THE MASSACHUSETTS CLEAN ENERGY PROCUREMENT took another odd turn on Friday as officials entered into contract negotiations with a second transmission company with ties to Hydro-Quebec while giving Northern Pass until March 27 to overturn a unanimous regulatory rejection in New Hampshire.
Just before 5 p.m., Baker administration officials released an update on the procurement that said Northern Pass, a partnership of Eversource Energy and Hydro-Quebec, would be given additional time to get its bid back on track. Given the limited time – just 26 business days – and the enormous regulatory hurdles involved in overturning a 7-0 vote by a New Hampshire regulatory body, the odds of Northern Pass mounting a comeback would appear to be slim.
While contract talks with Northern Pass continue, the state’s three electric utilities will also begin negotiating power supply contracts with New England Clean Energy Connect, a partnership of Central Maine Power and Hydro-Quebec that the update referred to as “the next best project.”
Northern Pass and New England Clean Energy Connect are almost identical projects in design. Both would deliver about 17 percent of the state’s power needs in the form of hydro-electricity from Quebec. Northern Pass’s $1.6 billion transmission line would run through New Hampshire while Clean Energy Connect’s $950 million line would run through Maine. Perhaps the biggest difference was timing. Northern Pass boasted that its transmission line would be operational in 2020, while Central Maine Power said it would need until December 2022 to get its transmission line up and running.
State officials said one way or another the Massachusetts utilities expect to have a contract signed with one of the two projects by March 27. After a period of review, the contracts will be submitted to the state Department of Public Utilities for approval on April 25.
Central Maine Power also has a host of permits it still needs to obtain, but the company issued a statement expressing confidence it can get the job done. “Our applications for state and federal permits are moving forward with the strong support of communities and stakeholders in Maine,” said Doug Herling, president and chief executive of Central Maine Power, a subsidiary of Avangrid Inc. “We believe the NECEC is a cost-effective response to Massachusetts’ needs, and given our experience building projects of greater scale and complexity here in our home state, we’re confident we can meet our commitments.”
The whole selection process has been something of a black box so far. A total of 46 bids were submitted for the clean energy procurement, and state and utility officials have yet to offer any detailed information on why Northern Pass and Clean Energy Connect were chosen. Friday’s update said Northern Pass offered the “greatest overall value” to Massachusetts customers but added that the permit denial in New Hampshire “has the potential to significantly impact or render infeasible the project’s ability to deliver clean energy within the timeframe proposed by the bidder.”
Another aspect of the contracting process that has drawn attention has been the involvement of the Massachusetts utilities as both bidders and bid evaluators. The state’s three utilities – Eversource Energy, National Grid, and Unitil – worked with the state Department of Energy Resources in writing the request for clean energy proposals and selecting Northern Pass, which included Eversource as one of the partners.
Once Northern Pass was denied its permit in New Hampshire on February 1, it was left up to the utilities to decide what to do next. Sources say there were disagreements among the utilities, but with prodding from Baker administration officials they ultimately reached consensus on an approach that gives Northern Pass a bit more time but inserts Central Maine Power as a backup.
The utilities reached their consensus on Wednesday and the two projects accepted the terms on Thursday, according to the state’s update, which wasn’t released until late Friday afternoon.
An independent evaluator has been monitoring the process. Indeed, the state’s update said the Department of Energy Resources and the three utilities agreed on January 31 that the independent evaluator should monitor the contract negotiations conducted by the utilities, an approach that had earlier been rejected by the Department of Public Utilities.
Eversource Energy issued a statement calling the decision to give Northern Pass a bit more time and incorporate Central Maine Power into the contracting process a “sensible balance.”
“From our perspective, the decision provides Northern Pass with the opportunity to make our case for a rehearing by our New Hampshire Site Evaluation Committee and a resumption of its deliberations,” the company said. “We have a strong legal argument for a reconsideration by the SEC. There is a path forward.”
But time is running very short. The Site Evaluation Committee hasn’t even issued a written decision yet, and most experts say appealing the group’s decision could take longer than a year.
Reaction to Friday’s announcement was muted because it was released so late in the day before a long holiday weekend.
Chloe Gotsis, a spokeswoman for Attorney General Maura Healey, appealed for more transparency. “Today’s announcement regarding the clean energy solicitation raises more questions than it answers,” she said in a statement. “It’s unclear what happened over the last two weeks to get to this point or what criteria is being used to decide what to do in the next phase on March 27. We continue to urge the parties to fully answer the public’s questions about this process.”
A rival project developed by National Grid and Citizens Energy to import wind power from Quebec issued a statement saying their proposal delivered the greatest emission reductions at the lowest cost with minimal environmental or community impact.
“We look forward to the independent evaluator’s report to better understand the methodology by which these projects were scored and selected,” said John Flynn, senior vice president of National Grid Ventures.
