I was on television the other night talking about the impact of sea level rise and storms on Boston and how the impacts of global warming mean that coastal cities like Boston face very real threats. During that interview, I found myself comparing the process of adapting to a changed climate to finding out the house is on fire and grabbing the cat and the kids and getting out – steps that should be followed by calling the Fire Department in order to save the rest of the house and neighborhood.

The climate equivalent of calling the Fire Department is reducing carbon emissions to head off even worse global warming and the wide gamut of effects that we are feeling and will feel from that phenomenon. On the national level, our problem is that Congress is not sure what kind of Fire Department we should have – and in fact a powerful contingent of folks in Congress refuse to believe in the existence of fire.

But here in the upper right hand corner of the U.S., the Northeast and Mid-Atlantic, our state governments have been rolling the big red truck out of the garage and taking action to address the greenhouse gas emissions from power plants, a key source of this pollution causing global warming, by capping carbon emissions through the program known as the Regional Greenhouse Gas Initiative (“RGGI”).

Today, February 7, those states (including the New England states of Massachusetts, Maine, Vermont, New Hampshire, Rhode Island and Connecticut) announced an agreement  to strengthen that cap on carbon  from 165 million tons down to 91 million tons (2012 levels).

This step, along with associated refinements to the RGGI program, is an important step toward meeting the climate imperative of an 80% reduction in greenhouse gas emissions by 2050, but we temper our applause by clearly noting that more sweeping action will be needed to get there. Listen to the wise words of Jonathan Peress, my colleague and our lead advocate on RGGI from our official release marking this announcement:

“This is a very meaningful step in the evolution of RGGI and a powerful example of how markets can drive solutions to climate change,” said N. Jonathan Peress, VP and director of CLF’s Clean Energy and Climate Change program. “Over the past four years, the RGGI program has proven that putting a price on carbon emissions and using the revenues to expand energy efficiency and clean energy as part of our mix is a formula that works. The program refinements announced today will further accelerate the ongoing transition away from dirty and inefficient fossil fuel power plants to meet our energy needs. Once again, the Northeast and Mid-Atlantic states have demonstrated a path forward for others areas of the country.”

RGGI, the nation’s first market-based cap and trade program requires power plants to hold permits, known as “allowances,” for each ton of CO₂ they release into the atmosphere. Revenue from the sale of these allowances is reinvested in energy efficiency programs that reduce costs for businesses and make the states more competitive.

Peress continued, “We applaud the New England states for supporting and strengthening RGGI as an important tool in their toolkits for reducing greenhouse gas emissions and advancing a clean energy economy. The RGGI program has proven that carbon cap-and-trade programs can reduce carbon pollution while contributing to economic growth and prosperity. However, state leaders still have much to do to meet the emissions reductions levels dictated by science and our understanding of what it will take for our region to thrive in the face of climate change. Today’s action to strengthen the regional electric power plant cap-and-trade program is a step in the right direction, but we have a long way to go.”

The new cap level locks in emission reductions achieved to date, and continues to drive additional reductions through 2020. Since it was launched in 2009, economic experts say the increased energy efficiency that RGGI is driving has been generating greater rates of economic growth in each participating state.

How are PSNH’s coal plants like Mark Sanchez? (photo credit: flickr/TexKap)

Earlier this week, the Concord Monitor published a must-read editorial addressing PSNH’s future. Much like an earlier widely-printed op-ed on the subject, the editorial correctly describes the PSNH death spiral of escalating costs, fleeing customers, and dirty inefficient power plants kept alive by massive ratepayer subsidies.

The editorial also points out one key reason why PSNH’s argument that its plants are an insurance policy against high natural gas prices is increasingly off the mark: it ignores the damage that those plants do to the climate and to the environment. In 2012, despite not operating for much of the year, PSNH’s plants were nonetheless collectively the single largest source of greenhouse gas emissions in New Hampshire.

As time goes on, PSNH’s “insurance policy” argument only gets more specious. Relying on inflexible power plants that take many hours to start up and shut down is diametrically at odds with the dynamic and advanced electric grid that will help New England move toward a clean energy future and address concerns around the region’s increasing use of natural gas. We know what we need to do: the region needs to reduce energy demand through cost-effective energy efficiency investments, to deploy clean renewable technologies like wind that displace fossil fuel use, and to optimize the rules of the wholesale electric market to ensure smooth operation of the grid. Indeed, regional grid operator ISO New England’s recent market design efforts will almost certainly make poor-performing, inflexible power plants like PSNH’s less competitive, not more.

