National Grid Plc said on Friday it will not process new applications for natural gas service in its New York City and Long Island service area until Williams Cos Inc.’s Northeast Supply Enhancement (NESE) pipeline receives the permits it needs to proceed.

On May 15, the New York Department of Environmental Conservation (DEC) denied Williams' application for water quality certification, a permit the $1 billion NESE needs, because it said the project could harm aquatic life.

RELATED ARTICLE: NY Pipeline Denial ‘Incredibly Short-Sighted,’ Says EPA Chief

The rejection was the latest of many projects the DEC has rejected for environmental reasons over the past few years. New York Governor Andrew Cuomo and other state politicians have said they want utilities to invest more in renewable power and energy efficiency rather than fossil-fired projects.

"While we continue to receive applications for new and expanded firm gas service ... none will be processed until the permits are received and (NESE) is allowed to proceed," National Grid said in a statement.

"Only at that time ... will (National Grid) resume processing all requests for new and expanded firm gas service in the order that they have been received," the company said.

Williams said it will resubmit the pipeline application "quickly" and is "confident" it can meet the state's concerns and bring the project into service for the winter of 2020-2021.

Before the state rejected the permit, National Grid, which has a contract to buy gas from the 0.4 billion cubic feet per day (Bcf/d) pipeline, warned it may have to impose a moratorium on new customer accounts if the state does not allow construction.

One billion cubic feet is enough gas supply for about 5 million U.S. homes for a day.

National Grid, which serves about 1.8 million customers in Brooklyn, Queens, Staten Island and Long Island, has said it was converting about 8,000 of those New York City-Long Island customers per year to gas from heating oil.

In March, another New York City-area utility, Consolidated Edison Inc. (Con Edison), imposed a moratorium on new gas customers in its Westchester County service area due to a lack of new pipeline infrastructure. Westchester is located north of New York City.

Con Edison warned in April it may be forced to impose a moratorium in its New York City territory in the future if NESE is not built since it shares some gas infrastructure with National Grid.

Onshore