Comments on: Storm clouds gather for New Hampshire electric ratepayers http://www.clf.org/blog/clean-energy-climate-change/storm-clouds-gather-for-new-hampshire-electric-ratepayers/ For a thriving New England Thu, 14 Feb 2013 21:21:35 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Christophe Courchesne http://www.clf.org/blog/clean-energy-climate-change/storm-clouds-gather-for-new-hampshire-electric-ratepayers/#comment-1624 Christophe Courchesne Mon, 24 Oct 2011 16:47:08 +0000 http://www.clf.org/?p=6128#comment-1624 Jim and Sandy - Thanks as always for your questions. As you can appreciate, the first one is very hard to answer right now, and we also do not yet have the underlying facts that will determine the regulatory treatment of the ROW revenues. The allocation of the revenue stream is an important issue; it certainly suggests the private incentives are preventing any discussion of alternative project designs or approaches more in line with the public good. At this point, we are focused on advocacy to ensure Northern Pass advances – and does not hinder - a clean energy future for New Hampshire and the region and to achieve" (a) a solution with minimal impact on the environment and communities; (b) equitable sharing of benefits and burdens from the project; (c) displacement of dirty power, and (d) a market that encourages energy efficiency and provides a level playing field for local renewable energy. As currently conceived, the Northern Pass proposal is not poised to achieve these outcomes - the record so far suggests that it falls short for all four objectives. Even if ROW revenue were reallocated for public benefit, it is unclear whether such a commitment would materially change the way we see the current proposal. I will say that the use of existing state ROWs, with ROW revenues providing a direct source of financial benefits to the state, is an intriguing option that CLF has strongly urged the Department of Energy to consider in its NEPA review of Northern Pass. Jim and Sandy – Thanks as always for your questions. As you can appreciate, the first one is very hard to answer right now, and we also do not yet have the underlying facts that will determine the regulatory treatment of the ROW revenues. The allocation of the revenue stream is an important issue; it certainly suggests the private incentives are preventing any discussion of alternative project designs or approaches more in line with the public good. At this point, we are focused on advocacy to ensure Northern Pass advances – and does not hinder – a clean energy future for New Hampshire and the region and to achieve” (a) a solution with minimal impact on the environment and communities; (b) equitable sharing of benefits and burdens from the project; (c) displacement of dirty power, and (d) a market that encourages energy efficiency and provides a level playing field for local renewable energy. As currently conceived, the Northern Pass proposal is not poised to achieve these outcomes – the record so far suggests that it falls short for all four objectives. Even if ROW revenue were reallocated for public benefit, it is unclear whether such a commitment would materially change the way we see the current proposal. I will say that the use of existing state ROWs, with ROW revenues providing a direct source of financial benefits to the state, is an intriguing option that CLF has strongly urged the Department of Energy to consider in its NEPA review of Northern Pass.

]]> By: Jim Dannis http://www.clf.org/blog/clean-energy-climate-change/storm-clouds-gather-for-new-hampshire-electric-ratepayers/#comment-1599 Jim Dannis Thu, 20 Oct 2011 01:20:10 +0000 http://www.clf.org/?p=6128#comment-1599 Thanks Christophe for the excellent analysis. Two questions. 1. Picking up on a point we discussed a while ago on this blog, PSNH has now confirmed that if Northern Pass goes forward and the existing PSNH right of way (ROW) is used for a portion of the project, then PSNH will expect to negotiate rental or use fees that will ultimately be paid by Hydro-Quebec. We did a grossly simplistic, apples to oranges comps analysis (using landowner rental payments in recent shale gas leases as a proxy for the value of land rights as a percent of transaction revenues) and estimated that PSNH could theoretically seek up to $150MM annually as ROW rental payments, assuming an average $1B annual revenue stream to Hydro-Quebec from sales of electricity over Northern Pass. That number may be off by orders of magnitude, but even at plus or minus 75% it certainly is a big number in the context of PSNH's revenues. In thinking about impact, it would seem (at first blush) that any ROW rental payments to PSNH may be part of the regulated business and would thus flow, directly or indirectly, into rate considerations. Has CLF given any thought as to how that revenue stream might be used by PSNH in the context of reshaping its operations along the lines CLF advocates? In terms of CLF's policy goals, would the balance of considerations indicate that that revenue stream would be "best" left at PSNH (ie, trade above-ground towers on existing PSNH ROW for large incremental revenue stream to assist PSNH in refitting its business), or would it be "best" allocated to, say, the state of New Hampshire (ie, bury the transmission lines on existing state ROWs such as highways or rail beds and route the rental money to the state, recognizing there may be less money if design/build costs are higher)? It seems like there may be some complex tradeoffs here, and any thoughts you could share would be helpful to the public in thinking this through. 2. Your last paragraph talks about a "radically redesigned Northern Pass proposal". Could you share some of the elements of what might be an acceptable redesign from CLF's point of view? Thanks again, and best, Jim (and Sandy) Thanks Christophe for the excellent analysis. Two questions.

1. Picking up on a point we discussed a while ago on this blog, PSNH has now confirmed that if Northern Pass goes forward and the existing PSNH right of way (ROW) is used for a portion of the project, then PSNH will expect to negotiate rental or use fees that will ultimately be paid by Hydro-Quebec.

We did a grossly simplistic, apples to oranges comps analysis (using landowner rental payments in recent shale gas leases as a proxy for the value of land rights as a percent of transaction revenues) and estimated that PSNH could theoretically seek up to $150MM annually as ROW rental payments, assuming an average $1B annual revenue stream to Hydro-Quebec from sales of electricity over Northern Pass.

That number may be off by orders of magnitude, but even at plus or minus 75% it certainly is a big number in the context of PSNH’s revenues. In thinking about impact, it would seem (at first blush) that any ROW rental payments to PSNH may be part of the regulated business and would thus flow, directly or indirectly, into rate considerations.

Has CLF given any thought as to how that revenue stream might be used by PSNH in the context of reshaping its operations along the lines CLF advocates? In terms of CLF’s policy goals, would the balance of considerations indicate that that revenue stream would be “best” left at PSNH (ie, trade above-ground towers on existing PSNH ROW for large incremental revenue stream to assist PSNH in refitting its business), or would it be “best” allocated to, say, the state of New Hampshire (ie, bury the transmission lines on existing state ROWs such as highways or rail beds and route the rental money to the state, recognizing there may be less money if design/build costs are higher)?

It seems like there may be some complex tradeoffs here, and any thoughts you could share would be helpful to the public in thinking this through.

2. Your last paragraph talks about a “radically redesigned Northern Pass proposal”. Could you share some of the elements of what might be an acceptable redesign from CLF’s point of view?

Thanks again, and best,

Jim (and Sandy)

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