Amid conflicting statements about federal approvals and studies questioning the need for big New England energy projects, the state’s counsel for the public is now asking the burning question – who will pay for Northern Pass?
March has been a rocky road for Eversource Energy, parent company of Northern Pass, after its partner, Hydro-Quebec, confirmed it will no longer pay for the estimated $1.6 billion development of the line in the U.S.
That reimbursement to Eversource by HQ is in a Transmission Service Agreement approved in late 2010 by the Federal Energy Regulatory Commission and renewed in 2014, with an expiration of February 2017 or another date the partners agree to in writing.
After HQ’s announcement, Eversource spokesman Martin Murray said the TSA remains “in full force.”
Since then, however, FERC spokesman Craig Cano has confirmed to The Caledonian-Record that HQ and Eversource will need a new approval if the financial arrangement has changed, as HQ said it has.
“If the partners develop a different cost recovery mechanism, then they would need to come back to FERC,” said Cano.
Who Pays?
On March 20, Peter Roth, counsel for the public with the office of the N.H. Attorney General, wrote Eversource attorney Marvin Bellis about who specifically will now pay for the Northern Pass line.
“I am concerned that the means for payment and assurance of profitability sought by HQ may have effects on the quantification of the benefits of the project to the people of New Hampshire,” said Roth.
Roth noted a contradiction from Eversource stating that HQ “will not pay to bury the line.” On the same day, however, HQ issued a press release stating it “will not pay for the line in the U.S.”
As proposed, the 192-mile line would see 7 miles buried in Coos County and 52 miles in Grafton County, with the rest overhead.
HQ’s statement about not paying for the line in the U.S. comes after conservation groups in Canada and Quebec’s environmental review board criticized HQ for not burying the line through the Hereford Community Forest near the U.S. border but paying to bury segments of the line in the U.S.
Roth seeks clarification on statements made by Eversource that he said contradict statements by HQ.
He is also asking Eversource to “please explain how HQ will recover the costs of transmission service for use of the project if HQ and [Eversource] are not successful in the Massachusetts RFP” and if the applicants have any responsibility to pay development costs if the project ever comes to fruition.
Roth, too, is asking Eversource to confirm that the TSA filed in 2010 is indeed “the governing agreement between [Eversource] and HQ for paying associated costs with the project and that neither [Eversource] nor HQ are seeking to renegotiate the TSA.”
Energy Studies
Both ISO-New England and the University of N.H. have issued reports that appear to contradict Eversource’s argument for the need of a large energy projects like Northern Pass.
According to the ISO-NE report in May 2015, “The EE [energy efficiency] forecast shows that the energy savings resulting from state-sponsored EE programs can be expected to cause electric energy usage to remain flat in New England as a whole, with energy use in Maine, Massachusetts, Rhode Island, and Vermont, declining by 2024 to levels below those that had been expected in the 2014 EE forecast. The EE forecast also projects that the EE savings will slow the growth in peak demand across the region.”
On March 7, UNH’s Carsey School of Public Policy issued a report stating, “New England does not need to increase energy use to continue to grow its economy. From 2005 to 2015, real state GDP in New England grew by 9.7 percent while energy use fell by 9.6 percent. Over the same time period real GDP for the entire U.S. grew by 15.2 percent, while energy use fell by 3.4 percent.”
The Carsey report states that during the current period of rapid transformation in energy markets there is significant stranded cost risk to electricity ratepayers for large infrastructure investments with uncertain return on investment.
The report concludes, “New England has adapted to higher electricity prices via improvements in energy efficiency and a transition to a less energy-intensive economy. The energy intensity of the New England economy is much lower than the national average.”
Murray said Massachusetts has a law specifically requiring its electric utilities to enter into contracts to purchase a large amount of hydro electric energy and off-shore wind energy and Northern Pass will respond to the Massachusetts RFP.
Referring to the ISO study, he said the success of the EE does not solve the supply-reliability-price challenge of replacing retiring base-load power plants that help meet demand today.