This summer, New Hampshire is bracing for news of the Northern Pass project’s future and its “new route.”

It’s now been nearly a year since the federal permitting process for the Northern Pass project was put on indefinite hold. North of Groveton, New Hampshire, the developer – Northern Pass Transmission LLC (NPT) – is still working behind tightly closed doors to string together a new section of the project route, where there are no existing transmission corridors, by paying landowners substantial sums for property – in many cases, well above market value.

Earlier this month, the chief operating officer of NPT’s parent company, Northeast Utilities, told investors:

Where we are right now is in procuring the last 40 miles of the right-of-way, and I can tell you we are making very, very strong progress in lining up the right of way. I think we’re on track for the middle of the year, approximately August timeframe to have the right-of-way secured and then to be prepared to file with the [U.S. Department of Energy] the route….

NPT’s apparent plan (assuming it really can overcome the considerable obstacles to a new route):

• Declare that it “heard the objections” to the original route (a posture it previewed last April when it agreed to look for new routes)
• Announce a new NPT-controlled route having the “support of property owners” (as it no longer has resort to eminent domain)
• Marginalize those with legitimate objections as “special interests” and
• Seek a speedy, narrow review of the proposal from federal and state regulators (after itself having put the permit process on hold for a year).

Not so fast. Before the news arrives (if it does), it’s worth remembering that whatever new lines the developer manages to draw on the map do nothing to change the project’s DNA or to demonstrate that the project will benefit New Hampshire. A brief review is in order:

Where are the benefits for New Hampshire?

Through  costly marketing efforts, NPT has been trying to sell New Hampshire on the tremendous economic and environmental benefits of Northern Pass. But the supposed benefits just don’t hold up to scrutiny:

• Reduced emissions from “clean power”?

In terms of greenhouse gas emissions, CLF’s report on the most recent science demonstrated that new hydropower projects to supply power for Northern Pass are much worse for the climate than NPT’s false advertising claims have led the region to believe and are not meaningfully better than natural gas power plants (the power NPT predicts that Northern Pass would replace) in the early years after reservoirs are developed. As a result, contrary to mistaken but widely disseminated assumptions, importing hydropower from Canada is not a short-term solution that will reduce New England’s or New Hampshire’s carbon emissions. Indeed, the current proposal would have the perverse effect of protecting – rather than hastening the transition away from – PSNH’s low-performing, high-emitting power plants, which are New Hampshire’s largest source of greenhouse gas emissions. (Despite marketing the project based on its “clean” source of the power, NPT also refuses to acknowledge the relevance or importance of the troubling damage to ecosystems and communities that large-scale hydropower causes in Canada.)

• Lower electric rates?

Those who would live with the new transmission lines, customers of NPT affiliate PSNH, are the least likely to benefit. Despite nearly two years of promises that PSNH would announce a plan to purchase Hydro-Québec hydropower for New Hampshire residents, there is still no agreement to do so. Any modest effects on the region’s wholesale electricity rates (which NPT’s consultant predicted based on outdated economic assumptions about energy costs) don’t translate into lower rates for PSNH customers (who instead are stuck paying the bill for PSNH’s inefficient and dirty power plants). In fact, if Northern Pass succeeds in lowering wholesale rates, it will likely worsen PSNH’s death spiral of increasing rates and fewer customers, leaving those residents and small businesses still getting power from PSNH with higher bills.

• Growing New Hampshire’s clean energy economy and jobs?

There is a substantial risk that Northern Pass would swamp the market for renewable energy projects in New England, especially if state laws are amended to qualify Hydro-Québec power as “renewable.” Furthermore, the project’s high voltage direct current technology means that its massive investment in transmission capacity will wholly bypass the potentially fertile ground for renewable energy development in northern New England. Whatever the short-term construction jobs required (and NPT’s estimates are disputed), the current Northern Pass proposal may diminish the prospects for New Hampshire’s clean energy economy, including needed permanent jobs in the renewable and energy efficiency sectors.

No regional plan addressing new imports

Québec continues to implement its ambitious plan to develop more wild Boreal rivers into a new generation of massive hydropower projects, which will increase its export capabilities. This January, Hydro-Québec commissioned the final turbine at its latest hydropower facility (Eastmain 1-A) and will commission other turbines (at Sarcelle) as part of the same overall project later this year. Construction at the $8 billion Romaine River hydropower project (the subject of the film Seeking the Current) has begun and is ongoing, with the first unit expected to come online in 2014. Northeast Utilities has affirmed that Northern Pass will tap the power from these new projects. Meanwhile, Northern Pass competitors are moving forward with new transmission projects in eastern New England and in New York, among others:

Northern Pass and competitor transmission projects (source: ISO-NE)

More than a year ago, CLF and others urged the Department of Energy to weigh the region’s energy needs and develop a strategic regional plan that would determine a well-informed role for new Canadian hydropower imports in the northeastern United States’ energy future – before moving forward with the permitting process for Northern Pass. NPT’s only response was that responsible planning – encompassing the other pending transmission projects and a full consideration of the reasonable alternatives – would unacceptably delay its project – a truly ironic claim given NPT’s own, unforced, ongoing delay. More incredibly, the Department of Energy has so far sided with NPT, without explaining why.

