(photo credit: flickr/macwagen)

With last month’s Northern Pass route announcement and last week’s filing of an amended application for a Presidential Permit, Northeast Utilities and PSNH have repackaged and repeated the very same arguments for the project that have filled air waves and op-ed pages throughout New England for nearly three years. We keep hearing the same sales pitch—cleaner air, a more reliable grid, economic prosperity, low-cost energy—with the same numbers: 5 million fewer tons of carbon pollution, 1,200 jobs, and millions in energy savings and tax revenue.

From a distance, the claims look real enough; on closer inspection, it becomes clear that they were born in a long-gone energy landscape and are aggressively deceptive. And they live not only in Northern Pass’s marketing materials, but in the disseminations of Northern Pass’s cadre of PSNH-aligned supporters, such as this recent op-ed by an avowed clean energy opponent who worked for a group that calls climate change “pseudo-science.”

CLF and others have been examining and debunking these talking points for a long time. But like zombies, they keep coming back. And there is perhaps no uglier member of Northern Pass’s living dead than the claim that Northern Pass will reduce carbon pollution by up to 5 million tons per year.

The number is an estimate of the carbon dioxide emissions from the typically natural gas power that Northern Pass imports would displace in our regional energy mix, based on a 2010 market modeling report by an economic consultant hired by Northern Pass—a report that, despite numerous references to it in the project’s amended application, no longer appears on Northern Pass’s website but is available here (25 MB PDF). The estimate assumes four things:

Assumption No. 1: Northern Pass power would not result in any carbon dioxide emissions. (See pp. 5 and 34 of the report.)

This is unequivocally wrong. Scientific research conducted by Hydro-Québec scientists and published in peer reviewed journals says just the opposite. The science confirms that, by flooding vast areas of boreal forests, new large-scale hydropower facilities have net greenhouse gas emissions (from the decomposition of flooded biological material, the elimination of forest carbon “sinks,” and other sources) that may initially exceed those of natural gas power plants and that, despite declining and producing fewer net greenhouse gas emissions than natural gas over time, may continue at meaningful levels even over the long term. Northern Pass’s continued “zero-carbon” assumption is dishonest and cynical, especially given the fact that Northeast Utilities has submitted summaries of the very same research findings on hydropower emissions to regulatory authorities and has steadfastly refused to change its marketing materials despite CLF’s effort to point out the error.

Assumption No. 2: Over the next ten years, New England’s energy market will look like government forecasts predicted in 2010. (See pp. 23-24 of the report.)

Northern Pass’s 5 million ton estimate is highly dependent on outdated modeling of an energy market that no longer exists. Its consultant report was prepared three years ago—in 2010—with U.S. Energy Information Administration forecasts of energy commodity prices, including natural gas prices approaching $7 per million cubic feet by 2022. The forecast price of natural gas is crucial to predicting how Northern Pass power will affect New England’s energy market because that price helps determine the market price of electricity in New England. Since 2010, domestic natural gas supplies have driven down prices, and the EIA’s forecast has changed dramatically, now estimating that average prices won’t crack $5 until 2026. (The spot natural gas price today is well below $4; the 2010 projection for 2013 was $6.13.) While CLF and many other stakeholders are deeply concerned about proposed long-term investments in natural gas (and their climate impacts), there is no denying that the fuel’s role in the region’s energy market is different than what was predicted in 2010.

In addition to lower power prices in New England, the report failed to account for the availability of an additional path for Hydro-Québec to export its power—the Champlain Hudson Power Express—which won approval from New York officials earlier this year and is in the process of obtaining federal permits.

All this means is that Hydro-Québec will likely sell less power into New England than previously estimated, replacing (by Northern Pass’s own logic) less natural gas power and its associated pollution.

