Hardly a day goes by at CLF that we don’t think about how to describe the work we do more simply and clearly. The issues we work on are complicated; the solutions often complex and nuanced. But the need to help people understand our role and theirs in protecting New England’s environment is critical to our shared success.

This week, we launched something completely different to help educate New Hampshire residents about how their choice of electricity supplier can save them money and help the environment. The multimedia campaign, called EmpowerNH, is the creation of a newly formed coalition of retail electricity suppliers, trade and consumer groups and CLF. The coalition grew out of a common interest among this diverse set of stakeholders in promoting a competitive electricity supply market in New Hampshire. As CLF Scoop has been reporting, PSNH’s state-sanctioned practice of charging sky high rates to keep its old, dirty coal plants in business has prompted tens of thousands of residential customers to switch to competitive suppliers, who are are currently offering better rates for cleaner power. The EmpowerNH campaign aims to inform consumers about their power to choose an alternative to PSNH, and make it easy to access information and compare offers from competitive suppliers.

The centerpiece of the campaign is a short video that uses whimsical drawings and stop motion animation to tell the story of electric supply competition in New Hampshire. Take a look, and let us know what you think. And if you like it, please share it with your friends!

This month Rhode Island’s dominant utility, National Grid, made its second-ever filing with the Public Utilities Commission (PUC) under Rhode Island’s “revenue decoupling” statute. Grid’s filing clarifies matters in a debate that swirled around the environmental community in Rhode Island (and the rest of New England) for years but ought now to be resolved once and for all – an argument over whether decoupling is a rip-off of utility rate-payers. CLF (and other environmental advocates) have argued for years that there are important environmental benefits to be reaped from decoupling. Opponents, including some ratepayer advocates, argued that decoupling would be bad for rate-payers because it would inevitably lead to unjustified rate hikes.

Grid’s highly technical, 59-page filing with the PUC this month is dense reading, with pages upon pages of complicated charts, but at the end of the day the filing resolves the controversy. Decoupling is good for ratepayers. In the year that ended on March 31, 2013, Rhode Island electricity ratepayers will receive a collective refund from National Grid of $4.2 million, including over $42,000 in interest on ratepayer overpayments.

Some explanation of what decoupling is and how this controversy has developed is in order.

Traditional utility regulation provides little incentive for utilities to promote energy efficiency. This is because reduction in sales equals a reduction in profits for the utility.

Decoupling is a way to address this problem and to align the utility’s pecuniary interest with the public interest in efficiency and conservation. Decoupling separates (that is, “decouples”) a utility’s income from the amount of commodity the utility sells. This effectively removes a major disincentive to utility enthusiasm for and participation in energy efficiency measures.

Decoupling is not all that is needed to achieve carbon-emission reductions through energy efficiency; but decoupling is one important and necessary ingredient. Many states have decoupled, and there is a high correlation between states that reduce carbon emissions the most (thereby lowering ratepayer bills the most) and states that have decoupled.

Work on “decoupling” is one aspect of CLF’s wider work on reducing carbon emissions in order to address the climate change emergency. More specifically, decoupling is closely linked to our work on energy efficiency. One of the most effective ways to reduce carbon emissions in the short- and medium-term is to work on energy efficiency.

In 2008, CLF participated in a litigation in the PUC in which we tried to get the PUC to decouple gas prices. The litigation, PUC Docket # 3943, took weeks, and CLF presented an expert witness, crossed examined witnesses of other parties, submitted briefs. But CLF lost the case; the PUC ruled that it would not decouple gas prices in Rhode Island.

In 2009, CLF tried again, this time trying to get the PUC to decouple electricity prices. This litigation, PUC Docket 4065, also took weeks – again, we presented an expert witness, cross-examined other parties’ witnesses, briefed the issue. Again we lost; the PUC ruled that it would not decouple electricity prices.

The main argument against decoupling was that it would hurt ratepayers. The Division of Public Utilities and Carriers (this is the statutory ratepayer advocate in Rhode Island, and is different than the PUC) opposed decoupling for this reason, as did others. One expert witness against decoupling put it this way: “[T]he plan would allow a broad range of automatic rate adjustments that would result in rate increases . . . .There is no down side to the Company. The only down side is to the ratepayers.”

