There are few more important, and more obscure, agencies in Washington D.C. than the Federal Energy Regulatory Commission the regulator of the wholesale electricity transmission systems and “bulk” (imagine big quantities, like giant tubs from Costco) U.S. electricity markets.

FERC oversees an incredibly complex electricity system.  Our grid meshes together rural systems, where power lines stretch hundreds of miles without interruption, with dense and sophisticated urban networks where millions of people are packed together and drawing power to charge cell phones, watch television, use computers, and make  hospitals, factories, homes and offices all hum.

The age of the elements of these incredibly diverse systems range from “physically touched by Thomas Edison” to “installed hours ago” with all that suggests in terms of technological sophistication.

On top of that physical complexity from a legal and regulatory perspective the American system is a bewildering mix of business and regulatory models with some places served by utilities that own generators and others, like nearly all of New England, served by utilities who are actually generally forbidden from owning power plants. And in contrast to many other parts of the world we mix together privately and publicly owned electricity systems, with many customers served by private “Investor Owned Utilities” but many others served by public entities like “municipal light companies” – and just to make life even more complicated our large generation is mostly owned by private companies with some giant exceptions in the form of hydroelectric dams and other generators owned by States like New York or Federal entities like the Tennessee Valley Authority.

This last bit of complexity is rooted deep in history, notably the declaration by Franklin Roosevelt, when running for President, that he generally favored private ownership of electricity generation and systems but “that where a community — a city or county or a district is not satisfied with the service rendered or the rates charged by the private utility, it has the undeniable basic right, as one of its functions of Government, one of its functions of home rule, to set up, after a fair referendum to its voters has been had, its own governmentally owned and operated service.”  This idea played out in his long run as President when the cornerstones were laid for both gigantic federally owned systems and for the FERC model of regulated private systems.

It is no wonder, given this complex mix of elements that some think the American electricity system is ungovernable.  But a few leaders have succeeded in using the tools available to them to reshape this unwieldy system and steer it in a good direction.  One of those leaders is the current, and soon to be former, FERC Chairman Jon Wellinghoff.

During Chairman Wellinghoff’s tenure FERC has instituted important reforms – pushing time and again for changes that remove the barriers to the new clean resources, like energy efficiency and renewable energy (like wind and solar) that are the rising stars of our energy system.   Under his leadership FERC has pushed aggressively against entrenched policies that gave a leg up to existing generators and utilities simply because they were already in place.  The idea of “pay for performance” that meant that new technologies could earn revenue from providing services to the electricity might sound simple and obvious but FERC has had to fight to make that idea a central tenet in its decision making, beginning with the critical idea (incubated in New England) that efforts to reduce electricity demand should be compensated in markets just like resources that generate power.  Application of the pay-for-performance principle has meant that new technologies that flourished in a small pilot market here in New England can spread across the nation – opening doors for electricity storage systems that will revolutionize the way we generate and use energy.

The biggest single effort that FERC has undertaken during the Wellinghoff era is almost certainly the Order 1000 initiative. Order 1000 mandated thoughtful regional planning of the electricity system across the nation and consideration of public policies, like state renewable energy standards and greenhouse gas reduction mandates, in electricity system planning and infrastructure decisions, among other systemic reforms.  This mammoth effort to reshape the current national electricity system is still in progress but should pave the way for significant progress in managing the energy system transformation and transition beginning to unfold around us.

The departure of Jon Wellinghoff from FERC does not have to mean the end of progress on all of these fronts.  FERC has maintained a collegial and effective decision making process that cuts across party lines (which is a pretty stunning thing to say in 2013 about any institution with a mix of Commissioners from the two main political parties).  Very often its decisions are unanimous or feature a very focused and specific dissent from one or two Commissioners disagreeing with some specific aspect of the decision but accepting much of what the majority are doing and saying.

This uniquely effective institution will maintain its balance and continue to make progress if Ron Binz, the nominee proposed by President Obama to take over as Commissioner and Chairman of FERC, is confirmed by the Senate.  Mr. Binz is accustomed to working across party lines as he comes from the quintessentially “purple” state of Colorado where he had a solid record as a consumer advocate, chair of the state utility commission and energy expert and innovator.