Assumption No. 3: Hydro-Québec will continue to build more hydropower facilities, including the Romaine River dams that are under construction, which will facilitate additional exports to the United States. (See pp. 2 and 28 of the report)

The report on which Northern Pass’ claimed 5 million ton greenhouse gas reduction is based explains that “[i]n reality, the additional transmission capacity provided by [Northern Pass] could lead to additional development of resources to support exports from Québec….” In fact, the 5 million ton estimate is only that high because it includes emissions reductions (which are inflated for the reasons identified above) that will happen if Hydro-Québec develops new hydropower projects and as a result has more surplus energy available than it does today. (If not, the report itself predicts emissions reductions of only about half the 5 million ton estimate.) The assumption suggests that Hydro-Québec will rely on a succession of new projects –the Eastmain-Rupert River complex just completed, the Romaine River complex under construction, and the Magpie and Petit-Mécatina complexes that are in Hydro-Quebec’s strategic plan—to feed exports to New England.

With this context, the 5 million ton estimate is even more unrealistic because the short-term greenhouse gas emissions of new projects are worse than older facilities. The assumption of new projects in Canada is noteworthy as well because, while consistent with sworn testimony by a Northeast Utilities executive about the source of Northern Pass power, it is directly at odds with Northern Pass’s repeated refrain that Northern Pass power will merely be excess “system power” from Hydro-Québec and won’t require the construction of new hydropower facilities. (See p. 6, footnote 1 of the amended application.)

Assumption No. 4: There won’t be any greenhouse gas emissions associated with the energy that Québec’s other neighbors may need when Northern Pass comes online and more Hydro-Québec power flows to New England.

Where would Hydro-Québec sell its energy without Northern Pass, and what power sources other than Hydro-Québec power will those places use if Northern Pass is built? Whether Northern Pass has any climate benefit depends on the answers. The report’s estimate of increased Hydro-Québec power sales into New England predicts that New England will get power that would otherwise flow to New York and Ontario. (See p. 27 of the report.) In both markets, natural gas is the marginal fuel, meaning that it both sets energy prices and tends to be the power source that makes up for unavailable sources. In other words, it would be reasonable to assume that natural gas power plants in New York and Ontario will run more if Northern Pass is built and shifts Hydro-Quebec’s exports to New England. Northern Pass’s 5 million ton greenhouse gas reduction estimate wrongly assumes that other regions’ replacement power won’t have any carbon emissions—in fact, it doesn’t address this critical issue at all. Because climate change is a global phenomenon, what we have here looks like a shell game: the supposed climate benefits of Northern Pass from displacing natural gas power in New England could very well be cancelled out by power plants in other regions burning natural gas (or other fossil fuels).

With all these assumptions in the open, Northern Pass’s 5 million ton estimate is, in a word, indefensible. Northern Pass’s strategy of endlessly repeating this 5 million ton fabrication—to investors, to permitting agencies, and to the public— signals that Northern Pass version 2.0 will be pursued with exactly the same adversarial, greenwashing tactics that accompanied version 1.0. Worse, it reflects apparent contempt on the part of Northeast Utilities and PSNH for well-informed dialogue regarding a key supposed benefit of their project.

And we certainly need a rational, fact-based dialogue as the region embarks on what CLF hopes will be a productive and rigorous process for considering the merits of and best options for importing more large-scale hydropower from Canada. A clear-eyed regional approach requires real, well-grounded numbers addressing pollution and economic impacts. (The now-revived permitting process for Northern Pass needs them, too.)

Zombies need not apply.

Northern Pass’s “new route”

Today, we learned from PSNH President Gary Long about the Northern Pass transmission project’s long-awaited “new route.” As predicted, the “new route” hardly changes the original proposal and corrects none of its serious flaws. You can read CLF’s official statement on the announcement here.

It’s critical to see Mr. Long’s announcement for what it is: a desperate (one might say “last ditch”) effort to resuscitate his company, PSNH, and its failing business model of operating inefficient and costly power plants on the backs of New Hampshire households and small businesses, leading to the highest energy rates in the region. True to form, PSNH parent company Northeast Utilities and its shareholders would still collect the lucrative fees from Northern Pass partner Hydro-Québec, while PSNH customers, who have to live with the project, would likely see even higher rates if Northern Pass were built and PSNH’s power plants continue to operate (and pollute) as they do today. Nothing about today’s announcement changes that reality.

