3 Things No One is Telling You About Rising Energy Costs

Oct 3, 2014 by  | Bio |  1 Comment »

Rahm Emanuel, President Obama’s first White House chief of staff, was once quoted as saying “You never want to let a serious crisis go to waste,” referring to the opportunities to pass sweeping bills in the wake of the 2008 financial meltdown. Over the past weeks, we’ve seen that sentiment put into practice by some of New England’s major energy industry players. They’ve been fanning the flames of fear over expected winter price spikes to support their continued push for building massive new gas pipelines, even though new pipelines have no chance of helping to address the risk of price spikes for this winter.

Here are 3 things you’re not being told about what’s really responsible for the increased rates and how to deal with rising energy costs now:

  1. New pipelines can’t and won’t address the rising rates for this winter (or the next three winters).
    • Even under the most optimistic scenarios, new natural gas pipelines of the scale that were being considered as part of the now-stalled New England Governors’ initiative could not be permitted and built earlier than November 2018. Even if they lived up to the Governors’ promises after that, they would do nothing for consumers this winter and the next three winters.
    • New England isn’t the only region of the country that experienced price spikes this past winter. New York, an area that had just expanded its pipeline capacity still experienced higher prices last winter, and the regional electric grid known as PJM (because it covers, in part, Pennsylvania, New Jersey and Maryland) also experienced price spikes even though it is located in the epicenter of abundant Marcellus shale gas supplies.
  2. The real problem isn’t a major deficit of pipeline capacity, but a failure to deal adequately with the increased use of natural gas for power generation.
    • We now use a lot of natural gas for power generation in New England, which helped modernize the system by moving us away from old, polluting, and inefficient sources like coal and oil. Because of this, and the way the regional grid’s electric market works, natural gas prices now generally set the price for electricity in New England.
    • Unlike natural gas utilities that supply homes and businesses with gas for heating, which buy gas on long-term “firm” contracts that guarantee access to gas, the companies that own natural gas power plants typically buy cheaper “interruptible” contracts because there isn’t currently a mechanism that allows them to pass-through the additional costs of buying firm supply.
    • In the winter time, people are often turning on the heat at the same time that they are turning on the lights, so the system experiences high demands on gas for both uses in the mornings and afternoons. These “coincident” demands led to price spikes between 10-42 days in each of the last winters, and retail electric prices are now catching up as the market is expecting a repeat of last winter’s high prices.
    • Now that natural gas makes up so much of the electricity we use, the volatility of gas prices has a bigger impact on electric prices and leads to higher rates. We have been far too slow in deploying demand-reducing energy efficiency measures in homes and businesses and in increasing the amounts of local renewable energy on the system, both of which would help reduce market prices for electricity and protect us from volatile gas prices.
    • The increased use of liquefied natural gas (LNG) imports should help to moderate the price spikes to some extent this year, but more can be done through market reforms without risking overbuilding gas capacity.
  3. Energy efficiency is the best way to reduce your bills and stay warm this winter.
    • Even though rates are going up, you can still lower your total bill by lowering your demand. Massachusetts has some of the best energy efficiency programs in the country which means that you can apply for rebates, incentives, and assistance to help you install efficient measures. Other New England states have programs as well.
    • If you don’t own your home or apartment, there are still some inexpensive steps you can take to cut your bills. There are many ways to conserve energy for a very small investment of time or money. Check back in for a look at how Senior Attorney Shanna Cleveland is getting her apartment ready for the winter.

Meet the CLF Dive Team

Jun 2, 2014 by  | Bio |  Leave a Comment

CLF-Dive-Team-1

The team getting ready for action.

With the CLF dive team busy exploring Cashes Ledge and other sites in the Gulf of Maine, we thought we’d introduce you to our star-studded team of ocean adventurers!

 

CLF-Dive-Team-2

Brian Skerry is a renowned underwater photographer praised around the world for his aesthetic sense and evocative scenes. His images tell stories that not only celebrate the mystery and beauty of the sea, but also help bring attention to the threats that endanger our oceans and their inhabitants.

A contributing photographer for National Geographic Magazine since 1998, Brian has covered a wide range of stories, from the harp seal’s struggle to survive in frozen waters to the alarming decrease in the world’s fisheries. His latest book, a 160-photo monograph entitled Ocean Soul, was published in 2011.