We are in a time of change and challenge: coal plants are retiring and the United States shows signs of finally getting serious about using energy efficiently while reaping the power of the wind and the sun.  Such times call for steady leadership at the essential Federal energy regulatory body.  That is what Jon Wellinghoff has shown – and it is what Ron Binz can provide going forward.

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.

As New England’s leading environmental organization, CLF has more than 60 staff people who work every day for healthy communities, clean water, and to reduce carbon emissions that cause climate change.

Sometimes we win big victories that make headlines, like when my colleague, Shanna Cleveland, won a major victory in federal court that required the permanent shuttering of the Salem Harbor coal-fired power plant. You can see more about Shanna’s victory here; and you can learn more about CLF’s coal-free New England program, here.

Other times, CLF’s work is much quieter, and behind the scenes, in obscure forums that no one has ever heard of. And CLF sometimes accomplishes good things very quietly.

I recently participated in one of these quiet victories. CLF is an active, voting participant in the New England Independent System Operator (ISO-NE), the operator of the regional electricity system. You can read more about CLF’s work with ISO-NE here. Very few environmental organizations participate in this important forum and, of the few that do, CLF is by far the most active.

One of the things that the ISO is most concerned about is the “system reliability” of New England’s electricity grid. System reliability basically means that when you or I turn a light switch, the lights actually go on. No one wants to see power outages or blackouts, and the ISO’s concern with system reliability is sensible.

One of the things the ISO has been doing of late to improve New England’s “system reliability” is to encourage the owners of gas-powered electricity-generating plants to install dual-fuel capability that would allow those plants to burn oil during periods of natural gas shortage – that is, allow those plants to be more reliable. Part of the ISO’s plan was to make sure that, when such a gas shortage arose, these power-plant owners could and would get compensated properly for burning oil, which costs much more than natural gas.

Of course, burning oil to make electricity is also much, much more polluting than burning natural gas. And the way the ISO was going to structure this new system would have provided no reason for generators to burn gas when gas was actually available – because those generators would be fully compensated regardless of which fuel they burned.

CLF reluctantly accepts that some of these generators will burn oil on those very, very rare occasions (at most a few times a year) when cleaner fuels truly are not available. (Of course, an even better idea is to reduce demand by efforts like turning down electricity use in places like factories and large stores; and CLF has long worked to promote programs that pay for and encourage such “demand response” efforts.) And such burning of oil is always limited by the air-pollution permits (under the Clean Air Act) of the generators. At the same time, CLF wanted to make sure that ISO rules would never allow compensation to an electricity generator for burning a dirtier fuel when a much cleaner fuel actually is available (which is nearly always).

None of the ISO experts realized the potential danger of the ISO’s proposed rule change at the time it was being discussed. None of the electricity generators pushed to prevent the originally proposed rule change from going through. Why would they? They were going to get fully compensated for burning a dirty fuel even when a cleaner fuel was available!

But CLF noticed the problem, and was willing to push for a change. As of this writing, I am cautiously optimistic that our proposed change will be approved by the ISO (and later by the Federal Energy Regulatory Commission, or FERC, that oversees and must approve ISO rule changes). The change that CLF pushed for would allow electricity generators to get compensated for burning a higher-priced, dirtier fuel only on those very rare occasions when cleaner, cheaper fuel is truly not available.

Ratepayers benefit because we are assuring the use of the lower-cost fuel whenever possible. And the environment benefits because we are assuring the use of the cleaner fuel whenever possible.

As I say: this was certainly a small victory. But if we are going to be able to address the threat of climate change successfully, it will take hundreds of victories in a variety of forums. Some of those will be big wins, like Shanna’s federal court victory in the Salem Harbor case. And others will be small, incremental steps in obscure forums like the ISO.

Passamaquoddy Bay. Courtesy of Jay Woodworth @ flickr. Creative Commons.

For some reason, the folks behind the last remaining proposed LNG import facility on the East Coast, Downeast LNG, are still pursuing their license from FERC to build a liquefied natural gas terminal on the shores of Passamaquoddy Bay here in Maine. And even more perplexing, FERC is still willing to spend time and resources on a project that the energy market is clearly saying makes no sense, or cents for that matter.