The “improvements” announced today involve moving a small portion of the project’s path through the northernmost towns in New Hampshire (a forty-mile stretch where an entirely new transmission corridor would be constructed) and include 8 miles of new underground lines, less than 5% of the overall route, to be buried in publicly-owned roads. Designed to make the project marginally less offensive to a few communities, these pathetically modest revisions are all PSNH can show for itself after two years and millions of dollars of closed-door land deals. Notably, Northern Pass does not currently have rights to use state and local roads and will seek them during the permitting process. In other words, Northern Pass could not find enough willing landowners to secure a complete route. Unaffected by the changes announced today, Northern Pass’s overhead lines would still cross the protected White Mountain National Forest, the Appalachian National Scenic Trail, the Pondicherry division of the Conte National Wildlife Refuge, and Bear Brook and Pawtuckaway State Parks, among other state lands and conservation areas.

Filled with gauzy statements about working with stakeholders and using precisely the same song and dance we’ve been hearing since 2010 regarding the project’s supposed benefits (complete with deliberate falsehoods about emissions reductions), Mr. Long’s announcement follows two years of adversarial, scorched earth tactics by PSNH, and PSNH affiliate Northern Pass Transmission LLC, like gaming the federal permitting process, attacking land conservation efforts, and blatantly misrepresenting the project’s support and its illusory economic and environmental benefits.

In this context, it’s not surprising that PSNH can’t keep its story straight. For example, Mr. Long is continuing to insist that Northern Pass needs no subsidies, even as the economic reality has changed and Northeast Utilities lobbyists have spent the last year fighting for subsidies to keep the project on track.

Likewise, the new plan to bury 8 miles of the project is flatly at odds with Northern Pass’s repeated insistence (including in a legal filing with the Department of Energy) that any burial would be too expensive. If burial is beneficial and practical for communities and stakeholders along a portion of the route, much more of the project – if not the whole line – should be sited underground, as Governor Hassan suggests in her first reaction to the route announcement.

Unfortunately, the new route moves the project no closer to a genuine solution that would bring meaningful economic and environmental benefits to New Hampshire and real progress toward a clean energy future for New England. It was just last week that CLF expressed cautious optimism that the region could benefit from imports of large hydropower from Canada, if the deals, policies and projects were done right. What is now clear: the “new and improved” Northern Pass project is nothing new, and isn’t the solution.

For a question as big, complicated and important as what role new imports of Canadian hydropower should play in New England’s energy future, it takes more than two lines in a press release to answer it. Indeed, we at CLF have been working on this issue for years. So, it’s worth explaining in a little more depth how a new initiative announced this week could help the region come up with a sound answer that serves the public interest. The “could” is crucial, because the initiative follows in the wake of a series of poorly conceived transmission (Northern Pass) and subsidy (Connecticut and Rhode Island energy legislation) proposals that ignored key questions and advanced narrow interests.

What we know: the major Canadian utilities want to sell more power into our markets and have been executing plans to build massive new hydropower facilities and to develop new transmission corridors into and through New England.

What we don’t know: are new large-scale hydropower imports the right move for New England? In particular:

• Will new imports supply cost-effective power to the region – i.e., with economic benefits that exceed impacts?
• Will new imports actually help reduce the region’s greenhouse gas emissions?
• Will new imports diminish the impetus for renewable energy projects that are based in New England?
• Will new imports displace the dirtiest power on the regional grid?
• Will new imports drive more and more development of costly and environmentally damaging hydropower projects in Canada?
• How many and what kind of new transmission projects do we need (if any), and are the community and environmental burdens and benefits of those projects shared equitably?
• What are the energy alternatives to new imports and are they a better solution to the region’s energy needs?

On Monday, five New England states announced that they would be initiating a process that could lead to a large procurement of Canadian hydropower. Almost all the details remain to be worked out, with the New England States Committee on Electricity (NESCOE) – an organization that represents the shared interests of New England state governments in electric energy policy – managing the effort. NESCOE also is implementing the New England states’ initiative to procure renewable energy from qualifying sources, to satisfy the goals of the states’ Renewable Portfolio Standard programs.