Propping up outdated physical assets – with high fixed maintenance costs – in the hopes that they will someday become competitive again is not “insurance.” It’s the kind of backward thinking that no competent manager or economist would endorse.

As a matter of policy, PSNH’s strategy enacts the classic economic mistake of “throwing good money after bad” by placing too much emphasis on “sunk costs,” an unfortunately common problem that James Surowiecki recently discussed in The New Yorker in describing the irrationality of sports teams’ commitments to ineffective players, like the Jets’ Mark Sanchez, after years of poor performance and bloated salaries.

At least sports teams suffer the consequences of their choices – they lose. With guaranteed profit and regulator-approved rates to recover its costs, PSNH and its parent Northeast Utilities have continued to win, even after a decade or more of terrible investment decisions. Unless of course PSNH can be made to pay for the mess it has created.

The key paragraph of the Concord Monitor’s editorial argues precisely this same point:

[L]awmakers must ensure that the lion’s share of the loss is incurred by investors in PSNH’s parent company, Northeast Utilities, not by New Hampshire ratepayers. That includes the huge cost of the mercury scrubber. It was investors, after all, who gambled that it made sense to spend hundreds of millions of dollars to keep an old coal plant running. They could have said no. So it’s investors who should lose if that gamble doesn’t pay off.

As PSNH looks for opportunities to spread its costs to the New Hampshire businesses and households that have escaped PSNH’s high rates, this is timely advice for New Hampshire policymakers. They should heed it.

The massive drag on New Hampshire’s economy caused by PSNH’s continued operation of the uneconomic and obsolete Merrimack Station and Schiller Station coal-fired units—extracting hundreds of millions per year in above market costs for its shareholders—is spiraling out of control, and several recent developments at the NH Public Utilities Commission raise troubling questions about what the agency empowered to protect ratepayers is doing about PSNH’s problems.

While competition among energy suppliers in New England is fostering efficiency, benefitting the environment and saving ratepayers money, PSNH’s energy service business, for which it collects its cost of service and a handsome profit, is increasingly looking like a dinosaur ready for extinction. Thousands of NH ratepayers are taking advantage of lower cost, more efficient electricity suppliers, but those remaining with PSNH are being dragged down into its death spiral.

One recent indicator is PSNH’s skyrocketing energy service rate. In early December, PSNH requested a 34% energy service rate increase (to 9.54 cents/kwh, equating to hundreds of dollars extra per household per year) beginning in 2013. At the end of December, the PUC approved the rate increase. CLF is challenging that increase at the PUC on the grounds that, even aside from the fact that it entirely consists of above market costs, NH law prevents the PUC from approving a utility’s requested rate increases when the utility has not submitted required planning documents demonstrating that it has a sound plan for serving its customers at the lowest cost. PSNH failed to submit long term least cost planning documents due last September; until they do so, the PUC is not authorized to approve their rate increases.

Fundamentally, the job of a utility commission dealing with a regulated utility like PSNH is to ensure that prices mimic the results of market competition while ensuring the best service for ratepayers. Thus far, the PUC has shielded PSNH from the consequences of its poor decisions, lack of meaningful planning, and insistence on retaining antiquated power plants that sit idly due to their high costs. It also is once again delaying the release of economic and environmental information that PSNH used when deciding to build the $422 million scrubber project at Merrimack Station. And days ago the PUC approved PSNH’s 2010 plan for its energy supply resources – a plan that utterly ignored lower natural gas market forecasts and impending environmental regulations when planning its future operations.  CLF is acting to protect ratepayers from PSNH’s dying business model; the extent to which the PUC is doing so is less than clear.

The PUC is engaged in dockets investigating both the costs of the scrubber project and PSNH’s increasing energy service costs. It remains to be seen whether these investigations will have any impact on the expensive mess PSNH has yoked to NH ratepayers, and whether PSNH will continue even farther down the path of  eroding New Hampshire’s advantage as a low cost state to grow a business and a family.

On Thursday, January 28, 2013, Maine’s Public Utility Commission (PUC) approved, by a 2-1 vote, the terms of a long-term contract for the first floating turbine offshore windfarm in Maine. After a few months of negotiation, this is good news for the state, and for renewable energy.

This vote clears a major hurdle toward Statoil putting four, three-megawatt wind turbines on floating platforms in deepwater 12 miles off Boothbay, and marks the early days of implementation of Maine’s Ocean Energy Act. Signed into law in 2009, the Act encourages projects like this one, so as to support the development of renewable energy technology that harnesses ocean energy. In this project, energy generated from the project would be transported via underwater cable to a transfer station on land, delivering renewable energy to the mainland.