In response, CLF introduced evidence that actually came from 28 natural gas utilities and 12 electric utilities in 17 states across the country that have operative decoupling mechanisms. This broad range of utilities showed two important results from decoupling. The first, and smaller point is that decoupling adjustments tend to be minor. Compared to total residential retail rates, decoupling adjustments have been most often under two percent, positive or negative, with the majority under 1 percent. The second, and larger, point is that decoupling adjustments go both ways, sometimes providing small refunds to customers, sometimes providing small surcharges.

Nevertheless, despite the evidence we introduced, we lost both cases. The PUC was persuaded that decoupling was just a trick whereby the utility could always ratchet rates upward.

In 2010, CLF, working with other environmental organizations supported a bill in the Rhode Island General Assembly that would require decoupling of both electricity and gas prices. On May 20, 2010, Governor Donald Carcieri signed the bill into law.

On October 18, 2010, the PUC opened a new docket in order to implement the new law that mandated decoupling. This time, the question wasn’t whether Rhode Island would decouple, but how. CLF participated as a full party in the docket in order to ensure that the decoupling mechanisms adopted would be designed to reap all the environmental benefits without unduly hurting or harming ratepayers. Nine months later, on July 26, 2011, the PUC approved an excellent set of decoupling rules for both electricity and gas.

A year ago, in May 2012, Grid filed its first-ever report under the then-new Rhode Island decoupling statute and under the PUC rules. That report showed that, on the electricity side, Grid needed to rebate to Rhode Island ratepayers just over a million dollars for the year that had ended on March 31, 2012.

This month, Grid filed its second-ever report under the now-not-so-new-anymore decoupling statute.  This year, the amount Grid is going to rebate to Rhode Island ratepayers has more than quadrupled, to $4.2 million.  Rhode Island ratepayers are getting rebates – not additional payments – in both of the first two years that electricity decoupling has been implemented in Rhode Island.

Remember the main point that CLF’s expert witnesses made in the decoupling dockets that we lost in 2008 and 2009: decoupling adjustments go both ways. Sometimes ratepayers pay a little extra; sometimes ratepayers get a rebate. Real-world results from the first two years of decoupling show that CLF’s main point was 100% correct.  And not only are Rhode Island ratepayers getting a rebate from Grid, but everyone in Rhode Island enjoys the savings and efficiency benefits that decoupling enables – and the environment enjoys lower carbon emissions.

As I suggested a year ago when the first-year figures came out, there may be two lessons that can be learned from this – one about CLF and one about the broader environmental movement.

About CLF: One of the things I love about working for CLF is the stick-to-itiveness that the organization (and my fellow and sister staff members) have. In 2008, we litigated decoupling, and we lost. So we tried again. When we lost again, we turned to a different forum, the General Assembly. When the law we supported passed, we were pleased – but we didn’t rest. We still had another litigation in the PUC to make sure that the law was properly implemented.

CLF is nothing if not persistent!

And about the broader environmental movement: So often our opponents argue that environmental protections are too costly to implement. Too often, the arguments made by environmentalists about the benefits and savings from environmental protections are just not believed by decision-makers and by ordinary citizens. With decoupling, everyone (including the PUC and so many others) just “knew” that decoupling would be an expensive rip-off. When evidence like this comes to light about the financial and pecuniary benefits of environmental laws, we should make sure that the public knows.

May 23, 2013

Dear Chairwoman Sosnowski and members of the Environment Committee:

This e-mail follows yesterday evening’s hearing on S-901, the Governor’s Energy Reform Act of 2013, with its provision for purchasing large quantities of Canadian hydropower; and S-938, Chairwoman Sosnowski’s proposal for extending and enlarging Rhode Island’s landmark Distributed Generation Standard Contracts program. For your reference, I attach a copy of the written submission that I provided at yesterday’s hearing, which you can see here.

