short-term ways to meet rising energy demand for the next two years.
Among the utility’s solutions were trucking in compressed natural gas and renegotiating agreements with existing pipeline operators to provide more liquefied natural gas to National Grid’s system, officials familiar with the agreement said.
“We have worked hard to identify an innovative series of alternatives to meet growing demand,” said National Grid’s president, John Bruckner, in a statement.
The deal also requires National Grid to provide a number of possible long-term solutions to address its anticipated supply issues. The utility and local officials will hold hearings in Brooklyn, Queens and Long Island, with the goal of having a long-term plan in place by the fall of 2021.
Mr. Cuomo has made a point of publicly sparring with utility companies recently. During the summer, he denounced Con Edison after a major blackout in Manhattan, threatening fines and suggesting that the utility could be replaced.
Last year, he also attacked Charter Spectrum, the state’s largest cable company, for not building out high-speed internet in rural communities. In July, the company and state regulators finalized a deal to allow Charter Spectrum to continue to operate.
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