Northern Pass’s phantom “benefits”

Jun 14, 2011 by  | Bio |  7 Comment »

PSNH's Merrimack Station (photo credit: flickr/Jim Richmond)

I appeared on NHPR’s The Exchange with Laura Knoy this morning, and the topic was the potential energy and economic impacts of the Northern Pass project. The show provided a good opportunity to explain why the project is inspiring so much opposition, why CLF has been skeptical of the current proposal, and how Canadian hydropower could play a role in the New England electric system if pursued appropriately. There was also a segment on the project’s potential impact on property values. You can catch the replay here if you’re interested.

Joining me on the show was Julia Frayer, an economist hired by the Public Service Company of New Hampshire (PSNH) to tout the energy and economic benefits of the project. Recently, she penned a widely-reprinted op-ed and provided testimony to the New Hampshire legislature, suggesting the project will be a boon to consumers and the reliability of the electric system.

Unfortunately, and as I made an effort to point out on the show, the arguments for the current proposal are pleasant talking points without much to back them up. All the cited benefits are speculative, rather than firm commitments, and are not forthrightly presented alongside the proposal’s potential costs. As any student of economics can attest, an intelligent discussion about the economics of a project requires that we at least try to describe and compare the costs and benefits.  We know that the project may have significant negative impacts, ranging from the environmental impacts of generating the power in Canada to the potential effects of major new transmission lines on New Hampshire’s tourism and recreation industries. PSNH and the project developer, Northern Pass Transmission, LLC, have stubbornly failed to acknowledge these impacts, and there is no evidence they were taken seriously in the planning of the current proposal.

One point worth highlighting – the current plan calls for all of the supposed clean energy benefits and electric rate reductions to be delivered through the wholesale market, where Hydro-Quebec intends to sell the power delivered by the project.  But these benefits would mostly bypass the very residential ratepayers in New Hampshire who pay PSNH for electricity – because PSNH acquires very little power from the wholesale market. Instead, as customers of PSNH’s retail power, PSNH residential customers have been left to shoulder the uneconomic costs of PSNH operating several coal-fired generating units – and to pay the highest electric rates in New Hampshire as a result. Northern Pass does nothing to change this situation.  Many commercial ratepayers in PSNH territory have “migrated” in increasing numbers to other utilities that – unlike PSNH – do buy substantial power from the wholesale market to supply their customers. Residential ratepayers don’t have this choice – which means they’re saddled with PSNH’s higher costs, as PSNH loses more and more of its commercial rate base.  Again, Northern Pass does nothing to change this situation.  On closer inspection, the claimed benefits for New Hampshire consumers look more like phantom benefits than anything real.

The proposal promises to send huge profits to Hydro-Quebec, as it bids power into the wholesale market (easily paying back its investment in the transmission lines), and to provide a revenue stream of transmission payments to Northeast Utilities, PSNH’s parent company. But this structure makes very little sense because it means New Hampshire residents will continue to bear the burden of high cost power and dirty air from PSNH’s coal plants and will also face the environmental and economic impacts of a massive transmission project, while the power would only displace relatively less-polluting natural gas generation and may undermine the development of local renewable energy projects in the state. If it does indeed lower costs on the New England market, the effect will be to increase costs for PSNH’s residential customers as more large customers migrate to the competitive market and fewer customers are left to pay the costs of PSNH’s expensive coal plants.

The current proposal is coming into focus as a bad energy and economic deal for New Hampshire, and regionally the benefits seem less than impressive – especially because the emissions reductions made possible could be so much greater if there was a firm commitment to pair the new imports with the retirement of coal-fired units. As the project continues to wind its way through the federal and state permitting process, CLF will keep pushing for the project to make sense for New Hampshire and for the energy future of the region as a whole.

For more information about Northern Pass, visit CLF’s Northern Pass Information Center (http://www.clf.org/northernpass) and take a look at our prior Northern Pass posts on CLF Scoop.

7 Responses to “Northern Pass’s phantom “benefits””

  1. Filson Glanz

    During the Exchange Yesterday, it crossed my mind that the two coal fired PSNH plants should be shut down as a MINIMUM condition of New Hampshire going along with the plan. But I see in the statement on this web site you have already stated this. At least NH would have less asthma and air polution as a benefit of the project.

    Also, the PSNH rep. stated that they would use rights of way already existing. But I have a friend who says the right of way on his property is 25 ft. wide, yet he was told the project would take more than that. Is there any truth in that as far as you know?

    • Christophe Courchesne

      Filson – Thanks for your comment. We expect that there will indeed be a need to expand certain stretches of existing ROWs. When the project releases more detailed plans, it should be possible to see where all such expansions will be required. Easements may require amendments to make this happen, and that may require landowner consent and/or eminent domain; to avoid eminent domain, the engineering may well be adjusted to avoid expanding ROWs where not allowed under existing easements or where landowners will not consent.

    • Susan Schibanoff

      Hi Fil, long time no see,

      PSNH has now revealed that it wants to “expand” its ROWs along approximately 70 miles of the entire 180 mile route. They don’t give the widths. These “expanded” ROWs would, in fact, be new ROWs. PSNH has no rights to widen its easements. If property owners are unwilling to grant the additional easements, PSNH would then ask the PUC to condemn and seize the land by eminent domain. This would be the biggest land grab NH has ever seen. Northern Pass is not a reliability project; it is not needed to keep the lights on. A crown corporation, Hydro Quebec, is using PSNH to get the land it needs to send power south of us. Neither has any more business seizing private property than Wal Mart does.