As I indicated in the press release on the initiative, CLF is optimistic that NESCOE’s procurement process could help New England define the right role for new hydropower imports. In fact, if done well, the procurement process could provide a version of the regional assessment and strategic plan for hydropower imports that CLF and others have been advocating for more than two years. What would “done well” mean?

• The process must include, up front, a sound, technical analysis of the region’s long-term need for new hydropower imports in the context of the many alternatives, including renewable energy, distributed generation, and energy efficiency efforts that exist here in New England.
• The process must be carefully structured to assure a level playing field that properly values the most intelligent strategies to meet the states’ climate and economic goals, with no special preferences for particular companies and no ratepayer-financed windfalls.
• The process must honestly, rigorously, and credibly analyze the potential climate benefits of new imports, in light of the unequivocal science that large-scale hydropower projects and especially new facilities result in significant greenhouse gas emissions and that most net reductions will likely be over the long term, not the short term.
• The process must fairly and equitably allocate properly-accounted greenhouse gas emissions impacts among the participating states, as states like Massachusetts and Connecticut look to make good on their legal obligations under their Global Warming Solutions Acts to reduce emissions.
• The process must acknowledge and avoid rewarding the considerable environmental damage associated with large-scale hydropower development in Canada, especially the additional dam projects that new imports may facilitate.
• The process must disavow the early, troubling signs that it could be used as a vehicle specifically to promote Northeast Utilities’ current, fatally flawed Northern Pass proposal through New Hampshire.
• The process needs to bring New Hampshire to the table, as a willing and empowered participant.
• The process must assure that new imports complement, not undermine, renewable energy development in New England, in order to assist in the beneficial development of wind and other renewable projects and to help the states in meeting their existing renewable energy goals and mandates.
• If new transmission solutions are needed, it is essential that the process ensure that developers pursue the lowest-impact technologies and routing options.

As I said, it’s complicated. But there’s a real opportunity to get it right, and CLF is committed to ensuring we make that happen.

My colleagues in CLF’s Rhode Island office have been doing some important work that deserves attention this legislative session. Two of their efforts stand out: opposing the governor’s attempt to create special legislation to import power from Hydro-Quebec, and opposing the Rhode Island House leadership’s attempt to create a state Commerce Department that would take over permitting functions from the Department of Environmental Management and Coastal Resources Management Council.

Rhode Island State House, courtesy of Mr. Ducke @ Flickr

You’ve likely read more here (or here, or here) about Hydro-Quebec. The company, which (unsurprisingly, given the name) produces power from large-scale hydroelectric dams located throughout the Canadian province of Quebec, has been making a strong push to sell this power to states throughout New England. Hydroelectric power might not be so bad on its own, but Hydro-Quebec has some serious issues. Not least of these is that the most prominent proposal for transmitting additional power from Quebec to New England is a proposed transmission project through New Hampshire – the Northern Pass – that is being developed by New Hampshire’s dirtiest utility and is, in its current form, a deeply flawed proposal that may not provide meaningful environmental benefits. And, also distressingly, Hydro-Quebec has sought special legislation in each of the states it has been courting.

Here in Rhode Island, the governor has been pushing one such piece of special legislation; CLF Staff Attorney Jerry Elmer has been pushing back. The governor’s bill would require National Grid (Rhode Island’s only major electric utility) to solicit proposals and then enter into a long-term contract for a large-scale, 150-megawatt hydroelectric project. This requirement would not only displace but likely eliminate local, small-scale renewable projects that the current long-term contracting statute was designed to benefit. At the same time, it would likely drive up energy costs, sending Rhode Island dollars to Canada. And, again, importing more power from Quebec through this mechanism seems calculated to advance the poorly conceived Northern Pass project in New Hampshire. As Jerry told the House Committee on Environment and Natural Resources, it is rare that environmental organizations, energy utilities, existing renewable and conventional power plant owners, and ratepayer advocates unite so seamlessly and forcefully as they have in opposition to the large hydropower bill. And the representatives from these diverse interests all recognized Jerry’s leadership, frequently introducing their own testimony with the phrase, “As Mr. Elmer said …” – certainly a sign of effective advocacy.