As our friends at Save Passamaquoddy Bay 3 Nation Alliance point out, Downeast LNG has “just become the sole remaining LNG import terminal on the entire continent.” In light of the already overbuilt capacity for importing LNG, the significant amount of domestic natural gas now flooding the market and bringing prices to an all-time low, and the number of import facilities that are now reversing course to become export facilities, the logic for continuing this quixotic adventure eludes us. For that very reason, FERC dismissed the application of the Calais LNG project, also slated for Passamaquoddy Bay and opposed by CLF in 2010. (Find CLF blog posts on Calais LNG here.) If anything, Maine should focus on more infrastructure to deliver gas to businesses and residents but new sources of natural gas supply are not needed now nor for the next foreseeable 50 years.

Perhaps it is time for FERC and Downeast Energy to face the music and realize that while a decade ago, LNG terminals  may have been a bridge to a better energy future that used less polluting energy sources, they are now a bridge to nowhere and should meet the same fate as that famous Alaskan boondoggle.

A few weeks ago I attended a conference in Washington, DC that brought together environmental groups from all over the country. In speaking with my colleagues, I was reminded of how this country is a patchwork quilt: each of us brought a unique set of challenges, a strong independent sense of identity, and solutions to regional challenges – solutions that are sometimes adopted at the national level. This certainly is true of New England.

Over the last year, two events have emphasized the importance of interregional coordination. In the process, they have reminded me of New England’s long history of regional cooperation to advance nation leading clean energy projects, and of the way in which those have been adopted on the national stage.

The first of these issues is FERC Order 1,000 – a significant reform to the Federal Energy Regulatory Commission’s position on “electric transmission planning and cost allocation requirements for public utility transmission providers” issued in June of 2010. That Order, and material explaining it, can be found on the FERC website. The new rules announced in that Order mandate that utilities operating wholesale electricity systems across the country engage in a process of regional planning. Here in New England, we have been doing that for as long, if not longer, than anywhere else in the country, so that part of the order will prompt new regional innovations largely elsewhere in the country. Another part of the order instructs regional operators of the electric grid to consider the public policy mandates of the states in their region in the planning they do for their part of the grid. The New England states have a variety of innovative policies intended to bring about a clean energy future. How our regional grid operator accounts for those in its planning is very likely to break ground for the rest of the country.

Similarly, the recent breakthrough settlement agreement by the Patrick Administration in the proposed merger between NStar and Northeast Utilities also reminded me of the need for regional coordination. Consider the scale of the proposed utility: As The Boston Globe reported, “the proposed $17.5 billion merger… would create the largest utility in the region, [and serve] nearly 3.5 million electric and gas customers from Westport, Conn., to Pittsburg, N.H., near the Canadian border.”

With a reach extending from southern Connecticut to Northern New Hampshire by way of Boston, the resulting utility has obligations under a variety of critical state policies intended to protect the environment and build a resilient clean energy economy. The right to operate as a state-sanctioned monopoly is conditioned on the utility meeting those obligations. The initial terms of the proposed merger did not meet those requirements; the merger as revised by the settlement, as my colleague Sue Reid said, “ensures that this powerful new utility will be in lockstep with Massachusetts’ nation-leading clean energy policies and propel the state forward instead of backwards in implementing them.”

This cases highlight the need for advocacy groups to be able to field their teams  on a scale and in a manner that that rises to the challenge of the moment. The NU/NStar merger required us to play on a regional scale; FERC Order 1,000 provides a chance to use the federally regulated planning process to advance critical state policies that are designed to build a cleaner and thriving New England. The challenges we face, and the institutions we engage (like utilities), are large and extend across our region and beyond, not respecting traditional boundaries. CLF must meet this challenge with size, scale, intentions, goals, and strategies that are appropriately sized to meet those challenges.

Given New England’s strong tradition of leadership on energy and environmental issues, I have confidence we have the tools required. However, as my conversations in DC emphasized, what is appropriate here in New England is not appropriate for every region.