It was significant at yesterday’s (very long) hearing that – except for the Governor’s Administration – every witness from every sector spoke against the Governor’s energy bill. In broad terms, these witnesses came from four different sectors: (1) the utility (National Grid); (2) the environmental community (including the Environment Council of Rhode Island, Conservation Law Foundation, and many others); (3) fossil-fuel generators (including Dominion, Exelon, and the New England Power Generators Association); (4) renewable energy developers (including People’s Power and Light, Heartwood Group, and many others). It is a rare issue indeed that sees these disparate sectors in such complete agreement. Last night, the Governor’s energy bill was opposed by National Grid; the Environment Council, representing every one of the 60-plus small, medium, and large environmental organizations in Rhode Island; the fossil fuel industry; and all the renewable energy developers working so hard to build real renewable projects in Rhode Island!

As I acknowledged in my testimony yesterday evening, these different sectors each have their own reasoning for opposing the Governor’s energy bill.

National Grid opposes S-901 because it would result in rate increases for ratepayers; and, as Mike Ryan of Grid put it last night, “We are the guys who send out the bills.”

On Senator Archambault’s question as to whether the bill provides an actual mandate, Mr. Ryan quite clearly said two things. First, yes, the bill provides a mandate that will have adverse consequences for ratepayers. Second, whatever you call it, the provisions of the bill act like a mandate and, thus, will have the consequences of a mandate.

The environmentalists oppose the Governor’s energy bill because it would eviscerate existing renewable energy laws.

For example, the bill changes the definition of “eligible renewable energy resources” in Rhode Island’s 2004 Renewable Energy Standard. (See ¶ 2 on the attached testimony). When the General Assembly enacted the RES, it carefully excluded large Canadian hydropower because the law was intended to help new renewable energy projects. Canada is in the middle of a 50-year plan to construct big dams. Many have already been built; the rest will be built anyway, and do not need help from the RES.

The Adminstration’s rebuttal on this point was extremely revealing. The response was that the bill does not grant Renewable Energy Credits, or RECs, to Canadian hydropower. This statement was completely correct. It was also completely irrelevant. The problem with the bill is not that it gives RECs to large hydropower (and last night no one suggested that it did). The problem with the bill is mis-using the RES to send money to projects that are built anyway.

CLF and the other environmental organizations also oppose the Governor’s energy bill because it misuses the 2009 Long-Term Contracting Statute to procure Canadian hydropower. The purpose of this statute was to facilitate projects that would not and could not have been built but for the statute. The purpose of the LTC Statute was not to give a sweetheart deal to already-existing projects.

Here, again, the Administration’s response was extremely revealing. The response was that the bill does not touch or eliminate the 90 megawatts of renewables provided for in Section 3 of the Long-Term Contracting Statute. Again, this is completely correct. Again, this is completely irrelevant. No one suggested that the problem with the Governor’s energy bill is that it takes away the 90 megawatt mandate in Section 3. Those megawatts are already under contract; there has been an entire series of PUC dockets examining the reasonableness of those contracts. The problem with the Governor’s energy ill is that it mis-uses the separate, additional 150 megawatts found in Section 8 of the Long-Term Contracting Statute that were intended to assist new development, in Rhode Island, that would not or could not have been built otherwise.

Simply put, it is bad public policy to mis-direct the 150 megawatts in Section 8 of the Statute to large, existing hydropower facilities in Canada when those 150 megawatts were meant for new projects in Rhode Island. And the Administration is simply wrong to conflate the 90 megawatts in Section 3 (that are already under contract) with the separate, additional 150 megawatts in Section 8 (that do not yet exist).

But the most important point from last night is this: there is today no law and no regulation that prevents National Grid from contracting for Canadian hydropower (see ¶ 4 of the attached sheet). As I explained last night, we litigate so-called “Standard Offer Service” dockets in the PUC every year. Standard Offer Service is the electricity that nearly every residential customer in Rhode Island uses every day. There is nothing whatever in the law right now preventing Grid from contracting for Canadian hydropower.

Although there is nothing in the law preventing Grid from buying Canadian hydropower today, there are two very, very powerful reasons why Grid does not do so: (1) it is uneconomical; and (2) there is no transmission to bring the power here. And changing the law will not change those factors. You can change the law and Canadian hydropower will still be uneconomical. You can change the law, and there will still be no transmission available.