Skerry is also a passionate ocean advocate. After three decades of exploring the world’s oceans, the Massachusetts native has returned to the Gulf of Maine to document and protect its exceptional diversity of marine wildlife and habitat.

CLF-Dive-Team-3

Jon Witman is a professor of biology at Brown University. He has studied the ecology of subtidal marine communities for over 30 years, and has conducted research in six of the world’s seven oceans.

Jon led the first ecological study of overfishing in the Gulf of Maine. He has published numerous peer-reviewed papers and book chapters on the invertebrate and fish communities that thrive on the rocky seafloor at Cashes Ledge, and he has also studied the internal waves that support primary productivity in the area. He is committed to protecting the ecological and scientific value of this unique marine habitat.

Jon will also be joined on the expedition by his Ph.D. student Robby Lamb.

CLF-Dive-Team-4

Evan Kovacs started his filming career in 2003 on the History Channel’s underwater adventure series Deep Sea Detectives.  He has also had an ongoing filming relationship with the Emmy award winning Lonewolf Documentary Group, and recently the Woods Hole Oceanographic Institution (WHOI).

With WHOI’s Advanced Imaging and Visualization Lab, Evan has filmed on the deep submersible ALVIN and the ROV Jason. Currently he is working with the lab to develop the next generation of 3D and 2D cameras and shooting techniques for topside and underwater imaging. Evan has been diving for over 18 years and has dived on shipwrecks, caves and reefs across the world.

CLF-Dive-Team-5

Luis Lamar is a scientific technician with WHOI’s Advanced Imaging and Visualization Lab. He has filmed and photographed marine life around the world, from New Zealand to Micronesia. Lu has assisted Brian Skerry on numerous dive expeditions and has captured video of the kelp forests on Cashes Ledge for Conservation Law Foundation.

CLF-Dive-Team-6

Ken Houtler is the captain of WHOI’s R/V Tioga, a research boat launched in 2004 and designed for day and overnight trips in coastal waters. Ken has led the vessel on countless research expeditions in New England waters, including trips to deploy and recover autonomous oceanographic instruments, to collect data on harmful algal blooms, and to tag endangered North Atlantic right whales.

CLF-Dive-Team-7

Liz Kintzing is the expedition’s dive captain. Liz supervises the academic diving program at the University of New Hampshire’s School of Marine Science and Ocean Engineering, and she also sits on the board of the American Academy of Underwater Sciences. She has been diving with Jon Witman on Cashes Ledge for over 20 years.

Distributed Generation and Net Metering in Rhode Island: Poised for Growth

Mar 4, 2014 by  | Bio |  Leave a Comment

This post is the third in a series about a new distributed generation bill introduced in the Rhode Island General Assembly.

On Friday, February 28, a new renewable energy bill – H-7727 and S-2690 – was introduced into the Rhode Island General Assembly. The bill is designed to provide for a steep increase in the amount of so-called “Distributed Generation” (or DG) in Rhode Island. You can read general background about the new bill here. This blog post focuses on two specific, innovative aspects of the bill, both of which concern “net metering.”

What is Net Metering? As I explained in my prior post, net metering allows utilities and owners of small DG projects to track how much electricity is produced by these projects. Most people have electricity meters from the utility that only run one way – measuring (and then billing for) the electricity the ratepayer uses in a month. With net metering, the ratepayer gets a meter that runs both ways. When the ratepayer produces more electricity than she actually uses, the electricity meter literally runs backwards. In some cases, the utility will actually end up sending a check to the ratepayer at the end of the month for the excess electricity put back into the grid.

Designing New Rates for DG and Net Metering Rhode Island’s new DG bill provides that the Public Utilities Commission (PUC), which sets utility rates, must open a docket to re-examine electricity rates in light of the anticipated huge growth of DG and net metering (which this new bill is designed to make happen).

net-metering

photo credit: nocklebeast via photopin cc

Why this is important. Traditionally, all utilities have recovered their costs (and made their profits) on a volumetric basis – the more electricity (or gas) a utility sells, the more money it takes in. The growth of net metering and DG undermines that traditional revenue model, since this growth will mean the utility will sell less commodity. Thus, unless this problem is addressed, utilities will always be opposed to net metering and DG. Moreover, utilities have legitimate costs associated with running the electricity distribution system; and these costs will continue to have to be met, even in a new world where there are huge increases in net metering and DG. Creating a new rate design that provides appropriate compensation to the utility in the new world of widespread net metering and DG will remove an important disincentive to utility support for these programs. Importantly, the bill carefully sets forth what the PUC must consider, including reducing carbon emissions and properly accounting for the many benefits of distributed generation.