Given the differences between the various regions of the country, and various areas within those regions, I wonder: To what extent can we successfully plot a common future? These questions are as relevant within New England as between regions.

Driving south from Acadia National Park in Maine or Hanover, New Hampshire, or east from Springfield, MA and Hartford, CT the scenery changes, the weather warms and the population becomes more dense. Though each place is in New England, each feels very different – and, if you ask someone on the street, chances are they’ll tell you just how unique and independent their town or city is. The same is true as you travel north from Atlanta or NYC to Boston, or east from Chicago or San Francisco. Within New England, as within our country, our differences can be easier to see than our shared future, but it is the latter that requires our attention.

More and more, we have the tools. That puts us in a good position to work together, town by town, region by region, for a thriving New England, and a thriving country.

Protest at Salem Harbor Power Plant. Courtesy of Robert Visser / Greenpeace.

This week the Conservation Law Foundation (CLF) and HealthLink secured an Order from the US District Court in Massachusetts requiring Salem Harbor power plant owner Dominion to shut down all four units at the 60-year-old coal-fired power plant by 2014. In bringing a clear end to the prolonged decline of Salem Harbor Station, this settlement ushers in a new era of clean air, clean water and clean energy for the community of Salem, MA, and for New England as a whole.

The court’s order is based on a settlement with Dominion to avoid CLF’s 2010 lawsuit alleging violations of the Clean Air Act from going to trial. The terms of the settlement, which can be found here, ensure that:

• Units 1 and 2 at the plant must retire (indeed are retired) by December 31, 2011; Unit 3 by June 2014;
• Dominion may not repower the retired coal-burning units, even if a buyer for the power was to come forward;
• Neither Dominion, nor any successor, may use coal as fuel for generating electricity on that site in the future;
• Dominion must fund projects of at least $275,000 to reduce air pollution in Salem and surrounding municipalities that have been impacted by the plant’s emissions.

The settlement, and the legal actions which led to it, provide a template to force plant shutdowns as changing market conditions, public health concerns and cleaner energy alternatives push the nation’s fleet of old, polluting dinosaurs to the brink. What makes this outcome unique is that, as part of its advocacy strategy, CLF filed a successful protest at the Federal Energy Regulatory Commission in Washington DC which effectively prevented Dominion from collecting above market costs for operating this aging and inefficient power plant. This first-ever ruling by FERC is in stark contrast to coal power plant retirements in other areas of the country which were brought about by agreements to pay (i.e., compensate) plant owners for shutting down their plants. In the case of Salem Harbor Station, retirement resulted from legal action to deny the plant’s owner compensation and cost-recovery by ratepayers.

A little background: Most of the nation’s coal-burning fleet, were designed, constructed and began operation in the 1950’s and 60’s. More than 60% of them have been operating for 40 years or more, meaning that they are now beyond their useful design lives. This is the case for all of New England’s remaining plants, which generally were built more than 50 years ago. In addition to the excess pollution and inordinate adverse impact these plants impose to public health and the environment, they are finding it difficult to compete with newer, cleaner and more efficient power producing technology. In the market, the day of reckoning has arrived. New England’s coal-fired power plants are losing their shirts. They are rarely asked to run by ISO-New England, the operator of our regional electricity system, because their power is more costly (i.e., out-of-market) than the region’s cleaner and more efficient power generating fleet.

So why don’t they all retire? Unfortunately, there are several factors that can, in many instances, complicate matters. For Salem Harbor Station: system reliability (i.e., keeping the lights on). Because these plants were built so long ago, and unfortunately in close proximity to population centers where demand for power is greatest, the system was designed assuming that electricity is being generated at these locations. Thus, removing electricity generation from these sites can create reliability risks at times of peak electricity consumption. This was the case for Salem Harbor. Try as we might (including NStar’s recent $400 million transmission upgrade in the North Shore), when ISO-NE modeled worst case conditions, it still found that Salem Harbor was needed for reliability and consequently required ratepayers to pay to maintain Salem Harbor, even though its power was far more expensive to produce than more modern plants. To break this logjam, CLF filed a protest at FERC claiming that ratepayers were getting bilked (in legalese: paying rates that were unjust and unreasonable) and that a small investment to develop a reliability alternative for the plant would save the ratepayers money and would safeguard public health.