None of the environmentalists testifying last night are opposed to hydropower in principle. Indeed, hydropower done right could be an excellent component of an overall energy mix designed to lower carbon emissions. Environmental organization are opposed to eviscerating existing renewable energy laws that were designed to help new projects get up and running in order to subsidize already-existing Canadian projects.

In the end, there are many reasons to oppose the Governor’s energy bill. As National Grid said, it will have adverse impacts for ratepayers. As CLF said, it will eviscerate existing, successful renewable energy laws long supported by the General Assembly. And what is clear after last night is that there is unusual unity on the issue: National Grid; every small, medium, and large environmental organization; the fossil fuel generators; and every renewable energy developer all oppose the Governor’s energy bill.

CLF respectfully asks you to vote the Governor’s energy bill, S-901, down.

Photo: DWeller88 @ flickr

It is important to build bridges, but we need to make sure they get us where we need to go.

The proposed expansion of the Vermont Gas pipeline may be more a minefield than a bridge, as one recent Vermont weekly  and one recent national energy blog reported.

The project will cut through valuable wetlands and farmland in Addison County. Future plans include crossing Lake Champlain, moving Vermont closer to gas supplies from fracking that is ongoing now in New York and Pennsylvania.

Proponents of the project, including Middlebury College and Vermont Gas advance an overly simplistic evaluation suggesting more natural gas is needed in Vermont because it is cheaper and cleaner than the oil and propane it will replace. Others suggest natural gas is a bridge to cleaner supplies that are in our future.

All bridges are not created equal. Natural gas is still a fossil fuel. The proposed gas pipeline will be in place for fifty to a hundred years. In that timeframe we need to solidly break our addiction to fossil fuels – including natural gas.

So what part of the project is in place to make sure natural gas is actually a valuable bridge and not a new addiction? Nothing. And that is sad.

We can do better than throw up our hands and blindly accept expensive and environmentally damaging new pipelines at a time when we should be moving away from fossil fuels.

Here are some ideas to start moving Vermont in a cleaner direction when it comes to new pipelines:

1. Provide a more sophisticated evaluation that answers where this pipeline is taking us in fifty years.
2. Stop providing unqualified support. If this is a cleaner solution, make sure it lives up to its promise. Sensitive and valuable environmental resources should be off the table.
3. Meet climate goals by dramatically increasing efficiency, prohibiting supplies from fracking and limiting the use and lifespan of any new pipeline.

If we build bridges, let’s make sure they get us to a place we want to be.

While harm from climate change becomes more apparent every day, EPA is dragging its feet in setting much-needed limitations on greenhouse gas emissions from new power plants. This failure is a plain violation of the Clean Air Act. So CLF recently took the first step to spur EPA into action. Working with attorneys at Clean Air Task Force, we let EPA know that if it does not act, we will sue.

Kite on Marconi Beach, courtesy of EandJsFilmCrew @ Flickr. Recent extreme weather caused significant damage at Cape Cod’s Marconi Beach.

The Clean Air Act requires EPA to issue regulations limiting emissions of air pollutants that may “endanger public health or welfare.” We know well that greenhouse gases drive climate change and therefore endanger public health and welfare in many ways: droughts pose risks to our food supply; sea level rise increases flooding of vulnerable communities; and extreme weather events threaten to wash coastal infrastructure out to sea. Nevertheless, during the early and mid-2000s, EPA all but ignored greenhouse gases. Many states and environmental groups (including CLF) sued to make EPA do something.

First, we argued, greenhouse gases are air pollutants subject to EPA regulation. Second, we said, EPA had to decide one way or the other whether greenhouse gases were dangerous; if so, the Clean Air Act imposes an absolute duty on EPA to regulate them. In a fine opinion by now-retired Justice Stevens, the Supreme Court agreed with us: greenhouse gases are pollutants subject to EPA regulation, and EPA had to decide whether they are dangerous. Two years later, EPA decided that greenhouse gases do, in fact, pose a danger to public health. This means EPA is required by law to regulate them.