Adding a Second Meter A second innovative provision of the new bill is that it will require renewable energy generators who net meter or receive a DG tariff to add a second electricity meter. Under the current system (in which generators have one meter), the utility only knows net flows for net metered and DG customers; the utility does not have any idea how much load is on site “behind the meter.” Installing a second meter will enable the utility to learn what is going on behind the meter, and understand how much electricity is flowing both ways.

Why this is important. This provision has broad implications for the electricity grid and ISO-NE, the company that runs New England’s electricity grid. (You can read more about CLF’s work with ISO-NE in a prior blog post of mine, here.) Historically, environmentalists have stressed to the public – and to state legislatures – the ratepayer benefits of net metering and DG by emphasizing the money that can be saved by ratepayers at times of peak load when the presence of DG means that the ISO does not need to dispatch (or “turn on”) the most expensive electricity generators on the system. However, the ISO estimates that 85% of the DG now on the system across New England is invisible to its Control Room in Holyoke, MA. Crucially, the ratepayer benefits of DG only occur if the ISO knows about it; if the DG actually on the system is invisible to the grid operator, then it unnecessarily dispatches generators that it doesn’t need – and ratepayers never see the benefits of the DG that is already on the system. This new system of metering will begin to address this problem, with all net metering and DG customers having two meters and making the energy visible to the ISO. The provisions for a rate-design docket at the PUC and for better monitoring of all renewable energy generators) are quite technical. But both are designed to remove disincentives and obstacles from the development of renewable energy. We believe that these innovations may well serve as a model for other states.

Major New Distributed Generation Bill Introduced in Rhode Island General Assembly

Feb 28, 2014 by  | Bio |  Leave a Comment

This post is the first in a series about the new Distributed Generation bill.

A significant new bill designed to dramatically increase the amount of clean renewable energy generated in Rhode Island has been introduced into the 2014 session of the General Assembly. The lead sponsor of Senate Bill-2690 is Chair of the Senate Environment Committee Susan Sosnowski; the lead sponsors of House Bill-7727 are Representatives Deborah Ruggiero and House Environment Chair Arthur B. Handy

I was pleased and honored to have worked over a period of months with the bill’s sponsors and with other collaborators – including National Grid and the New England Clean Energy Council – to craft the bill.

If this new bill passes, it will quadruple the size of Rhode Island’s existing Distributed Generation (DG) program. DG involves the development of projects that produce renewable energy – like solar panels on residential rooftops or a single wind turbine at a town hall or school – rather than utility-scale projects like Cape Wind or a large land-based wind farm. While both types of projects (large and small) are important to developing a renewable energy future, it often takes different laws, providing different financial incentives, to get each type of project built.

Rhode Island’s current DG program was enacted in 2011 as a pilot program designed to get 40 megawatts (MW) of DG projects up and running over a four-year period. The pilot program has worked exactly as it was intended; so far, 18 separate renewable energy projects have been approved and are under construction in Providence, East Providence, Portsmouth, Lincoln, Westerly, Bristol, West Greenwich, East Greenwich, Hopkinton, Middletown, Cumberland, North Kingstown, North Smithfield, and West Warwick.

Still, the pilot program was – well, a pilot program. As such, it was relatively small. In contrast, the newly introduced bill would ramp up DG development to an additional 160 MW over the next five years.

The bill is designed especially to facilitate rooftop solar projects for residences and small businesses by giving home and business owners a generous financial incentive for these smallest projects – and by making the process for getting that incentive very easy. Solar developers anticipate that these provisions will jump-start a strong and robust rooftop solar industry in Rhode Island.

Distributed-Generation-Bill-in-Rhode Island

photo credit: Greens MPs via photopin cc

The bill also has specific provisions designed to facilitate (and pay for) non-solar DG projects, like wind and small, local hydro. Like Rhode Island’s existing DG Statute, the new bill creates a mechanism for setting payments for DG owners – payments that are designed to be high enough to get projects actually built, yet low enough to still be competitive.