So as Québec builds more dams and NPT buys up land, our region has no plan of its own. With no framework to understand the nature and extent of the appropriate role for Canadian hydropower, it is difficult if not impossible to make a sound, well-informed decision on whether Northern Pass – or projects like it – should proceed.

Community and grassroots reaction throughout New Hampshire

Since Northern Pass was announced in 2010, the project has inspired a broad-based and spirited movement of people throughout New Hampshire to oppose the current proposal. Last spring, there were massive turnouts at the Department of Energy’s public hearings on the project, with literally thousands attending and providing written and verbal comments both questioning the merits of the current proposal and urging a thorough environmental review. And earlier this year, a coalition of citizens and organizations of many political stripes succeeded in persuading New Hampshire’s legislature to enact a bill preventing projects like Northern Pass from using eminent domain. In another effort, more than 1,500 donors contributed total of $850,000 to enable the Society for the Protection of New Hampshire Forests to preserve the treasured New Hampshire landscape surrounding the historic Balsams resort, including a parcel that NPT had sought to purchase as part of Northern Pass’s transmission corridor. To date, town meeting voters in 32 local communities have passed resolutions and ordinances against the current proposal. Critically, most of these communities are located along the NPT’s “preferred route” that follows PSNH ‘s existing transmission corridor, south of any “new route” that NPT may announce.

NPT’s refusal to consider routing and technological alternatives

At every turn, NPT has rejected calls for in-depth consideration of potential alternatives to its current proposal, including use of an existing high-voltage transmission corridor that extends from Canada, through Vermont and western New Hampshire, to Massachusetts; burying transmission lines in transportation corridors, as is proposed in the New York and eastern New England projects mentioned above; or adding capacity to that same New York project, consistent with that project’s original proposal (it has since been scaled back). Indeed, Northern Pass’s response to the public’s opposition to the project was to “withdraw support” for alternative routes and double down on its “preferred route.” While this stance may be in the economic interest of NPT and PSNH, it’s grossly at odds with a fair, well-informed permitting process that would vindicate the public’s interest in a solution with minimal environmental and community impacts.

If and when NPT comes back from its year of buying up North Country land and relaunches its effort to secure approval of the Northern Pass project, with the only change to the proposal consisting of a new line on the map north of Groveton, there should be no mistake: the fundamental flaws in the current proposal remain. Likewise, whatever NPT’s “preferred route,” CLF remains as committed as ever to securing a comprehensive and rigorous permitting process that identifies superior alternatives and a final outcome that moves us toward – and not away from – a clean energy future for New Hampshire and the region.

For more information about Northern Pass, sign-up for our monthly newsletter Northern Pass Wire, visit CLF’s Northern Pass Information Center (http://www.clf.org/northern-pass), and take a look at our prior Northern Pass posts on CLF Scoop.

We are in the midst of a massive, historic retreat in the nation’s use of coal to produce electricity, which began in 2008. This ongoing shift away from our dirtiest fuel has made news around the country. The primary reason: coal-fired power plants – expensive new facilities and decades-old dinosaurs alike – can’t compete in today’s marketplace. Investors and customers are moving toward cleaner, cheaper alternatives, principally natural gas but also renewables (especially wind) and high-tech ways of reducing energy use.

The national trend is occurring here in New Hampshire and throughout New England. This week, New Hampshire learned that PSNH is not operating its flagship coal plant, Merrimack Station in Bow, and that its economic prospects are not good. In fact, the plant will sit completely idle for six months of 2012, prompting the Manchester Union Leader to run the headline, “PSNH’s Bow power plant shuts down.” (The word “temporarily” was later added to the online story.) The two coal boilers at PSNH’s Schiller Station in Portsmouth will operate even less. (The Nashua Telegraph also took note.) This is welcome and long overdue relief for New Hampshire from New England’s top toxic polluter, and it would not have happened without legal pressure from CLF and others. More on our work in a moment.

