Energy Policy

Doubt for Northern Pass Transmission Project Causes Massachusetts to Select Alternate

It’s been a rollercoaster month for Eversource’s Northern Pass Transmission project. The new $1.6 billion transmission line is intended to bring 1,090 MW of emission-free hydropower into southern New England through New Hampshire from Quebec. The transmission line first received some good news on January 25th when the Massachusetts Department of Energy Resources (DOER) selected it as the sole winner of the State’s Clean Energy Request for Proposal (RFP). Northern Pass was picked out of 45 other projects that would help bring the State closer to its aggressive goals of bringing clean, renewable, and carbon-free power into the New England electricity grid. Other competing projects also proposed bringing in some of the same hydropower from Canada, onshore wind or some combination of both to fulfill the RFP requirements. However, a committee formed by the State comprised of utility executives from Eversource, National Grid and Unitil along with other State officials deemed Northern Pass as best qualified to deliver their requirements and selected it as the sole winner.

The terms of the RFP award stipulate details for the negotiations of a 20-year power purchase agreement (PPA) for 9.45 terawatt hours per year. The details will need to be ironed out between Eversource and the State by March 27th and submitted to the Department of Public Utilities (DPU) by April 25th. The basic structure for financing the project will be an agreed upon rate paid to the transmission owner (Eversource/Northern Pass) for delivery and supply of power with costs or credits passed on to the transmission and delivery (T&D) ratepayers of Massachusetts. Those customer charges or credits will vary with market conditions. If wholesale market energy clears above the negotiated rate, then utility customers will receive a credit on their T&D bill – if energy clears below the rate, utility customers will see an additional charge.

One week after the RFP award, the much-anticipated deliberations by the New Hampshire Site Evaluation Committee (NH SEC) began. The NHSEC decided that the project failed to meet its burden of proof on at least one of four standards it must satisfy under New Hampshire law. Specifically, the NHSEC found that the project’s outsized impacts on land and local planning along the venture’s route will negatively affect the “orderly development” of the northern region of the state which relies heavily on its natural resources for its tourism industry. The NHSEC concluded its deliberations without reaching a determination under the other three criteria and is currently preparing its written decision. The decision brings over two years of polarizing activity to a conclusion involving  both supporters of the project and its opposition. In the end, the a strong and sustained grassroots campaign against the project, comprising landowners, municipalities and businesses across Northern New Hampshire, was able to present a more compelling evidentiary case before the NH SEC than the project’s sponsor, Eversource.

Following the decision, Northern Pass has 30 days to request a re-hearing with the NH SEC and then another 10 days to appeal to the state Supreme Court. However, an April 25th deadline to submit a final contract to the DPU is looming over the project as well. In light of these developments, on February 16th the Massachusetts DOER declared that they will continue negotiations with Eversource and Northern Pass up until the March 27th negotiation deadline but will concurrently enter into parallel contract negotiations with Central Maine Power’s (CMP) New England Clean Energy Connect (NECEC) hydro project. If negotiations are unsuccessful with Northern Pass the MA DOER will be in “position to proceed with the next best project that satisfies the policy directives contained in [the Massachusetts Clean Energy RFP].”

The NECEC project would bring 1,200 MW of the carbon-free hydropower that Massachusetts is seeking through 145 miles of new transmission lines in Maine. Much of the development of the transmission lines would use existing utility corridors, which may avoid some of the pitfalls Northern Pass encountered in New Hampshire. CMP expects the $950 million project to save New England ratepayers $3.8 billion over the first 20 years while reducing 3.1 metric tons of carbon dioxide emissions in the region.

The Northern Pass project was furthest along in the permitting process and most importantly the hydropower provider, Hydro Quebec, as inferred by its expected 2020 in-service date. Most of the headlines for the project have focused on permits, siting, and construction on the U.S. side of the border. What is overlooked, however, is that  transmission needs to be built and permitted on the Canadian side of the border as well , which will require time and resources. With this in mind, a shift to the yet to be permitted NECEC project could set the timeline back significantly. Despite these significant challenges CMP enjoys strong support for its project from Maine officials and has expressed confidence it can be online by the RFP deadline of December 31, 2022.

For electricity end-users in the region the completion of Northern Pass or the Clean Energy Connect via the MA Clean Energy RFP would essentially shift some energy costs in the supplier/generation portion of the electricity bill to the T&D share. The recent events have added an element of uncertainty for completion of either project. For the near term at least, a larger percentage of supplier/generation costs versus T&D charges equates to more choice and the potential for greater energy management strategies available to customers in the region.

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