The new bill would also remove the aggregate statewide limit (currently at 3% of statewide electricity load) on net metering. Utilities and owners of small DG projects use net metering to track how much electricity these projects produce – and to make sure that the owner of the project gets properly paid. Most people have electricity meters from the utility that run one way – measuring and then billing a ratepayer based on how much electricity she uses in a month. With net metering, the ratepayer gets a meter that runs both ways. When the ratepayer produces more electricity than she actually uses, the electricity meter actually runs backwards. In all cases, the ratepayer won’t pay for that unused electricity, and, in some cases, the utility will end up sending the ratepayer a check at the end of the month for the excess electricity she put back into the grid.

Net metering provides an important way for individuals and businesses to pay for the renewable energy projects they own. Until now, Rhode Island – like most states – has capped how much net metering can be done in the state. This bill removes that cap – a goal that CLF has been fighting for in the State House for years. If passed, Rhode Island will become one of the first states in the country to remove all caps on net metering.

In future blog posts, I will discuss two additional features of Rhode Island’s new DG Bill. Both are important, because they are designed to remove major, existing disincentives to utility company support for developing a robust renewable energy future. One provision moves payment for DG projects away from contracts and to tariffs. The other creates a new method for compensating utilities, which will allow for rapid growth of renewable energy distributed generation.

Rhode Island is now poised for rapid growth of renewable DG. The newly introduced bill – H-7727 – represents a major step forward for Rhode Island.

CLF’s Most Read Blog Posts for 2013

Jan 2, 2014 by  | Bio |  Leave a Comment

The Good, the Hopeful and the Ugly: Clean Energy in America and New England in the Fall of 2013

Sep 25, 2013 by  | Bio |  Leave a Comment

First, the good:  There’s some good news to report: The Commonwealth of Massachusetts and the State of Connecticut are well on the way to implementing key provisions in the clean energy laws that CLF helped craft. These provisions ensure that for years to come the residents of both states will enjoy the benefit of clean and cost-effective renewable energy generated by solar and wind power.

In Massachusetts, the Boston Globe reports, the utilities are proposing to buy 565 Megawatts of wind power from six wind projects in Maine and New Hampshire.  At least two of those projects will be built by Boston based First Wind.

The Connecticut utilities, reports the Hartford Courant, are proposing to purchase 270 Megawatts of clean power, with 250 of those Megawatts coming from a wind farm in Aroostook County, Maine and 20 Megawatts from a solar project in Sprague and Lisbon, Connecticut.

For over a decade, Conservation Law Foundation has been advocating for states to encourage and require these kind of cost-effective long term contracts between utilities and renewable energy developers (in financial jargon, “going long”). These kinds of contracts are a smart and cost-effective way of managing the transition to a clean energy economy and are consistent with the restructured competitive electricity system and markets that CLF helped to create in our region in the 1990’s. CLF supported similar contracts to make the Cape Wind project possible and worked to shape the laws in both Massachusetts and Connecticut that enabled and mandated the contracts that have just been proposed in both states.

And from Washington, hopeful news: Environmental Protection Agency administrator (and wicked big Red Sox fan) Gina McCarthy announced that EPA is moving forward with the regulations required by the Clean Air Act to regulate emissions of Carbon Dioxide, the primary greenhouse gas causing global warming, from new power plants. As CLF noted in our statement hailing this move:

The emissions limits proposed by EPA are critical to reducing the climate pollution that is raising sea levels, increasing extreme weather events and imposing devastating consequences on people and countries around the globe . . . For the past ten years, actions by the northeast states and countless power plant owners in the region have demonstrated that reducing greenhouse emissions is not only good environmental policy, but also enhances the region’s economic prosperity by more efficiently and cost effectively making and using electricity. Our long experience in decreasing electric sector greenhouse gas emissions in New England, while also reducing energy costs, has blazed a path for EPA to follow in implementing the requirements of the Clean Air Act.

 In a moving and unusually personal essay, Ms. McCarthy explained the regulations and put them the context of her long career in Massachusetts that began with her work as a town public health agent:

I didn’t plan for a life built around protecting the environment. In fact, I started my career as a health agent in the town of Canton, Mass., and later worked for the Stoughton Board of Health. But at some point I realized that at its core, the issue of a clean environment is a matter of public health. The two are inextricably linked.

 This is the perspective that we need to embrace – focusing on the practical connection between reducing emissions and protecting the public health.  This perspective underlay the efforts to slash dangerous emissions in the Northeast and is a solid foundation for the work that EPA is now doing nationally.