Meanwhile, Rhode Island House leadership has been touting an “Economic Development Package” of bills designed to enhance the business climate in Rhode Island. Unfortunately, one of these bills would move DEM’s permitting functions and all CRMC programs and functions to a newly created “Executive Office of Commerce.”  The purpose of these moves would be to ensure that environmental permitting delays do not hold up business development.

At a hearing before the House Finance Committee, CLF Vice President Tricia Jedele pointed out the many reasons this proposed bill makes no sense whether viewed through the prism of policy or law. (You can view her testimony here, beginning midway through minute 162.) The bill ignores the reasons for permitting delays under the current regime: some delays are the result of the severe staff cutbacks DEM has suffered in the last several years; others are perfectly justified as a way to protect Rhode Island’s greatest asset – its natural resources – against exploitation. Moving permitting functions to a new Executive Office of Commerce would not restore DEM staff or better prevent exploitation.  Moreover, the bill suggests a tension between business and environment, even though a robust business climate and a clean, healthy environment can peacefully coexist under an adequate permitting regime. Perhaps most importantly, though, the bill could throw Rhode Island’s environmental permitting programs into total disarray. Many permitting programs are founded on authority delegated to the state by EPA under a host of federal environmental laws. These programs are subject to EPA oversight, and tinkering with them could easily result in EPA’s withdrawing approval and taking over permitting functions itself. Needless to say, this is not the goal of the commerce bill. Instead, Tricia told the Finance Committee, a simple solution would be to leave DEM and CRMC’s functions alone, to staff them adequately, and to add staffers to the new Department of Commerce who can help guide businesses through the permitting process. This argument was well-received, and CLF now has the opportunity to work with the House to reform the bill.

Again, my colleagues have been too busy doing this work to call attention to it, but I think it’s important to take a moment to recognize just how valuable they are to Rhode Island and its environment.

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.

Northeast Utilities (NU) tells investors and the public that it is will announce a new northernmost route for its Northern Pass transmission project by a certain date. The date arrives. A “project update” appears on the website of NU subsidiary and project developer Northern Pass Transmission LLC, saying that it isn’t ready to announce the new route just yet.

What’s behind the curtain, Northern Pass? (photo credit: flickr/Nick Sherman)

Sound familiar? It happened at the end of 2012. As reported in the Caledonian Record, it happened again last week, a mere month after NU said – in writing to investors and the Securities and Exchange Commission – that it would announce a new route by the end of March. This is the fourth self-imposed deadline that Northern Pass’s developer has failed to meet since last summer. You’d be forgiven if you started asking yourself whether Northern Pass’s route is the transmission equivalent of vaporware.

For whatever reason, NU has repeatedly misled the public and its investors about the Northern Pass project, and not just the project’s schedule.

• Its claims regarding the climate benefits of the project are based on the demonstrably false assertion that large-scale hydropower has no greenhouse gas emissions. The other New Hampshire benefits that NU ascribes to the project are little more than overblown talking points that do not withstand scrutiny.  
• Last November, NU’s CEO misled investors by falsely claiming broad support for Northern Pass among environmental groups, New Hampshire’s governor, and the regional operator of the electric grid; a corporate spokesperson then misrepresented what he said in an attempt to cover up the misstatements. 
• While it continues to insist Northern Pass-transmitted hydropower needs no subsidies, NU has been openly lobbying to obtain special treatment for large-scale hydropower from Connecticut officials and the Connecticut state legislature.

Securities regulators should take note of this pattern of behavior and insist on honesty and transparency from NU, just as Massachusetts Attorney General Martha Coakley did when NU recently balked at revealing its CEO’s 2012 compensation package. As we’ve said before, investors, the public, and our energy future depend on accurate information and forthright disclosures from energy companies. That’s not what we’re getting from NU on Northern Pass.

On a sloppy March 19, while our changing climate threw a late winter storm of ice, snow, hail, sleet and rain at New England, a legislative hearing room in Hartford Connecticut was the focus of regional energy policy attention. The  Energy and Technology Committee of the Connecticut Legislature was holding a hearing on a bill to revise the Renewable Energy Portfolio standard of Connecticut – the Nutmeg State’s piece of the regional effort that has inspired a rising tide of wind and solar energy development across New England.