Approval for this project has been a long time coming. Statoil, which has successfully operated a one-turbine pilot project off the Norwegian coast for the past year, originally sought approval for a version of its project in October of 2012. At the time, CLF submitted comments supporting the project and the long-term contract, but the PUC tabled its deliberations and asked Statoil to come up with terms that would have a lower price for the electricity generated and guarantee more future benefit to Maine. Click here to see PUC Chairman Welch’s notes from deliberations. Since then, the project has only improved.

Working with PUC staff, Statoil revised the terms of its contract to reduce the price of energy to Maine consumers and add more assurances that if its initial small scale windfarm is successful, it will make all efforts to employ Maine companies as it scales up the project. Click here to see Statoil’s Revised Term Sheet.  We liked these additional terms even more than Statoil’s initial proposal. Again we wrote in favor of the project and expressed our increased support. Click here to view our additional comments.

The vote at this past week’s hearing was 2-1, with Commissioner Littell and Chairman Welch voting in favor of the project. Littell has long been a champion of efforts to reduce carbon emissions, whether during his time at the DEP where he championed RGGI or now at the PUC. Welch deserves credit as he was not supportive of the long-term contract in its initial phase, but recognized that Statoil had made efforts to address his concerns and even more so recognized the potential that offshore wind holds for Maine.

Vermont is poised to take a big bite out of the high cost and pollution of heating our homes and businesses. Slashing a full one-quarter of both lies within our reach.

Over the past decade, the cost Vermonters pay for staying warm has more than doubled. This strains our pocketbooks, our environment, our health and our security. Watching our dollars go up in smoke drains our economy.

What can we do? Building on the enormous success of our electric efficiency efforts, we can improve the heating efficiency of our homes and businesses in a similar manner. While some efforts have begun, most of the savings opportunity remains on the table. Throughout Vermont, heating efficiency has saved the average homeowner about $1,000 a year.  (See a recent editorial here).

A new report of Vermont’s Thermal Efficiency Task Force provides a strong roadmap for jumpstarting heating efficiency and renewable heat for our homes and businesses. The Task Force recommendations show how Vermont can stretch its heating dollars farther and provide over $1.4 billion in direct savings. That’s $1.4 billion that is not going up in smoke, literally leaking out of our homes and businesses.

Affordable heat means lowering bills. Every year Vermont struggles to fund low income heating assistance (LIHEAP). With affordable heat, Vermont can reduce the funds needed and can use LIHEAP dollars to help more Vermonters. Cutting fuel use by one-quarter means that for every four homes that are weatherized, help is available for one additional family.

Affordable heat reduces pollution. Every gallon of fossil fuel we don’t burn means less pollution. Whether we are adding solar to our roofs or insulating/weatherizing our homes we leave a lasting positive legacy for our children by taking seriously our responsibility to tackle climate change and reduce pollution.

The long and short of it is that Vermont — and Vermonters — can’t afford to keep wasting energy, wasting money and wasting clean air. Vermont’s commitment to affordable heat is our ticket to more comfortable homes and businesses, and a thriving and affordable clean energy economy.

New Year's Eve in Times Square (photo credit: flickr/Mondayne)

The ball and other ceremonial objects have dropped, and 2013 has arrived. Although we mark the turn of the year with champagne, Auld Lang Syne, and a bevy of news stories and year-end blog posts, there’s not much genuinely “new” about the New Year. We hang a new calendar and start writing 2013 on legal briefs and checks (as the case may be), and life goes on.

Here in New Hampshire, the developer of the Northern Pass transmission project celebrated New Year’s Eve without any year-end changes. As revelers made their way to New Year’s Eve parties, in a classic “news dump” to minimize attention, Northern Pass Transmission LLC (NPT) posted a cryptic “project update” to its website. The update stated:

[W]e have identified a new route in the North Country that we will submit to the New Hampshire Site Evaluation Commission [sic] in the future for consideration and review.  We are in the process of finalizing this new proposal and will soon be prepared to announce its specific details….

We also recognize that while we are communicating with local citizens, stakeholders and public officials across New Hampshire, there is still much that can be done.  We believe this communication and dialogue is critical to the ultimate success of the new route and the project overall and felt it was necessary to take some additional time to continue these efforts before we publicly announce the new routing proposal.

In other words, NPT and its parent company Northeast Utilities (NU) had nothing new to announce, and the public will continue to wait for actual details and updated regulatory filings. And it’s not the first time Northern Pass’s developer has failed to deliver on its promise of a new route.

