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.

The Federal Energy Regulatory Commission (FERC), in an order issued on September 18, 2009, has sided with the operator of the New England electricity system (ISO-NE) in a dispute with Dominion, the owner of the Salem Harbor Power Plant.

Here is the basic situation:  Dominion has “de-listed” the Salem Harbor Power Plant in the upcoming “Forward Capacity Auction”.   This means that it is virtually certain that in the 2012-2013 period that the plant will not be obligated to run and will not received capacity payments that power plants receive when they have such an obligation.   While the plant could still run and be paid for the electricity it made the act of de-listing means that the owner of the plant thinks there is a significant chance it will not be running during that year.  If, however, ISO-NE, finds that one (or more) of the  power generating units at the plant are “needed for reliability” then Dominion would receive payments set at the level of the “de-list bids” submitted this year.

Here is the dispute:  ISO-NE argued that Dominion had set the amount of its “de-list bids” to high.  Dominion had calculated those bids assuming that all pollution control equipment put into the plant would have to be depreciated (basically paid off) within three years.  ISO-NE argued that this was inappropriate. Local newspapers took note of this dispute.

CLF, and the Massachusetts Attorney Generals office, agreed with ISO-NE that Dominion’s bids were inappropriate.  CLF, pressing beyond the polite wording of ISO-NE’s filing, argued that the only appropriate circumstance for the “super-accelerated depreciation” being sought by Dominion would be appropriate only if Dominion were proposing to permanently de-list the plant.  The absurdity of Dominion’s position was highlighted by the fact that it was contradicted by public statements of its own spokesman in a local newspaper.

The Mass. AG, supported by CLF, also raised concerns about the lack of public disclosure of key information about the plant and the lack of auditing of the representations that plant owners like Dominion made to ISO-NE.

FERC, in the order resolving the dispute, accepted the basic logic that ISO-NE and CLF presented, requiring use of the longer depreciation period proposed by ISO-NE.   FERC stated that it could not consider converting a de-list bid from being one-year to permanent at this point in the process – which is essentially a moot point as CLF floated that as an idea that would only apply if the shorter depreciation period was accepted, which it was not. Also, FERC did not squarely address the issues of public disclosure and auditing, relying on earlier decisions that will be continued to be criticized.

But in the end this was squarely a defeat for Dominion: their bluff of calculating costs as if the plant was shutting down, but not actually committing to do so, was called.

These battles will continue.  The likely next dispute will center around “reliability” as all of these numbers games are meaningless if ISO-NE recognizes that the improved transmission system, new generation and rising amounts of energy efficiency and “demand response” (slashing energy use at peak hours during the summer) means that the plant can retire without causing any shortages in the regional electricity system.  They are very close to doing so (having found that other nearby plants can safely retire) and are likely to reach the right result here – although it might take some encouragement.