And, sadly and unsurprisingly, the “Ugly” is found on Capitol Hill in Washington DC: Recently, I wrote here about what a great choice President Obama made when he nominated Ron Binz of Colorado to be a Commissioner (and the Chairman) of the Federal Energy Regulatory Commission. Mr. Binz is a reasonable and moderate man with an even temperament, a good sense of humor, deep knowledge of the energy world, the ability to see things from a range of perspectives (drawing on his broad experience as a consumer advocate, businessman and state energy regulator) and a clear sense of how to manage the difficult transition that the energy system is experiencing.

It is therefore very disappointing that his nomination is “in trouble.” Mr. Binz is being attacked for having had incidental contact with a lobbying firm hired by others to respond to the massive and unprecedented campaign against his nomination. The closest thing to a substantive complaint against Mr. Binz is this: he has stated that if the Federal government continues to move forward with the regulation of greenhouse gases that, unless carbon capture and sequestration (CCS) is perfected and made commercial for natural gas fired power plants so they can run without contributing to global warming, gas will no longer be usable as a major fuel at some point in the future.  In public remarks, that reflect very mainstream thinking in the energy industry, he noted this reality and said that absent CCS the move away from gas must begin before 2035, using the phrase “dead end” to describe the situation.  If you have an appetite for deep engagement of complex energy issues featuring Jim Rogers, the retiring CEO of Duke Energy and Mr. Binz check it out on Youtube – the “controversial” remarks used to create a phony controversy can be found around the 30 minute mark.

Given the current state of affairs on Capitol Hill it is possible, if not likely, that this excellent nomination will fail. That would be a shame indeed.

 

Air Quality Alerts; What You Can Do About Them

May 31, 2013 by  | Bio |  1 Comment »

Mindy McAdams, Flickr

Kids playing in Boston’s Christian Science Plaza Fountain, by Mindy McAdams on Flickr

The heat is here!

Even though it’s technically still spring until late June, it feels as though summer has already come to stay in southern New England. While we New Englanders pride ourselves on being able to handle all kinds of weather, the health risks posed by poor air quality shouldn’t be ignored.

On a hot summer day, I know I make sure to check the weather in the morning before leaving to see how hot it might get and if there’s a chance of rain. Weather reports and weather websites are good at giving us lots of data about the day’s weather in general (hourly temperatures, chance of rain, and radar maps tracking storms), but don’t always give a detailed explanation when there’s an air quality alert (like there is this weekend).

What does an Air Quality Alert really mean?

The Air Quality Index combines measurements of ground level ozone and particulate matter to determine when levels of those pollutants might be harmful to humans.

Ground level ozone forms when pollution from cars, construction equipment, factories, and power plants containing oxides of nitrogen and volatile organic chemicals mix in sunlight. While lots of ground level ozone is formed in urban areas on hot days, it can also be blown over long distances by wind. Particulate matter is just what it sounds like, particles from construction dust and pollen down to heavy metals and toxic pollutants. Both ground level ozone and particulate matter can be inhaled and cause serious respiratory problems. Southern New England and the mid-Atlantic seaboard are at special risk for ground level ozone and particulate pollution due to the combination of big cities and winds blowing east.

Ground level ozone and particulate matter at levels that commonly occur here in the summer can cause some very unpleasant health problems for even healthy adults (coughing and wheezing isn’t a lot of fun), but can be dangerous and even life-threatening for kids with asthma or other breathing problems, adults with chronic conditions, and the elderly. And some studies suggest that ground-level ozone can actually cause asthma and breathing problems in kids. Adults at risk and parents of kids at risk probably know more about all of this than the average person, but hearing that there’s an Air Quality Alert on the weather can still leave anyone with a lot of questions.

As you can see from the AQI scale, a score of 50 would be labeled “good” and 51 would be “moderate,” so more precise data is essential. That information isn’t always available on a weather report, which is where the EnviroFlash website comes in. They plot the hourly Air Quality Index measurements on maps, so you can check out the forecast and close to real-time information about local air quality:

EnviroFlash this morning

What can I do about bad air quality in the summer?

While there are of course steps that people at risk from elevated ground level ozone and particulate levels can take to protect themselves from dangerous breathing events, the good news is that there are simple and very important things we can all do to help prevent elevated air quality:

  • Prevent your car from contributing to vehicle emissions: try to limit driving trips and take public transportation if possible.
  • Reduce the amount of electricity that your household uses, keeping the worst-emitting fossil fuel fired power plants from being pressed into service: Keep your air conditioner a few degrees higher, and make sure to turn lights and electronics off when you’re not using them.