FERC agreed — at least with the money part (as FERC is a financial, not environmental regulatory agency). Its December 2010 order granting CLF’s protest compelled ISO-NE and the region’s electricity market participants to expedite the process for developing reliability alternatives for Salem Harbor’s expensive power (in utility parlance, to replace its “reliability function”). Shortly thereafter, ISO-NE crafted a new plan that will keep the lights on at reasonable cost to customers, while also creating a more flexible, reliable grid.

The new plan calls for simple and relatively inexpensive electric transmission line upgrades that will meet the area’s reliability needs without Salem Harbor Station and allow for the deployment of newer and cleaner energy resources like energy efficiency, conservation and renewables such as wind and solar. As soon as the plan was approved in May of 2011, the die was cast and Salem Harbor’s retirement became imminent. To its credit, the very next day Dominion announced that the plant would be shut down. As we all know, corporation’s make decisions based primarily on economics; once FERC denied them the above-market rates they had been collecting for years to maintain the plant, Dominion was compelled to retire the plant. Couple that with the prospect of major expenditures for pollution upgrades that would result from CLF and Healthlink’s lawsuit, there was only one rational outcome. Good-bye Salem Harbor station. Next up (or should I say, down): Mt. Tom, Brayton Point, both of which are uneconomic and facing the end of the road.

As I said in a joint press statement with Healthlink (found here), “This outcome sends a signal to coal plant operators everywhere that they cannot avoid costs through noncompliance with the Clean Air Act. These obsolete plants that either have decided not to invest in technology upgrades or are retrofitting at ratepayers’ expense are doomed: they are staring down the barrel of cheaper and cleaner alternatives to their dirty power and public and regulatory pressure to safeguard human health. When these plants can no longer get away with breaking the law as a way to stave off economic collapse, I predict we will see a wave of shutdowns across the country.”

The history of Salem Harbor Station is both long and tortured (recall then-Governor Romney standing at the gates of the plant in 2003 and saying that the plant was killing people). Despite its bleak financials and unjustifiable damage to public health and the environment, Salem Harbor Station continued to operate and pollute for a decade or more beyond when it should have succumbed to age and obsolescence.

Shanna Cleveland, staff attorney at CLF said, “The Court’s Order coupled with our successful FERC protest have finally put an end to a half century of toxic and lethal air pollution from Salem Harbor Station. The very factors that have been propping the power plant up for years beyond its useful life – cheap coal, lax environmental oversight, and overdue reliability planning – have been pulled out from under it.”

For more, including quotations from said Jane Bright of HealthLink and Massachusetts State Representative Lori A. Ehrlich, as well as more background on CLF’s Salem Harbor Station Advocacy, read the press release here.

Next week I’ll be participating in a clean energy summit in Boston that will feature Congressman Ed Markey and FERC Commissioner Cheryl LaFleur. Attendance at this event is free. Please RSVP today.

This event brings together key Federal officials from the Administration and Congress, their state counterparts, clean energy industry leaders and the environmental community and energy consumers to forge clean energy solutions that benefit our economy and our environment drawing on the full range of options from renewable energy to transmission infrastructure to demand side solutions like energy efficiency.

Please join me and others for this engaging, important conversation.

New England Clean Energy Transmission Summit

January 23, 2012
9:00am – 4:30 pm

RSVP for FREE

Agenda: Click here

The Federal Reserve Bank of Boston
Connolly Center, Fourth Floor
600 Atlantic Avenue, Boston, Massachusetts

Featuring:

Congressman Ed Markey
U.S. House of Representatives

Commissioner Cheryl LaFleur
Federal Energy Regulatory Commission (FERC)

Seth Kaplan
Conservation Law Foundation

Sometimes, the failure to act is as harmful as an act itself.

Yesterday, I sent a letter to Patricia Aho, Commissioner of the Maine Department of Environmental Protection, whose recent failure to act on water certification standards for Flagstaff Lake has resulted in the state losing its ability to have any say in the matter for the next 25 years. You can access a copy of that letter here, or read it in full below.