The bill before the committee that day, which bears the spine tingling and exciting name of “SB 1138 – An Act Concerning Connecticut’s Clean Energy Goals” was a complex piece of legislation making a whole series of changes to the important law that is Connecticut’s part of a successful regional effort to build new clean energy facilities.

An odd and disturbing subtext was this: at the very same moment that the hearing was going on the Connecticut Department of Environmental Protection (DEEP) announced and released online a study of the very program being revised by the proposed law.  This meant that as DEEP Commissioner Dan Esty was introducing and explaining a law to change a critical energy and environmental program his Department was releasing a draft study, which would go through two months of public process, to decide whether to make the very kind of changes that the bill he was introducing would make. This is very similar to a group of kids playing baseball in front of plate glass window while promising to have a really focused conversation about where (and where not) was a safe place to play ball, vowing to do so right after their game ended.

To be fair, there is a real urgency to one part of the bill: the provision that would enable Connecticut to move quickly, perhaps in cooperation with other states, to enter into long-term contracts with windfarms and take advantage of the limited extension of the federal renewable energy incentives that (unless Congress changes its mind yet again) only apply to projects that are in construction by the end of 2013 – a deadline that seems like a long ways away, unless you are trying to build a large facility like a windfarm, in which case you understand that getting contracts in place as soon as possible is needed to have shovels in the ground and construction underway by the end of the year.

But another topic was the main focus of the hearing: the proposal to allow large Canadian hydroelectricity to participate in the program, a change long sought by Canadian provinces who seek to import money in exchange for power – and a change long opposed by those who wanted to keep the program focused on building new wind and solar resources for New England.

The hearing brought forth a flood of testimony. While there were over 100 pieces of written and in-person testimony presented to the committee it appears that only the state-owned Hydro Quebec utility, who would likely handsomely benefit if the bill became law, and Northeast Utilities, who are trying to build the infamous Northern Pass transmission line to bring that power to market, testified in favor of the very controversial change in eligibility benefiting large Canadian hydropower.

CLF’s testimony on Bill 1138 criticized that change in the law as disrupting a very successful renewable energy program, as did the testimony of business leaders and labor unions and many, many others. Our testimony graphically illustrated the ever-rising progress of wind power in New England as RPS-inspired projects came on line and fed clean power into the regional grid.

Some members of the committee, including Rep. Brian Becker, actively raised the question of whether the urgent portion of the bill that would allow Connecticut to move forward with procurement of wind and solar this year, in tandem with other states, could be severed from the other controversial portions of the bill that could be reviewed and discussed separately. No real response was ever given to this very legitimate concern.

In the aftermath of the hearing some of the environmental and business groups who testified delivered a letter to the legislative leadership summarizing the situation and, extraordinarily, officials in Massachusetts state government expressed concern about the bill – telling reporters that:

Massachusetts has taken the lead, working very closely with other New England states, in putting together a regional procurement plan for renewable energy. While we embrace a wide range of clean energy initiatives, we have serious concerns about how Connecticut’s proposed changes to its renewable portfolio standard will affect the region’s renewable market

Undeterred by this criticism and controversy and ignoring the clear issues of good government and process, as well as the need to foster business development through clear and consistent rules adopted after careful process, the Committee met and considered a very slightly revised version of the bill on March 20 in a meeting recorded in an online video.  Eight members of the Committee expressed real concern about the deep and systematic changes being made to a critical clean energy program. They, once again, aired the idea of severing the one small provision that needed to be moved rapidly, considering the rest of the bill after the study, already underway, was completed. Again, they did not get a public response.  The final vote of 16-8 shows who on the Committee stood where.  It is indeed striking not one of the 16 who voted “yea” was willing to defend their vote.

All signs point to the bill continuing to move ahead at a very rapid clip – in fact it may come to the floor of the legislature for a vote as soon as March 27 – when new gun laws being considered in the wake of the Newtown tragedy will be absorbing public interest.