After all that, EPA did begin to regulate greenhouse gases. However, it did not limit emissions from the single largest category of greenhouse gas polluters – power plants – which account for nearly 40% of the nation’s carbon dioxide emissions. If any polluters need robust regulation, power plants do. Finally, after more pushing from CLF and other environmental organizations, EPA published proposed standards for greenhouse gas emissions by power plants.

Under the Clean Air Act, these proposed standards started a clock – EPA had one year to issue final rules. Instead, EPA announced on Day 364 that the final rules would be delayed indefinitely. This delay is both illegal and wrong. EPA now has sixty days to fix its error and issue final rules that seriously address the most pressing problem of our time.

If it does not, CLF and Clean Air Task Force will turn to federal court to compel EPA to act.

(photo credit: flickr/crschmidt)

With the Northern Pass “new route” drama entering its third year (Northeast Utilities executives once again failed to announce any progress on last week’s investor conference call), it’s important to remember that all we’ve been talking about is the northernmost forty miles of what is a 180-mile project that stretches from the Canadian border to southeastern New Hampshire.

The “new route” will not change one of the proposed Northern Pass project’s most troubling segments: approximately 10 miles through the White Mountain National Forest, within the towns of Easton, Lincoln, and Woodstock. It goes without saying that the Forest is one of New Hampshire’s most treasured public assets: a vast and magnificent wilderness that is among the most accessible and visited natural wonders in the nation and the cornerstone of the state’s tourist and recreation economy. The Forest is an awe-inspiring place, and its ongoing stewardship is one of those things that make me profoundly proud of this country.

Project affiliate Public Service Company of New Hampshire (PSNH) has a “special use permit” from the United States Forest Service for an existing transmission line, built in 1948, which is largely comprised of H-frame wooden poles standing about 50 feet tall. Northern Pass developer Northern Pass Transmission LLC (NPT) is now seeking a special use permit to remove the existing line and build two new sets of towers (one carrying the new Northern Pass transmission line and the other carrying the existing line) with a “typical” height of 85 feet.

Proposed Northern Pass tower design (existing towers in background)

You can read NPT’s permit application here (PDF) and download its attachments here. The project’s construction would impact important wildlife habitat and ecologically sensitive high-altitude wetlands, and the new more prominent towers would cross the Appalachian Trail and impact a number of the Forest’s other signature hiking areas and viewsheds. It’s also worth noting that the project’s failure to provide meaningful greenhouse gas emission reductions falls particularly hard on the Forest, where climate change is already shifting seasons, reducing snowpack levels, and disrupting mountain ecosystems in significant ways.

It will be up to the United States Forest Service – and specifically the supervisor of the White Mountain National Forest  – to decide whether to approve NPT’s permit application. In particular, the Forest Service must determine whether granting the proposed use is “in the public interest” and consistent with the current management plan for the Forest, which includes special protections for the Forest’s most important natural and scenic resources. This decision will follow the United States Department of Energy’s environmental review of the Northern Pass project as a whole, which CLF has been fighting to improve since the project was first announced in 2010.

Earlier this year, a diverse coalition of conservation organizations, including CLF, along with a grassroots group, several Forest communities, and the regional land use planning commission wrote to the Forest Service, urging the agency to take all available steps at its disposal to ensure comprehensive and rigorous scrutiny of the Northern Pass project and a full analysis of all reasonable alternatives, especially those alternatives that avoid or minimize impacts within the Forest.

Our letter (PDF) highlighted the Forest Service’s stewardship obligations and the special and stringent standards for granting a special use permit. We explained that the Northern Pass project, as proposed, is very different from an ordinary utility transmission line constructed to extend service or improve system reliability; the project is much more like a private commercial development, with no specific policy or law encouraging or requiring its development. We suggested that it was critical for the Forest Service to take these features into account as it weighs whether the project would be consistent with the “public interest” and the Forest’s management plan. Finally, we recommended that the Forest Service avoid relying on data collected by the first contractor hired to conduct the federal environmental review of the project, which was withdrawn by NPT after a public uproar, and that the Forest Service exercise its prerogative to order Forest-specific studies and to scrutinize and question all data and analysis presented by the current contractor team, the objectivity of which is in serious doubt.

