Hydro-Quebec's Northern Pass Project Met with Broad Criticism in the US

Hydro-Québec and its local partner Eversource Energy Corp. face stiff local resistance to their proposed 1,090-
megawatt transmission project through New Hampshire, and a wild card in Washington as they seek a crossborder
permit from President Donald Trump.
As state environmental hearings continue, the partners tout the Northern Pass project as part of the answer to
New England state governments’ efforts to cut greenhouse gas emissions and secure clean supplies of
electricity.
But in New Hampshire, where the route winds through the White Mountains National Forest, a vocal coalition
is opposing the 307-kilometre, $1.6-billion (U.S.) project on environmental grounds, saying it would impose
unsightly towers and wires on natural landscapes and destroy wetlands.
While Eversource will finance the New Hampshire portion of the line, Hydro-Québec – which has surplus power
to sell – will spend an additional $620-million (Canadian) on transmission capacity in the province to facilitate
the exports. The partners are bidding for a long-term contract with Massachusetts to deliver renewable
electricity by way of Northern Pass.
Local electricity generators are critical of Hydro-Québec’s growing penetration in the New England electricity
market, saying the provincially-owned utility benefits from subsidies – a charge that could resonate in
Washington, where President Trump touts the benefits of American energy development and appears
hypersensitive to domestic trade complaints.
The Northern Pass controversy is emblematic of the market access challenges faced by Canadian energy
producers and their transmission partners, particularly as they aim for the American market.
Long lateral projects – whether pipelines or transmission – have to win support from skeptical residents along
the route, who often see little benefit but significant costs and future risks. Canadian producers of crude,
natural gas and electricity who want to expand exports to the United States are competing with booming
domestic supplies of gas and oil. And an “America First” Trump administration is unpredictable – recently
mentioning “energy” along with dairy and softwood lumber as areas of contentious bilateral trade.
In New Hampshire, the state’s site evaluation committee is holding hearings through the summer, with a
promise to conclude by the end of September, though its decision can be appealed in court. Some critics want
the entire transmission line buried, saying it would otherwise result in an ugly industrial intrusion on the
rugged landscape that supports a healthy tourist trade.
“Because of the height of the towers and the lines, there will be in scenic areas of the state an extreme visual
impact, as well as damage to wetlands, some of it temporary, some of it permanent,” said Judy Reardon,
senior adviser to Protect the Granite State coalition. “Why do this? Why cause this damage to the environment
and the tourism industry and so forth when there’s no guarantee that it is going to lower electric rates?”
Eversource argues the 1,000 megawatts of imported hydroelectric power will help New England states meet
aggressive greenhouse gas emission targets, and replace nuclear and fossil-fuel generating stations that are
slated to close. It will bury line along a 96-kilometre section through the White Mountain forest, and says more
than 80 per cent of the route will either follow existing transmission-line right of way or will be buried.
“I feel we’re in pretty good shape in terms of providing a strong case that the proposal we have is a sensible
one,” company spokesman Martin Murray said. He insisted there is “a tremendous amount of support for the
project” despite the noisy opposition from critics.
Hydro-Québec and Eversource also face opposition from regional power generators who argue the imported
hydro producers are getting preferential treatment under state procurement programs, like Massachusetts’
request for proposals, which amount to indirect subsidies.
“We’re not for or against any specific transmission project – it’s how they are financed and the impact on open
competitive marketplace that concerns us about Northern Pass,” said Dan Dolan, president of the New England
Power Generators Association. “It is a project that is predicated on receiving state subsidies that would
undermine the billions of dollars of investments other companies are making in the region.”
While Eversource notes that about 4,000 megawatts of generation capacity is scheduled to be shut down, Mr.
Dolan said there are already projects under way to replace it, including two-thirds from gas-fired generation
and one-third from wind. Hydro-Québec says the Northern Pass project is not conditional on the partners
winning the long-term contract in Massachusetts.
“There is a clear and growing demand for clean energy in New England as the region faces the retirement of
many older units and the need to achieve the region’s environmental objectives,” Hydro-Québec spokeswoman
Lynn St-Laurent said.
“Meeting this demand will require additional energy infrastructure to be built.”
Ms. St-Laurent said the provincial utility remains confident it will obtain a presidential permit, and is
“compliant with all rules and regulations pertaining to the electricity sector.” The Canadian Electricity
Association recently took a delegation of utility executives to Washington, including a representative from
Hydro-Québec, and CEA president Sergio Marchi said they heard no complaints about Canadian electricity
imports.
However, in its annual report on foreign trade barriers published last month, the United States Trade
Representative’s office cited Hydro-Québec’s domestic content requirement for its wind energy program,
saying the rules “can pose hurdles for U.S. companies in the renewable energy sector in Canada.”
Mr. Dolan suggests the Trump administration may pose a problem for a provincially-owned utility that has
trade barriers in its home market and benefits from state subsidies in the U.S.
“It’s going be an interesting question given the campaign rhetoric from President Trump and some of his recent
statements about import of commodities in general,” he said. “That’s something that absolutely people should
keep their eyes on.”