If you live in Connecticut, or know someone who does, please use our action alert to urge the legislative leadership to stop the rush towards changing this important energy and environmental program.  Instead, very specific and timely action to join with other states to enter into long term contracts with new windfarms is needed and the rest of the changes to the renewable energy program should be carefully studied and considered.

(photo credit: Jack Zalium/flickr)

Get ready: long-simmering chatter among lobbyists and officials in state houses and administrative agencies is about to become a loud, insistent chorus proclaiming that New England needs to give Canadian hydropower financial incentives so that our region can meet renewable energy and climate goals. This policy change would be a wrong turn for a region that is trying to build a truly clean energy future.

As we’ve been discussing for several years now, Québec and other eastern Canadian provinces are eager to increase power exports to New England, including through proposed transmission projects like Northern Pass. Our neighbors to the north have developed and are building more power than they need, and, until New England power prices began their historic decline, the economic motivation for increasing exports was clear: Canadian utilities like Hydro-Québec could sell power to customers in New England and the northeastern U.S. at much higher prices than their own domestic customers are paying. Profits from existing exports to the United States were and remain a major contributor to those utilities’ bottom lines, and they saw and planned to take advantage of a major opportunity to increase profits with new transmission capacity and newly developed hydropower facilities.

The economics behind this long-term Canadian strategy are increasingly in question. Following on the heels of recent technical analysis questioning the strategy’s underpinnings, the most recent projections from the U.S. Energy Information Administration show that total U.S. imports of all energy and electricity in particular are slated to decline over the next fifteen years, with electricity imports never again to achieve the peak level of imports seen in 2012. Given the availability of U.S.-based energy supplies at lower long-term prices, especially natural gas but also wind and other renewable sources, there will be less market demand in the U.S. for Canadian power. These projections reflect a very different reality from the prevailing expectations in 2008, when Hydro-Québec’s strategic plan and the Northern Pass proposal were taking shape. In a research note published last week, Stéphane Marione of Canada’s National Bank Financial warned that “none of the Canadian energy-producing provinces can ignore the profound changes that are taking place in the U.S.”

Montréal, we have a problem. In this new world, the potential market profits from Hydro-Québec’s export strategy are far less compelling. Hydro-Québec may not be able to sell power in New England at the prices it needs to recover the costs of building new transmission like the Northern Pass project and new hydropower projects like the Romaine complex and also return substantial export-driven dividends to the provincial budget.

One possible way that Hydro-Quebec could restore some of these profits is by convincing New England states to increase the price New England customers will pay for Canadian hydropower above the market price. While this may directly contradict the widely held assumption (and marketing claim) that Canadian hydropower is a low-cost power source that is economic without any special incentives, the cognitive dissonance has not prevented Hydro-Québec and Northern Pass developer Northeast Utilities from lobbying New England states to achieve just this goal, an effort CLF has opposed around the region, including in New Hampshire. (Hydro-Québec succeeded several years ago in convincing Vermont to allow its power to count towards a portion of the state’s renewable targets.)

Although the utilities’ lobbying is mostly outside the public view, it is increasingly occurring out in the open, with a direct and urgent new tone. Case in point: Hydro-Québec and Northeast Utilities recently filed comments on Connecticut’s draft energy strategy, which contained some language favoring expansion of Connecticut’s renewable portfolio standard program to include Canadian hydropower, the very policy change that the utilities are seeking. (Incidentally, the final strategy, released last week, made a few changes to the language, and Connecticut is now considering whether and how it might incentivize new imports in a separate study, which is due out soon.) So what did they say?

Hydro-Québec, through its U.S. trading subsidiary HQUS, commented that hydropower should be counted towards meeting Connecticut’s renewable objectives and that its hydropower is less costly than other renewables, but not all power in the marketplace:

HQUS urges Connecticut to recognize Hydro-Québec hydropower as a renewable resource and consider how it might contribute to achieving renewable objectives, as well as other important energy and economic goals. HQUS recognizes that Connecticut has multiple objectives for its renewable programs including to support the development of in-state and in-region resources and emerging technologies. However, if Connecticut’s priority is to maintain its commitment to renewable supply in a cost-effective matter, consideration should be given to the participation of Canadian hydropower. Allowing these resources to contribute to renewable objectives offers a pragmatic way for the state to lower program costs in the near term and, if desired, to extend and increase renewable goals into the future. An approach that values the multiple benefits of Canadian hydropower could also create a market signal necessary in today’s market to promote the infrastructure needed for incremental deliveries into the region for the benefit of all consumers….