Oddly, the federal environmental review of Northern Pass seems to be moving forward even as the project is stalled and the northernmost route has not been disclosed. As field work, studies, and analysis proceed, the Forest Service is hearing from many voices registering strong opposition to Northern Pass’s special use permit application, through efforts like ProtectWMNF.org and this recent citizen-generated petition. If you are concerned about the impacts of the Northern Pass project on the White Mountains, you can add your voice through those resources or by filing a comment with the United States Department of Energy.

This article first appeared in the Sunday May 5 edition of the Rutland Herald /Times Argus.

For over a decade, Vermont’s hardworking cows and farmers have been keeping our lights on, curbing greenhouse gas emissions and helping local businesses grow. The renewable energy produced by cow manure in Vermont now powers 2,990 homes and businesses, including Killington Resort, Long Trail Brewing Company and Vermont Clothing Company.

The greenhouse gas emissions avoided by these projects is equivalent to taking over 9,000 cars off the road each year that would have burned 5.3 million gallons of gasoline.

There is no question — Vermont leads in advancing farm methane projects, and our production of this renewable energy continues to increase. It is a legacy to be proud of, and one that will soon be expanding.

The Cow Power program was started by Central Vermont Public Service in 2002 as a way to meet electric customers’ demand for renewable power. With the merger of CVPS with Green Mountain Power and recent approval from the Vermont Public Service Board, the program is now expanded and available to any customer of Green Mountain Power. That’s a good thing, since farm production of power has outpaced the in-state demand. It is time to close that gap.

The program could be replicated by other utilities or expanded to serve other customers. Perhaps someday it will be available statewide — but for now Cow Power is only available to GMP customers.

GMP customers can sign up for the program and make a voluntary 4 cent per kilowatt hour payment on all or a portion of their electric bill. All the proceeds go to Vermont farmers to produce electricity. And all GMP Cow Power purchases provide customers with 100 percent renewable power. It’s a small investment for a cleaner planet and a healthier future for our children and grandchildren.

Here’s how it works. Manure produced on a farm is put into a digester at the farm. The bacteria in the digester convert the waste into methane gas. The gas fuels an engine that runs an electric generator and creates electricity. Heat generated from this process is used to keep the digester warm. Remaining solids are processed for bedding or soil amendments — and the liquid, which still contains nutrients, is used for fertilizer.

The benefits of GMP Cow Power extend well beyond the supply of electricity. With the volatility of milk prices, the option to produce power provides real economic benefits to farmers in tough times. It also significantly reduces odors, making for happier farmers and neighbors. The gases and compounds that typically produce farm odors and contribute to climate change are captured to produce electricity. The gas keeps lights on — instead of creating a stink.

Vermont businesses have been as creative and hardworking as our farms in turning their use of GMP Cow Power into gold and rightfully expanding Vermont’s solid environmental reputation.

In Woodstock, the trolley that runs through town is operated on Cow Power and features creative posters informing riders about Cow Power and how it helps keep the planet clean.

The Vermont Clothing Company in St. Albans produces Cow Powered T-shirts, which it creatively sells in cardboard milk cartons that describe Cow Power. And as the sole supplier of T-shirts to the Deepak Chopra Foundation, the company enhances the foundation’s commitment to a cleaner and healthier planet.

Killington Resort, a business that depends on snowfall and avoiding a warming climate, is using GMP Cow Power to operate cow-painted gondola cars, while promoting the climate change benefits of Cow Power and its partnership with local dairy farms.

Here’s the real beauty of Cow Power: It’s a 100 percent local program, where 100 percent of the proceeds go to help you and your neighbors create a healthier planet for future generations everywhere. This is a success worth building on and expanding, now that it is available to all 250,000 GMP customers in Vermont.

Source: HAM Guy, Flickr.
New Hampshire’s state flower, and my favorite sign of spring.

It’s another spring in New Hampshire, and the slow death of Public Service Company of New Hampshire’s (PSNH) coal-fired business model continues, as do PSNH’s efforts to hold back reality and hold on to its regulatory protection from competition. More and more PSNH customers are choosing cleaner, cheaper energy options, the company is again getting special treatment as it initiates a strange new program to lure those fleeing customers back, and its dirty and inefficient coal plants are once again sitting idle, with PSNH customers still paying for their upkeep.