In May, NU set an August deadline for a route announcement; in July, NU set a September deadline; and throughout the fall, NU promised to finalize a route and file an updated Presidential Permit application with the U.S. Department of Energy by the end of the 2012, even going so far as to say that it had already obtained 99% of the land it needs. In this context, the Concord Monitor aptly reported on the New Year’s Eve “update”: Northern Pass misses deadline to unveil new route.

While NPT’s non-announcement wasn’t a surprise to CLF or others following the project closely, it was an important moment. It was, most of all, an embarrassing setback – the latest blown deadline after a series of blown deadlines stretching back to April 2011, when NPT decided to seek out a “new route” for the northernmost portion of the project.

NPT has been banking on its capacity to pay above-market land prices for a transmission corridor in the North Country. So far, the Society for the Protection of New Hampshire Forests, its supporters from more than two hundred New Hampshire towns and cities and also from around the region and country, and a number of courageous landowners unwilling to sell at any price have achieved remarkable success in blocking NPT’s efforts on the ground, property-by-property. It would appear NPT’s confidence was misplaced.

For NU executives and investors, Hydro-Québec, and Northern Pass enthusiasts in southern New England, the project’s latest blown deadline should be a wake-up call.

It’s not working.

Not NPT’s back-room strategy to assemble a serpentine series of parcels for a new transmission corridor in the North Country, without any meaningful changes to the project’s design or the southern 80% of its proposed route.

Not NPT’s attempts to game the federal permitting process in its favor.

Not NPT’s bogus claims of environmental and economic benefits for New Hampshire and of wide support for the project.

Not NPT’s campaign to discredit affected citizens in the nearly three dozen communities that have declared opposition to the project and the entire New Hampshire conservation community as “not in my backyard” types and “special interests.”

In the New Year, Northern Pass’s developers should recognize that half of the “dialogue” they are promising is listening. The latest blown deadline should signal, loud and clear, that the current Northern Pass proposal won’t be successful, new route in Coös County or not.

A few weeks ago, Springfield, MA, was rocked by a natural gas explosion that destroyed a building, ruined a city block, and was hailed as a miracle because no lives were lost.

The pipelines that lie below our communities, always out of sight, came suddenly came into focus. The explosion reminded us of the sobering reality that our streets are not always safe. Despite smart investments in energy efficiency and new energy technologies in New England, when it comes to natural gas, whose infrastructure is among the oldest in the nation, we have been reluctant to prioritize investment in replacing and repairing the pipes and valves that we rely upon not only to heat and power our homes, but to keep us safe.  When it comes to natural gas efficiency and investment, there is much more we can do – so much more.

We need to improve safety, increase efficiency, and reduce the risk to communities and to our planet. It is my belief, as well as that of my colleagues here at CLF, that we can and should make our communities healthy and safe from the unnecessary risk of explosions from old and leaky pipelines. This is vital, for two reasons.

It’s vital because methane, the major component of natural gas, is 25 times more potent as a global-warming causing gas than CO2. In a year that has broken so many temperature records, and in an age when climate is showing the signs of human distortion, we are constantly reminded of the strain we are placing on our global ecosystem. It is a strain we need to urgently reduce.

It is also vital to replace and fix pipes leaking natural gas because it is so combustible. Springfield reminded us of this fact. So too did the explosions that that rocked San Bruno, California in 2010, Allentown, Pennsylvania, in 2011, and Gloucester, MA in 2009, and most recently, Sissonville, West Virginia, to name only a few. These explosions are reminders of the serious care and attention that our natural gas infrastructure needs. If we fail to provide them with that care, we gamble with our safety, and with our lives, as this image from the San Bruno explosion vividly shows.

As my colleague Shanna Cleveland recently said, “The need for action is particularly acute in Massachusetts where over one-third of the system is considered ‘leak-prone’—made up of cast iron or unprotected steel pipe.” The leaks in Massachusetts are so significant that the gains by efficiency programs put in place by Massachusetts regulators are disappearing into thin air. A report released by CLF by that name (Into Thin Air, available to download for free here) documents how these leaks, known as “fugitive emissions,” are being borne not by the utilities, or by the regulators, but by consumers. Utilities pass the cost of lost gas onto ratepayers to the tune of $38.8 million a year. Here’s an infographic from that report:

Another report by Nathan Phillips of Boston University combines Google Earth and research into a compelling visualization of just how prevalent these leaks are.