  2. Laura Bonk

    I own a 120 acre parcel abutting Bear Brook State Park in Allenstown, NH. Running across this parcel is an existing power line. It is my understanding that Northern Pass is planning to remove the existing towers and replace them with much taller ones–ones that will be readily seen above the height of the surrounding forest. The corridor will most likely be widened.

    Merrimack Station, a 500 MW coal burning power plant is about 5 miles from my property. Mercury deposits from Merrimack Station end up in the pond and brook on my own property as well as the ponds within Bear Brook State Park.

    If PSNH would decommission Merrimack Station, I would support taller utility poles and a wider corridor on my property. That would be a fair tradeoff. However, the current proposal does not offer any benefits to the citizens of Concord, Pembroke, Chichester, Epsom, Allenstown and Deerfield. It is just more environmental degradation for us to live with. There are no benefits for the citizens of these communities.

    Under no circumstances do I support a high voltage transmission line through virgin forest in New Hampshire’s north country. I have been living with the environmental degradation of an utility corridor–illegal ATV use, invasive species, loss of visual appeal, among other things. It is not fair to ruin the pristine forests of New Hampshire’s north country. A new high voltage line in the north country is simply unacceptable.

    • Meg

      Laura, I hear your concern regarding the pollution created by Merrimack Station. However, agreeing to the Northern Pass to possibly close Merrimack Stattion is not a good nor a safe solution. Choosing NP over MS is just moving from one horrible pollutant to another.From the frying pan into the fire and no way to undo damage caused by high tension cancer causing transmission lines.

      Large hydro is far from green, this can even be found on HydroQuebec`s website. Everytime they dam a river by massive flooding the rotting flooded vegetation leaks methane causing also high levels of mercury in fish. HQ admits that it takes decades for them to correct the damage done to the environment. Why would we want to reward those practices?

      I mentioned the health risks of high voltage transmission lines. This is a real threat. In several New England states, including CT the use of transmission lines on towers such as proposed by PSNH/NP is banned by law. Only lines buried underground are permitted due to the potential health risk these lines cause. This is similar throughout Europe. Germany the leading country of solar and wind energy only allow lines to be buried. Let`s not allow PSNH/NP to use outmodes to transmit energy.

      Also a huge concern, and perhaps the greatest,is the serious threat of eminent domain. Many thousands do not want the existing ROW expanded to make room for the NP nor do their current easement deeds allow expansion (nor broadband). This leaves no option than the real and serious threat of eminent domain hanging over everyone`s heads. No one should lose their property rights to a private corporation, NP, for that corporation`s private financial gain.

      We need to think long term and find real solutions within NH not more problems with devastating unrepairable effects.

  3. Amanda

    I agree that the NP will be destructive and the efforts to sell it to the public don’t go much farther than ‘sounding pretty’. Let’s face it: it’s a hard sell. There is no actual need, no energy shortage or reliability issues here, we are doing just fine. Actually, we are using less energy than in 2007.

    Taken from the June 26, 2011 article written by Staff Writer David Brooks of the Nashua Telegraph:
    ‘ISO-New England, which oversees the regional power grid and does a lot of analysis about electricity production and need, says the six-state region consumed about 3.5 percent less power in 2010 than it did in 2007, before the recession hit.’

    Another positive point to mention: Merrimack Station is getting ready to start using the new scrubber technology that touts Capturing 80% Mercury Emissions and reducing Sulfur Dioxide by 90% (http://psnhnews.com/displaypage.cfm?pgid=71).
    Given that Merrimack Station is still a coal-fired power plant, there is still the need for NH to find a local, renewable energy source, but until then, let’s all stand together to keep Northern Pass OUT of NH, and then focus on taking care of renewable, local alternatives.

  4. Julie

    This is a great discussion with all excellent points. thank you all for your great work, excellent arguements, and support of those from other areas than where you live. I am from the North Country, and am also 100% supporting anyone from any other area that wants to protect their properties from invasive species of any kind, from plant to steel, or even hot pipes buried underground. As an aside, I believe that the NEL line should NOT be buried on land through our seacoast area – it should be sent out to sea where it does not affect our neighbors on our short but beautiful seacoast.) The one issue that has not been mentioned in this conversation yet, is the need for a comprehensive, forward looking regional energy plan for New England. I believe that CLF has petitioned the PUC to do this prior to approving any plan from the Northern Pass or any other presented in the future. A regional energy plan would make approving or rejecting any proposed energy production or transmission project, a simple, quick process, rather than putting us through 4-5 years of economic and emotional hell while we await the long arduous process that is the current case. If, indeed, the coal plants at Bow, Schiller, Salem (Ma), and any other dirty plants, or even nuclear plants are slated to go offline in the future, then it would make sense to have a 25-50 year plan of principles that must be met to replace them with cleaner, locally produced energy that doesn’t require the use of eminent domain or any other unjustly or inequitably distributed costs. That way, those who wanted to “get a jump on the market” could begin developing their projects with a principled common sense that Northern Pass planners obviously left at the Canadian border. If the principles and guidelines were directly related to our goals of 25 in 25, and also directly related to the health and economic well being of our citizens, and the project was required to provide finances for unbiased studies representing pros and cons of the proposed project, then only well researched projects would even be considered. Hopefully, those would be truly renewable and clean projects, such as solar, wind, microhydro, and very efficient biomass projects in very local areas.