Across the region, coal use has been collapsing for some time — and this was not unpredicted, as PSNH is claiming. PSNH’s claims to the contrary convey its willfully myopic planning perspective – a direct result of its expectation that ratepayers will cover its costs with a handsome profit irrespective of how utterly unsuccessful its investment decisions have been.

Coal-fired power plants’ “capacity factors” – their actual power output as a percentage of their theoretical maximum output at full power, running 24/7 – are intended to be very high; these plants were designed to run at close to full power day and night as “baseload” power for the electric grid. Not anymore:

In 2012, the trend is accelerating. Nationally, the U.S. Energy Information Administration reports that, in the first quarter, coal power accounted for only 36% of total generation – the smallest role for coal in a generation and down almost 9% from the first quarter of 2011. Regionally, a new milestone came in April, when the regional electric grid announced that, during the previous month, it didn’t dispatch any power from New England coal plants to meet the region’s electric demand.

For public health, air quality, the environment, the climate, and the communities where these plants are located, these trend lines are all in the right direction. For years, CLF’s Coal-Free New England 2020 campaign has fought to speed this progress and to make it permanent, by holding plant operators accountable for violating environmental laws (including at Merrimack Station), securing final and binding agreements to guarantee closure, and working in coalition with local residents to plan for responsible redevelopment and reuse of the plants’ sites.

In New Hampshire, with the complicity of state regulators, PSNH made big bets that the market for its coal-fired power will exist for years to come. One such spectacularly bad gamble was PSNH’s investment – over vigorous opposition from CLF, ratepayer advocates, and others – in a life extension project for Merrimack Station, including air pollution controls that address only some of the plant’s toxic and harmful emissions, to the tune of $422 million, plus a 10% guaranteed profit, money it now wants back from New Hampshire residents and small businesses through the regulator-approved rates it charges. Given coal’s collapse, which CLF and ratepayer advocates predicted at the time, this investment looks absurd and unwise, except of course to PSNH and its parent company Northeast Utilities, which has repeatedly reassured shareholders it is entitled to get back the full value of the upgrade, even if the plant barely runs.

Why has PSNH been so richly rewarded for such terrible economic decisions? Put simply, New Hampshire’s backward relic of a regulatory system is still protecting PSNH and its coal plants from the market. Remarkably, ratepayers continue to pay for upkeep and staffing at PSNH’s power plants, even when they sit idle, and also pay that same 10% profit on the value of all PSNH assets, including its quiet coal piles – and that’s whatever book value PSNH assigns, not market value.

PSNH has fought tooth and nail to protect its special treatment. Earlier this year, PSNH pulled out all the stops to kill a bill that would have directed state regulators to investigate whether PSNH’s ownership of power plants, including Merrimack and Schiller Stations, is in the best interest of ratepayers. After PSNH’s full-court press of lobbying, editorial board visits, and pressure from PSNH employees as well as PSNH-allied unions, politicians, and chambers of commerce, the House tabled the bill.

In the meantime, PSNH remains in an economic “death spiral” with very few large business customers to cover its costs. As a result, its remaining customers – homeowners and small businesses – are now paying as much as 50% more for power (8.75 cents per kilowatt-hour) than are customers of other utilities – which do not own power plants and get all their power from the competitive market (around 6 cents per kilowatt-hour). And the Legislature continues to seek the rollback of New Hampshire clean energy laws under the guise of easing ratepayer burdens, mistaking small trees for the forest of PSNH’s above-market rates, which include the costs of both PSNH’s idle fleet and buying power from more efficient plants.

What is CLF doing about it? Against the odds, we’re succeeding at forcing New Hampshire regulators to scrutinize PSNH’s costs, and the fact that PSNH’s coal plants are now sitting idle and the corresponding benefits to public health and the climate are a product of that scrutiny and a testament to CLF’s advocacy. And we’re pushing for regulators to do much more to hold PSNH accountable for its abysmal planning and force PSNH’s shareholder Northeast Utilities – and not suffering PSNH ratepayers, who are paying among the nation’s highest electric rates – to bear the downside of PSNH’s bad bets on coal. The last thing we should be doing with our energy dollars is subsidizing dirty power that can’t compete.

The market is providing an unprecedented opportunity to make that Union Leader headline from this week – and headlines like it for every other coal plant in the region – an enduring reality as New England transitions to a clean energy future. New Hampshire and the rest of New England should seize it.

A dispatch from the future? Manchester Union Leader headline, May 8, 2012

A keystone to CLF’s work to secure a clean energy future for the region is completing the transition to a coal-free New England. It is a time of historic progress: cleaner, cheaper alternatives are driving coal out of the market, and old coal plants are closing their doors. But New Hampshire remains a critical battleground for CLF’s work, with two costly old coal-fired power plants being kept alive by failed state policies and ratepayer subsidies.