Increasing Choices for PSNH Customers

PSNH (and shareholders of PSNH’s parent company, Northeast Utilities) must be wondering when the rate of residential customers abandoning PSNH’s energy service will slow. It certainly wasn’t during the first three months of 2013, when the number of households purchasing power from PSNH’s competitors topped 49,000. By comparison, that number was 2,704 at the end of March 2012.

The number of small businesses migrating away from PSNH has steadily increased, from 11,194 in March 2012 to 16,919 this March. Of course, PSNH’s medium and large commercial customers have been taking advantage of competitive suppliers since long before it was a practical option for residents, and they move back and forth from PSNH and the competitors much more frequently; in any given month, between 75% and 90%+ of medium and large businesses purchase their power from PSNH’s competitors.

Source: PSNH data

We last checked in on PSNH’s accelerating death spiral in January, highlighting the historically low use of its coal plants to produce power and the flight of customers away from PSNH’s ballooning rates. The utility’s ancient, filthy coal plants are sitting idle for large stretches of time during the year, at substantial cost to ratepayers, because PSNH is able to recover its costs and a guaranteed profit from its customers even when it isn’t economic to put the plants online. Despite a winter when the spot market price of natural gas was very volatile, PSNH’s coal plants provided no economic relief to its customers, as its energy rates remained almost 40% higher than those offered by other New Hampshire utilities and energy suppliers.

In response to the huge disadvantage posed by PSNH’s coal plants, the competitive atmosphere has continued to flourish in New Hampshire’s energy market in 2013. We’ve previously highlighted the residential energy services offered by companies like ENH Power and North American Power, and still more companies are hurrying to take advantage of PSNH’s above-market rates by siphoning off customers.  As the Union Leader recently reported, four new competitive suppliers have applied for licensing with the NH Public Utilities Commission already this year.

The “Alternative Default Rate”

Looking to secure a special deal to protect itself from its new competitors, PSNH applied for and received [PDF] regulator approval to pilot an “alternative default rate” to lure back customers who had switched to other suppliers. The alternative rate will only be available to large commercial customers at first, with small businesses and residential customers to be added to the program within nine months.

After the increased public awareness of competitive electricity supply in NH around the end of 2012 rate hike, the press and public were quick to take note of this plan, and customers who stayed with PSNH through the January rate hike feel doubly burned.

Saving by Switching

After PSNH’s astronomical rate hike in January, the energy rates offered competitive suppliers like ENH Power and North American Power should be even more attractive to PSNH customers who were previously cautious about making the switch. And switching online is easy, free, and safe: it takes a matter of minutes if you have a copy of your latest PSNH bill handy.

As spring turns to summer, and PSNH’s troubles grow, the ongoing challenge remains: to ensure that clean energy competition continues to flourish in the Granite State and that PSNH does not secure a legislative or regulatory bailout that subsidizes its dying business model. Although PSNH doesn’t seem willing to change its terrible economic decision to keep operating its coal plants, New Hampshire residents and businesses are taking matters into their own hands and deciding to do something about it.

Earlier this week, I brought a message from New Hampshire to a gathering of major players in the Northeast’s energy industry in lower Manhattan, the Platt’s Northeast Energy Markets Conference.

(photo credit: flickr/Mathew Knott)

Remember Northern Pass, that novel Northeast Utilities transmission project that would import 1,200 megawatts of large-scale hydropower from Hydro-Québec?

The project, as it was conceived and pitched to the region and the industry, Northern Pass version 1.0 if you will, is dead.

I ran through the key financial elements of the original proposal, what I called the Northern Pass gambit:

• $1.1 billion to build a new transmission line, funded wholly by Hydro-Québec.
• A generous “return on equity,” or guaranteed profit on project costs, of 12.56% for project developer Northeast Utilities, paid by Hydro-Québec.
• Easy and inexpensive siting approvals for the line, which would be located solely in New Hampshire, mostly in corridors controlled by Northeast Utilities subsidiary Public Service of New Hampshire, the state’s largest and most powerful electric utility.
• Ample profits that would cover all Northern Pass costs and much more for Hydro-Québec, which would sell its hydropower in New England’s lucrative wholesale electric market, where energy prices were, in 2008 and 2009 when Northern Pass was conceived, orders of magnitude higher than Hydro-Quebec’s costs of generating power.
• Unlike New England-based renewable projects, no public or ratepayer subsidies.