Dan Dolan, the president of the New England Power Generators Association, issued a statement condemning the state’s decision to negotiate special power-supply contracts with Hydro-Quebec outside the competitive process that typically governs power purchases in New England.
“Once again, Hydro-Quebec wins, and consumers lose,” Dolan said. “Massachusetts is now all-in on Hydro-Quebec, going from the fatally flawed Northern Pass to a Maine project that still lacks virtually all its key permits. All in the name of meeting 2020 carbon emissions reduction mandates. This deeply troubled RFP, and the legislation that authorized it, has from the start been about locking-in provincially-owned Canadian hydropower. Hydro Quebec is asking for Massachusetts consumers to guarantee them revenue through an above-market contract for electricity for the next two decades.”
It’s time to disclose the bid prices and terms so that electric ratepayers will know the costs they are on the hook to pay. Grid and Eversource rates are already 2nd highest in the contiguous US. Will this contract hurt ratepayers further and make the state even less competitive for manufacturing? Why can’t the “firm” power the RFP purports to purchase transmit on the existing HQ line that actually delivers in MA rather than NH or ME?
ISO-NE oversees the competitive wholesale markets and availability of electric power in New England. These contracts for renewable energy bypass the market at above market prices, and ignore the extra cost imposed on the system for firming the intermittent and variable nature of wind and solar by dispatching additional flexible natural gas power. That is why we have the 2nd highest rates in the nation.
We are told that cheap natural gas is forcing the early retirement of coal and nuclear. If that were true, rates whould be going down, not up. Coal and nuclear are forced out because they are incompatible with wind and solar. In the absence of energy storage, the more renewables mandated by law the more natural gas we need. That is why rates are rising and the grid runs short on fuel in the winter.
Baker is trying to replace coal and nuclear with imported hydro which may or may not solve the operational problem to avoid blackouts, but for sure cannot reverse the skyrocketing rates.
We need to convince legislators, like Pacheco, that the mandates for a “clean energy” future are not working and do more harm than good. We are damaging the economy and without nuclear we cannot avoid enough carbon to reverse global warming. Our best bet to reverse global warming is to forget about renewables and concentrate on nuclear for most of our power with a small amount of natural gas added to address the variability of demand.
Does NextEra pay well?
The existing line is already at capacity. If we want more hydro we need another transmission line. Further, it really doesn’t matter where the energy is physically delivered, -apart from northern Maine which is constrained- attributes are transferred upon delivery into ISO-NE and that is how accounting is done.
C’mon – let’s skip the spin. There is no true firm coming in to New England from HQ in winter. The existing line can handle all the firm purchased in the RFP. HQ is generation capacity limited at peak – which is the same time NE hits its winter peak. And in locational energy and capacity markets, it really does matter where the power is delivered, especially over a 20 year term. Let’s get real – there is no intrinsic value to “hydro”. That doesn’t lower my bill or anyone else’s. That’s all political spin.
Arguably the guiding ethos of an ISO Grid is redundancy. The Baker Administration announcement is arguably consistent with same.
Costs, timings and so on, however, remain to be seen in what is a wicked complicated overall proposition to properly assess.
Gentlemen: No argument, a lot more disclosure is only properly in order as well as long overdue.
How well outside observers can properly assess things, however, is a whole other matter as bidding criteria are variously impacted by other than lowest possible cost factors (e.g., low carbon requirements AND how low carbon is scored). Such, in turn, baits the potential for all manner of spin to be spun during the post game food fight.
At the same time, I have not noticed ANY discussion of recent technological advances in reducing transmission energy losses – and which is about as green a delivered supply as can be provided. I find this odd as energy conservation has been essential for decades as essentially no significant ADDITIONAL domestic power production capacity net of facilities retirements has been developed for – again – decades.
In turn, such reductions in transmission losses could not only boost available supply, but
also greatly reduce the need for less than steady and not necessarily cost-effective solar and wind power generation.
Granted, these transmission loss technologies have their own costs and so would grow the complexity of parsing just the cost accounting assessment as well as so add more projectiles on the table for the food fight.
Again, its complicated – wicked complicated.
The one certainty, however, is the high likelihood that public officials will probably screw the pooch.
From what I understand existing lines deliver at capacity most of the time because New England has the highest energy prices in the Northeast. And yes, given physical constraints on an energy system the location of interconnection can matter. However, ISO-NE has put a bunch of upgrades in place over the last 5-10 years and there really is no constraints within the system at this time. ISO-NE’s interconnection studies on several of the projects doesn’t state any locational energy or capacity issues.
On the cost thing, I agree and disagree. Putting 1000MW into the region will depress prices in the short term; that amount of time is undetermined (oversupply in the region). In the long term it might be more expensive energy but that’s relative to fossil fuel (natural gas). I think the hydro will have a lower cost than other renewables which aren’t dispatchable.