Like the explosion in Springfield, Nathan’s map documenting the 3,356 separate natural gas leaks under the streets of Boston reminds us that, as we walk or drive down the street, we are often driving through an invisible cloud of natural gas leaking from aging pipes. If you are like me, to accept the avoidable risk of a predictably volatile gas is deeply unsettling.

With the exuberance for cheap, domestic natural gas on the rise, proposals for new massive interstate pipelines are in the works. Houston-based Spectra, a natural gas pipeline company, is proposing a $500 million expansion for Massachusetts alone. Before we go down that route, I would like to make three simple suggestions.

1) Whether the natural gas industry ever delivers on its claim of being more environmentally friendly than coal or oil depends on how well natural gas infrastructure addresses leaks. We develop more accurate tools for assessing the greenhouse gas emissions from pipelines.

2) Not only is investment in new pipelines and power plants expensive, but it comes with serious and lasting environmental consequences whose costs are too often discounted or ignored.  Before we blindly rush ahead with investments to expand, we need to look closely at the full range of costs.

3) Finally, we would do well to remember the lessons we have learned so well about the environmental and financial benefits of looking to efficiency first. Efficiency, both in the traditional sense of reducing our use of natural gas, and in the sense of maximizing the efficiency of our existing natural gas infrastructure by replacing outdated infrastructure and repairing leaks will reduce risk, reduce costs, reduce environmental impacts and put people to work throughout the region.

As the explosions in San Bruno, Gloucester, Allentown, and Springfield have reminded us, this is about the safety of our communities. We should not let promises of short-term profit in new projects trump both the near-term risk of thousands of leaks and the long-term sustainability of this region and stability of our climate.

Ignoring leaky natural gas infrastructure is risky business. Let’s fix what we have, and maximize our efficiency gains, before aggressively expanding. We’ll be more sustainable, and safer, that way.

Photo courtesy of Andy Hares @ flickr.com

The financial world is waking up to what a drag Vermont Yankee really is. The tired, old and leaking nuclear plant in Vermont is not carrying its weight. Financial analysts report that Vermont Yankee is economically vulnerable and a retirement announcement would boost stock prices for its parent, Entergy.

You can read the UBS Investment Research report “Re-assessing Cash Flows from the Nukes” here. It states:

“Notably, we believe both its NY Fitzpatrick and Vermont Yankee plants are at risk of retirement given their small size; while potentially negative to sentiment, an announcement to retire the units would likely drive positive FCF revisions.”

Clearly it is past time to close this plant.

Analysts today dropped the projected price target for Entergy’s stock. They see high debt and little cash coming in. Not good news for any investment.

It is good the financial world is waking up to what Vermonters have known for years. Vermont Yankee is not a good deal. It hasn’t been for years. It is expensive and financially risky. Conservation Law Foundation submitted testimony to the Public Service Board on the lousy economics of allowing Vermont Yankee to continue to operate. It does not have enough money for decommissioning, low energy prices mean it is not making money and any problems would saddle Vermont with big problems. You can read CLF’s testimony here.

These are not problems we need. Nuclear power was once touted as too cheap to meter. That has never been true. Now it is too expensive to even keep operating. Thank goodness financial markets are waking up to this fact.

Photo courtesy of Wiertz Sébastien @ flickr.

It’s been a great year for CLF — and a great year on CLF Scoop. We’ve had lots of great posts by our advocates, staff and volunteers. See below for the most read 10 blog posts published in 2012.

Counting Down to Shark Week 2012
Nov 11, 2011 by Robin Just

The Promise of Urban Agriculture: New Growing Green Report
Jul 12, 2012 by Jo Anne Shatkin and Melissa Hoffer

Latest Research: Northern Pass Worse for the Climate than Advertised
Feb 14, 2012 by Christophe Courchesne

The “New Route” for Northern Pass Won’t Cure Its Failings
May 24, 2012 by Christophe Courchesne

Salem Harbor Enforced Shutdown: The Beginning of the End for Old Coal in New England
Feb 10, 2012 by N. Jonathan Peress

Risky Business: Leaking Natural Gas Infrastructure and How to Fix It
Nov 28, 2012 by Shanna Cleveland

Everything You Know Is Wrong: Growing the Economy Without Growing Electricity (and Energy) Demand
Oct 1, 2012 by Seth Kaplan

It’s Time to Stop Subsidizing PSNH’s Dirty Power
Feb 1, 2012 by Christophe Courchesne

Save the Beach or Save Your House: Which Would You Choose?
Apr 25, 2012 by Tricia K. Jedele