These elements looked good to investors on paper. But they have, one by one, fallen apart, and they no longer add up. I took the audience through the Northern Pass reality:

• Years of a stalled siting process, as Northeast Utilities tries to purchase a new route for the northernmost 40 miles of the project, where PSNH has no transmission corridor, with repeated missed deadlines for announcing the new route and restarting the federal permitting process.
• Increasing costs – an estimated additional $100 million in project costs already, even without accounting for any new route, mitigation commitments, or any underground component.
• Growing doubt (even more pronounced than a year ago) that Hydro-Québec can recover Northern Pass development costs and its hydropower costs (which will only increase as costly new dam projects continue in northern Québec) through energy exports, given that wholesale energy prices in New England are now much lower.
• Opposition by the vast majority of communities affected by the project, 33 at last count, local chambers of commerce, political leaders, and a diverse, well-organized grassroots movement of residents.
• No support from any New England environmental group.
• Mounting risk to NU’s lucrative return on equity, with the underlying deal expiring in 2014, and any renewal subject to federal regulators’ recently more skeptical view of such incentives.

And finally, I gave the eulogy for the key financial element of Northern Pass 1.0 – the one that attracted so much interest in regional energy circles, was the project’s key distinguishing feature from New England renewable energy projects, and continues to reside within the project’s discredited and misleading media campaign: the promise that the project would not require any subsidies.

In the last several months, as CLF predicted, Northeast Utilities, Hydro-Québec, and their allies have launched a major initiative to secure out-of-market subsidies of one form or the other for Canadian hydropower.  These efforts are now raging in the legislatures of Connecticut and Rhode Island and are simmering in other New England states. CLF is deeply engaged in protecting our state Renewable Portfolio Standard laws from this incursion and in turning back any long-term deals that will supply Canadian hydropower to these states at above-market prices or in a way that threatens renewable deployment in New England.

To us and to others, the false urgency associated with these proposals seems transparently calculated to advance a “Northern Pass 2.0,” just as Northern Pass 1.0 falls apart.

What would Northern Pass 2.0 look like? On the ground, whatever the “new route” New Hampshire continues to wait for, it will almost certainly look the same as Northern Pass 1.0, suffering from many of the same failings. But there will be some key differences, as the project’s underpinnings shift to accommodate a new economic reality. It will rely on public and/or ratepayer subsidies that will mean that New England will pay an above-market premium for the power or will provide an out-of-market gift of long-term energy price certainty to Hydro-Québec, in part to finance the associated transmission. In addition, many in New Hampshire’s North Country believe that the project will need to be sited on public land that is legally off-limits to circumvent the strong, ongoing efforts of the Society for the Protection of New Hampshire Forests to secure blocking conservation easements – in effect, another public subsidy for the project that will face overwhelming pushback in New Hampshire. (Clearly, Northern Pass’s dogged legislative fight to secure an ability to use eminent domain for the project, which it lost in resounding fashion in 2012, was only a preview of coming tactics.)  

As CLF has consistently said, there may be appropriate alternatives to Northern Pass that strengthen New England’s access to Canadian hydropower resources, but only if those alternatives are pursued through well-informed, fair, and transparent public processes, provide meaningful community and ratepayer benefits, displace our dirtiest energy resources, and verifiably result in carbon and other emissions reductions. It does not appear that the emerging Northern Pass 2.0 – buoyed by a set of special deals and no discernible improvements – would do anything to advance these basic common sense principles, which should guide the region’s transition to a resource mix that will power New England’s clean energy future.

With few signs that Northern Pass’s sponsors have learned lessons from their missteps so far, Northern Pass 2.0 looks to have an even tougher path in New Hampshire than the dead end road that Northern Pass 1.0 has traveled. This was a message from the Granite State that the world of energy industry insiders and analysts needed to hear.