Documents obtained through a Maine Freedom of Access Act (FOAA) request now lead us to conclude one thing: we believe Aho’s failure to act was intentional. Consider the following two points, outlined in the letter:

• Aho had been briefed on the status of the water quality certification application for the Flagstaff Storage Project by the applicant and its attorney and had met with Mr. Mullen, the head of the lead bureau on that application;
• Aho and her staff were aware of the options available to the State with respect to the application.

As stated in the letter, “this makes Ms. DePoy-Warren’s statements of December 9, 2011 that the failure to act on the application in a timely manner was due to reorganization efforts and changed assignments at best completely uninformed and at worst deliberately false… Even more troubling is the conclusion one can logically draw” that Aho “made the decision to not act on the application and thereby waive the State’s rights to certify whether the Flagstaff Storage Project’s new license meets our water quality standards.”

This deliberate inaction is troubling. As I said in a recent joint statement, it not only hurts Maine people who use Flagstaff Lake, but also “raises real concerns about the DEP’s ability and willingness to exercise Maine’s rights to control, manage and protect our natural resources.”

For the full letter, keep reading.

January 3rd, 2011

Patricia Aho, Commissioner January 3, 2012
Maine Department of Environmental Protection
17 State House Station
Augusta, ME 04333-0017

Re: Flagstaff Storage Project #L-19313-32-G-N

Dear Commissioner Aho:

We have finished a review of records provided by your Department pursuant to a December 9, 2011, Freedom of Access Act request from our organization, the Conservation Law Foundation.  That review leads us to conclude that the Department, under your direction, intentionally waived the State’s rights under section 401 of the Clean Water Act, 33 U.S.C. § 1341(a), to certify that the relicensing of Florida Power & Light’s Flagstaff Storage Project meets Maine’s water quality standards.  That conclusion is contrary to the assertions of the Department’s spokeswoman, Ms. DePoy-Warren, who publicly stated that the failure to act in a timely manner on the FPL application was neither intentional nor insidious.  While we will never definitively know about the latter, as set forth below, we believe the failure to act was certainly intentional.

As you know, for the past several years, a new license for the Flagstaff Storage Project, #L-19313-32-G-N, had been stayed by FERC based on the denial of the Section 401 water quality certification by the Board of Environmental Protection in 2004, a decision appealed and upheld by the Maine Law Court in 2007. Since then, FPL had filed an application for a water quality certification for the Flagstaff Storage Project as a placeholder while it worked with the Department staff to identify a means to meet the water quality standards identified by the Board in its original order.  The Clean Water Act provides that if an application for water quality certification is not acted upon within a year of its submittal, the State is deemed to waive its right to make or to withhold such a certification. To avoid such a waiver, the Department’s practice had been to request FPL to withdraw and refile the application. Failing that, the Department would deny the application.  FPL, as it had with its other hydroelectric projects, would withdraw its application for this project and then re-file, thereby “re-starting the clock.”  (This is a practice followed not just by FPL but by most other owners of hydropower projects seeking water quality certification from Maine.)  Thus, FPL filed its water quality certification application for the Flagstaff Storage Project with the Department on November 15, 2009, then withdrew and re-filed its application on November 16, 2010.

As you also know, action by the Department on water quality certifications applications had for many years been coordinated by a longtime Department employee, Dana Murch.  Mr. Murch announced that he would retire at the end of the summer in 2011 and documents produced in response to our FOAA request establish that he began preparing for the transfer of his responsibilities to other employees at the Department in early summer.  Specifically, in June, Mr. Murch and senior managers at the Department, including Michael Mullen, current head of the Department’s Land and Water Bureau, scheduled a series of meetings to discuss the transition of his work load. These meetings specifically included discussion of the Flagstaff Storage Project water quality certification application. Indeed, Mr Murch prepared a memorandum to the file dated July 13, 2011, concerning the history and status of the Flagstaff Storage Project and specifically noting that “Unless DEP acts to approve or deny the pending application for water quality certification on or before November 15, 2011, certification will be deemed waived by operation of law.”