 

 

Worth Remembering: Northern Pass Would Mean Big Changes in the White Mountains

May 8, 2013 by  | Bio |  Leave a Comment

(photo credit: flickr/crschmidt)

(photo credit: flickr/crschmidt)

With the Northern Pass “new route” drama entering its third year (Northeast Utilities executives once again failed to announce any progress on last week’s investor conference call), it’s important to remember that all we’ve been talking about is the northernmost forty miles of what is a 180-mile project that stretches from the Canadian border to southeastern New Hampshire.

The “new route” will not change one of the proposed Northern Pass project’s most troubling segments: approximately 10 miles through the White Mountain National Forest, within the towns of Easton, Lincoln, and Woodstock. It goes without saying that the Forest is one of New Hampshire’s most treasured public assets: a vast and magnificent wilderness that is among the most accessible and visited natural wonders in the nation and the cornerstone of the state’s tourist and recreation economy. The Forest is an awe-inspiring place, and its ongoing stewardship is one of those things that make me profoundly proud of this country.

Project affiliate Public Service Company of New Hampshire (PSNH) has a “special use permit” from the United States Forest Service for an existing transmission line, built in 1948, which is largely comprised of H-frame wooden poles standing about 50 feet tall. Northern Pass developer Northern Pass Transmission LLC (NPT) is now seeking a special use permit to remove the existing line and build two new sets of towers (one carrying the new Northern Pass transmission line and the other carrying the existing line) with a “typical” height of 85 feet.

Proposed Northern Pass tower design (existing towers in background)

Proposed Northern Pass tower design (existing towers in background)

You can read NPT’s permit application here (PDF) and download its attachments here. The project’s construction would impact important wildlife habitat and ecologically sensitive high-altitude wetlands, and the new more prominent towers would cross the Appalachian Trail and impact a number of the Forest’s other signature hiking areas and viewsheds. It’s also worth noting that the project’s failure to provide meaningful greenhouse gas emission reductions falls particularly hard on the Forest, where climate change is already shifting seasons, reducing snowpack levels, and disrupting mountain ecosystems in significant ways.

It will be up to the United States Forest Service – and specifically the supervisor of the White Mountain National Forest  – to decide whether to approve NPT’s permit application. In particular, the Forest Service must determine whether granting the proposed use is “in the public interest” and consistent with the current management plan for the Forest, which includes special protections for the Forest’s most important natural and scenic resources. This decision will follow the United States Department of Energy’s environmental review of the Northern Pass project as a whole, which CLF has been fighting to improve since the project was first announced in 2010.

Earlier this year, a diverse coalition of conservation organizations, including CLF, along with a grassroots group, several Forest communities, and the regional land use planning commission wrote to the Forest Service, urging the agency to take all available steps at its disposal to ensure comprehensive and rigorous scrutiny of the Northern Pass project and a full analysis of all reasonable alternatives, especially those alternatives that avoid or minimize impacts within the Forest.

Our letter (PDF) highlighted the Forest Service’s stewardship obligations and the special and stringent standards for granting a special use permit. We explained that the Northern Pass project, as proposed, is very different from an ordinary utility transmission line constructed to extend service or improve system reliability; the project is much more like a private commercial development, with no specific policy or law encouraging or requiring its development. We suggested that it was critical for the Forest Service to take these features into account as it weighs whether the project would be consistent with the “public interest” and the Forest’s management plan. Finally, we recommended that the Forest Service avoid relying on data collected by the first contractor hired to conduct the federal environmental review of the project, which was withdrawn by NPT after a public uproar, and that the Forest Service exercise its prerogative to order Forest-specific studies and to scrutinize and question all data and analysis presented by the current contractor team, the objectivity of which is in serious doubt.

Oddly, the federal environmental review of Northern Pass seems to be moving forward even as the project is stalled and the northernmost route has not been disclosed. As field work, studies, and analysis proceed, the Forest Service is hearing from many voices registering strong opposition to Northern Pass’s special use permit application, through efforts like ProtectWMNF.org and this recent citizen-generated petition. If you are concerned about the impacts of the Northern Pass project on the White Mountains, you can add your voice through those resources or by filing a comment with the United States Department of Energy.

A Message to the Energy Industry: The Demise of Northern Pass 1.0

Apr 26, 2013 by  | Bio |  2 Comment »

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.

wall street

(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.

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