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.

(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.

May 23, 2013

Dear Chairwoman Sosnowski and members of the Environment Committee:

This e-mail follows yesterday evening’s hearing on S-901, the Governor’s Energy Reform Act of 2013, with its provision for purchasing large quantities of Canadian hydropower; and S-938, Chairwoman Sosnowski’s proposal for extending and enlarging Rhode Island’s landmark Distributed Generation Standard Contracts program. For your reference, I attach a copy of the written submission that I provided at yesterday’s hearing, which you can see here.

It was significant at yesterday’s (very long) hearing that – except for the Governor’s Administration – every witness from every sector spoke against the Governor’s energy bill. In broad terms, these witnesses came from four different sectors: (1) the utility (National Grid); (2) the environmental community (including the Environment Council of Rhode Island, Conservation Law Foundation, and many others); (3) fossil-fuel generators (including Dominion, Exelon, and the New England Power Generators Association); (4) renewable energy developers (including People’s Power and Light, Heartwood Group, and many others). It is a rare issue indeed that sees these disparate sectors in such complete agreement. Last night, the Governor’s energy bill was opposed by National Grid; the Environment Council, representing every one of the 60-plus small, medium, and large environmental organizations in Rhode Island; the fossil fuel industry; and all the renewable energy developers working so hard to build real renewable projects in Rhode Island!

As I acknowledged in my testimony yesterday evening, these different sectors each have their own reasoning for opposing the Governor’s energy bill.

National Grid opposes S-901 because it would result in rate increases for ratepayers; and, as Mike Ryan of Grid put it last night, “We are the guys who send out the bills.”

On Senator Archambault’s question as to whether the bill provides an actual mandate, Mr. Ryan quite clearly said two things. First, yes, the bill provides a mandate that will have adverse consequences for ratepayers. Second, whatever you call it, the provisions of the bill act like a mandate and, thus, will have the consequences of a mandate.

The environmentalists oppose the Governor’s energy bill because it would eviscerate existing renewable energy laws.

For example, the bill changes the definition of “eligible renewable energy resources” in Rhode Island’s 2004 Renewable Energy Standard. (See ¶ 2 on the attached testimony). When the General Assembly enacted the RES, it carefully excluded large Canadian hydropower because the law was intended to help new renewable energy projects. Canada is in the middle of a 50-year plan to construct big dams. Many have already been built; the rest will be built anyway, and do not need help from the RES.

The Adminstration’s rebuttal on this point was extremely revealing. The response was that the bill does not grant Renewable Energy Credits, or RECs, to Canadian hydropower. This statement was completely correct. It was also completely irrelevant. The problem with the bill is not that it gives RECs to large hydropower (and last night no one suggested that it did). The problem with the bill is mis-using the RES to send money to projects that are built anyway.

CLF and the other environmental organizations also oppose the Governor’s energy bill because it misuses the 2009 Long-Term Contracting Statute to procure Canadian hydropower. The purpose of this statute was to facilitate projects that would not and could not have been built but for the statute. The purpose of the LTC Statute was not to give a sweetheart deal to already-existing projects.

Here, again, the Administration’s response was extremely revealing. The response was that the bill does not touch or eliminate the 90 megawatts of renewables provided for in Section 3 of the Long-Term Contracting Statute. Again, this is completely correct. Again, this is completely irrelevant. No one suggested that the problem with the Governor’s energy bill is that it takes away the 90 megawatt mandate in Section 3. Those megawatts are already under contract; there has been an entire series of PUC dockets examining the reasonableness of those contracts. The problem with the Governor’s energy ill is that it mis-uses the separate, additional 150 megawatts found in Section 8 of the Long-Term Contracting Statute that were intended to assist new development, in Rhode Island, that would not or could not have been built otherwise.

Simply put, it is bad public policy to mis-direct the 150 megawatts in Section 8 of the Statute to large, existing hydropower facilities in Canada when those 150 megawatts were meant for new projects in Rhode Island. And the Administration is simply wrong to conflate the 90 megawatts in Section 3 (that are already under contract) with the separate, additional 150 megawatts in Section 8 (that do not yet exist).

But the most important point from last night is this: there is today no law and no regulation that prevents National Grid from contracting for Canadian hydropower (see ¶ 4 of the attached sheet). As I explained last night, we litigate so-called “Standard Offer Service” dockets in the PUC every year. Standard Offer Service is the electricity that nearly every residential customer in Rhode Island uses every day. There is nothing whatever in the law right now preventing Grid from contracting for Canadian hydropower.

Although there is nothing in the law preventing Grid from buying Canadian hydropower today, there are two very, very powerful reasons why Grid does not do so: (1) it is uneconomical; and (2) there is no transmission to bring the power here. And changing the law will not change those factors. You can change the law and Canadian hydropower will still be uneconomical. You can change the law, and there will still be no transmission available.

None of the environmentalists testifying last night are opposed to hydropower in principle. Indeed, hydropower done right could be an excellent component of an overall energy mix designed to lower carbon emissions. Environmental organization are opposed to eviscerating existing renewable energy laws that were designed to help new projects get up and running in order to subsidize already-existing Canadian projects.

In the end, there are many reasons to oppose the Governor’s energy bill. As National Grid said, it will have adverse impacts for ratepayers. As CLF said, it will eviscerate existing, successful renewable energy laws long supported by the General Assembly. And what is clear after last night is that there is unusual unity on the issue: National Grid; every small, medium, and large environmental organization; the fossil fuel generators; and every renewable energy developer all oppose the Governor’s energy bill.

CLF respectfully asks you to vote the Governor’s energy bill, S-901, down.

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.