Some stakeholders suggest that Hydro-Québec hydropower facilities are “cheap” or low cost to construct. This is incorrect. In fact the cost of building hydropower facilities is significant and generally also requires the construction of new transmission facilities to deliver generator output to load centers, which is also very costly. (Hydro-Québec has also proven successful in the development and construction of transmission facilities to deliver large quantities of electricity over long distances.) However, even with the added cost of transmission to deliver hydropower from Quebec into New England, HQUS estimates its costs to be significantly less than the cost of the delivering equivalent quantities of renewable power from other potential renewable resources in and near New England.

Northeast Utilities, through its Connecticut subsidiary Connecticut Light & Power, commented that hydropower delivered through new transmission projects should get incentives, which would count against the state’s current renewable requirements:

Connecticut has an opportunity to tap into Canadian hydroelectric facilities that are available now or under development, through the development of new transmission infrastructure. A Connecticut RPS market design, which acknowledges that RPS can not only enable new generation, but also support new, clean energy transmission infrastructure could, in this instance, provide for significant Connecticut customer savings….

CL&P believes Connecticut could create a new class of RECs for incremental hydro-electric supply that is delivered over a new transmission interconnection that has been built as an economic project (as opposed to a reliability-based one) which would supplant the need for meeting some portion of Class I RPS requirements….

CL&P believes that embracing large scale hydro power delivered on new transmission as a qualified renewable would meet all three of the State’s energy goals:

• It would be cheaper than other clean energy resources,
• It is clean with very low lifecycle CO₂ emissions, established by independent scientific reviews, and
• It is reliable, and would lessen the region’s dependence on natural gas for power generation needs.

It’s clear from these comments – and the utilities’ growing campaign to secure changes to New England’s renewable energy policies – that they are looking for subsidies from electric ratepayers to support new hydropower imports into the region. In fact, the Northeast Utilities comments constitute a direct effort to secure ratepayer subsidies for Canadian hydropower transmitted over Northern Pass, something Northeast Utilities repeatedly claimed it would not seek and does not need (e.g., here, here,  and here).* (For the record, they are mischaracterizing the emissions benefits to support their argument for subsidies. But that’s another story, well chronicled in prior posts.) Certainly, Hydro-Québec’s own comments reveal that its power can no longer beat the market on its own.

It’s also clear that, depending on how it is pursued, this kind of policy change threatens to put New England’s renewable energy industry at a deep and unfair disadvantage and to undermine its growth. Even Northeast Utilities, in the comments linked above, acknowledges this risk.

CLF has been clear that more Canadian hydropower could be a good thing for the region under the right conditions. But why should New England customers be forced to pay an above-market price? State renewable portfolio laws are intended to get new renewable projects built here, not to force ratepayers to pay extra to improve the economics of Québec’s new hydropower facilities and specific transmission development plans. That’s why CLF strongly objected to the draft Connecticut strategy’s mention of potential inclusion of Canadian hydropower in Connecticut’s renewable portfolio standard law. You can read our full comments, which address other major Connecticut energy issues as well, here.

It’s not too late for the New England states to get smart about new imports and make sure that new imports only happen, if at all, in cost-effective ways that allow alternative power sources and companies to compete on a level playing field, respect local communities, and provide meaningful economic and environmental benefits, accounted for in fair and open processes. Committing New England residents and businesses to pay above-market prices for Canadian hydropower isn’t one of them.

* from Northern Pass’s website, accessed today:

Providing economic clean energy—without a government subsidy

This will be one of the few—if not the only—renewable energy projects in the region that does not need a government subsidy to move forward. Hydro-Québec can generate and sell the power to us at prices that will compete with the average market prices that are being set today by fossil fuel power plants.

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.