On June 17, 2011, you were named acting Commissioner of the Department, subsequently nominated to take that position permanently on September 9, 2011 and confirmed on September 28, 2011 by the Senate. The documents produced by the Department in response to our FOAA request establish that shortly after you were named acting Commissioner, Pierce Atwood’s Matt Manahan, a partner at your former law firm and FPL’s attorney, contacted you to discuss FPL’s Flagstaff and Brassua Storage Projects and requested a meeting with you, Mr. Murch and representatives of FPL.  A meeting that you organized was set for August 5, 2011 at your office. On the following Monday, August 8, 2011, you sent an email to Mr. Mullen (delivered at 8:11 a.m. and read at 8:40 a.m.) stating the following – “Hi Mike – We need to talk about Flagstaff and Brassawa [sic] when you get a chance.  Thanks!  Pattie.”

A subsequent memorandum from Mr. Murch dated August 12, 2011 to DEP staff, including Mr. Mullen (who was by then overseeing all staffing of hydropower projects for the Department) attached a spreadsheet that listed the staff that would be overseeing the various hydropower projects in the state.  Ms. Dawn Hallowell was listed as being responsible for the Flagstaff Storage Project but it is our understanding that, at the direction of the Commissioner’s office, Ms. Hallowell never received that file.

Thus, by the time that Mr. Murch retired on August 31, 2011, the documents strongly support the following: you had been briefed on the status of the water quality certification application for the Flagstaff Storage Project by the applicant and its attorney and had met with Mr. Mullen, the head of the lead bureau on that application; and that you and your staff were aware of the options available to the State with respect to the application.  This makes Ms. DuPoy-Warren’s statements of December 9, 2011 that the failure to act on the application in a timely manner was due to reorganization efforts and changed assignments at best completely uninformed and at worst deliberately false.

Even more troubling is the conclusion one can logically draw that after you met with the FPL and its attorney, you made the decision to not act on the application and thereby waive the State’s rights to certify whether the Flagstaff Storage Project’s new license meets our water quality standards.  While the Department is legally authorized to make such a decision under the Clean Water Act, the manner in which this decision was made, particularly after the State had invested significant resources over the last 7 years in defending the right to determine when a project does or does not meet our water quality standards, and the subsequent response by the Department when the waiver came to light, is unacceptable.

We feel strongly that the documents we have seen to date support our conclusion.  If, however, we have not reviewed all of the relevant documents or there are other facts we are not aware of, we would be most interested in meeting with you to discuss them.  If we are wrong and this was indeed a case of a blown deadline, then the Department should be aggressively acting to ensure that FERC condition the license for the Flagstaff Storage Project to ensure that Maine’s water quality standards are met and instituting procedures to prevent such failures in the future.  If our current understanding of the situation does not change, we believe that at a minimum you should clarify that the Department decision to waive its rights to determine if the Flagstaff Storage Project met Maine’s water quality standards was in fact intentional and should include an apology to the stakeholders who were counting on the State to exercise its rights under the Clean Water Act.

Respectfully,
Sean Mahoney
Vice President and Director
CLF Maine

cc: Peter J. Carney

President Obama took a very positive step when he nominated Cheryl LaFleur to be a Commissioner of the Federal Energy Regulatory Commission.

Ms. LaFleur played a key role in developing the energy efficiency programs that have become a model for the nation during her time at National Grid USA (formerly the New England Electric System).  She was also instrumental in the critical decision by her company to support the landmark Regional Greenhouse Gas Initiative and to champion an auction of the pollution “allowances” instead of giving them to polluters for free and re-invest the proceeds in customer friendly efforts like energy efficiency.

As a career utility executive Ms. LaFleur knows the companies that FERC regulates and the people who run them but as a tough, smart and fair-minded independent thinker with solid values about protecting the environment and the people she is well positioned to be the right person to regulate those companies.

And maintaining a little geographic and gender diversity on a body like FERC that has been traditionally Western and male is not such  a bad thing . . .

Hopefully, the partisan gridlock in Washington will not hold up her confirmation by the Senate.