That’s why we’re delighted to be partnering with the Sustainability Film Series at Phillips Exeter Academy to present a free screening of the critically acclaimed documentary The Last Mountain in Exeter, New Hampshire, on Friday May 4. With stunning footage of the practice of mountaintop removal mining, the film bears dramatic witness to the social, public health, and environmental damage wrought by coal and power companies, and chronicles the grassroots fight against coal in Appalachia and around the country. The New York Times called The Last Mountain a “persuasive indictment” of coal; I think you’ll agree.

The Last Mountain producer Eric Grunebaum and I will be on hand for a panel discussion to discuss the film and the future of coal-fired power in New Hampshire and New England.

Please join us:

When: Friday, May 4, 2012. 7 pm.

Where: Phillips Exeter Academy, Phelps Academy Center in The Forum (3rd Floor), Tan Lane, Exeter, NH (map). 

Bring your friends and family, and email me at ccourchesne@clf.org with any questions. We hope to see you there!

Here is the trailer:

Outlook with your head in the sand? Pretty dark, even when the future around you is bright. (photo credit: flickr/tropical.pete)

In a public hearing tomorrow, a legislative committee of the New Hampshire House will take up a proposal – House Bill 1238 – to force Public Service of New Hampshire’s dirty, costly power plants to confront the realities of the electric marketplace. The bill would require PSNH to sell (“divest”) its plants by the end of next year. Tomorrow’s hearing on House Bill 1238 is scheduled for 8:30 am in Representatives Hall under the dome of the New Hampshire State House, on North Main Street in Concord.

The debate is long overdue and comes at a critical time. Over the last several years, New England’s restructured electric market has overwhelmingly turned away from uneconomic facilities like PSNH’s coal and oil-fired power plants and toward less-polluting alternatives, especially natural gas. For most New England customers, this technology transition has resulted in lower electric bills, and we have all benefited from cleaner air. In the next few years, well-managed competitive markets are positioned to help us move to a real clean energy future that increases our use of energy efficiency, renewable resources, demand response, and innovative storage technologies.

CLF has played a key role in this process by, among other things, ensuring that coal plants are held accountable for their disastrous impacts on public health and the environment. As highlighted in an excellent op-ed in the Concord Monitor this week, CLF’s work includes our federal court case against PSNH’s Merrimack Station, New Hampshire’s biggest source of toxic and greenhouse gas emissions, which has repeatedly violated the Clean Air Act by failing to get permits for major changes to the plant.

Meanwhile, like the proverbial ostrich, PSNH gets to ignore what the market is saying. PSNH’s state-protected business model is a relic that has become a major drag on the pocketbooks of New Hampshire ratepayers and New Hampshire’s economy. Current law protects PSNH from market forces because it guarantees PSNH and its Connecticut-based corporate parent Northeast Utilities a profit on investments in PSNH’s power plants, whether or not they operate and whether or not they actually make enough money to cover their operating costs – an astounding rule for the small-government Granite State, to be sure.

The costs of this guarantee fall on the backs of New Hampshire residents and small business people, who effectively have no choice but to pay for PSNH’s expensive power. For their part, larger businesses have fled PSNH in droves, for cheaper, better managed suppliers. This has shrunk the group of ratepayers who are responsible for the burden of PSNH’s high costs, translating into even higher rates for residents and small businesses.

PSNH customers face the worst of both worlds – electric rates that are among the highest in the nation and a fleet of aging, inefficient, and dirty power plants that would never survive in the competitive market.

It is by now beyond dispute that these plants are abysmal performers. Last year, CLF and Synapse Energy Economics presented an analysis to New Hampshire regulators showing that the coal-fired units at PSNH’s Schiller Station in Portsmouth will lose at least $10 million per year over the next ten years, for a total negative cash flow of $147 million. The analysis did not depend on natural gas prices remaining as low as they are now or any new environmental costs; because it is old and inefficient, Schiller will lose money even if gas prices go up and it doesn’t need any upgrades. According to information provided by PSNH to regulators last week, PSNH’s supposed workhorse Merrimack Station will not even operate for five months this year because it would be uneconomic compared to power available in the New England market. Nonetheless, PSNH ratepayers will be paying for the plant even when it does not run.

It will only get worse: PSNH’s rates could skyrocket later this year if New Hampshire regulators pass on the bill for PSNH’s $422 million investment in a scrubber for Merrimack Station to ratepayers, and other costly upgrades of PSNH’s fleet may be necessary to comply with environmental and operational requirements in the future. And the PSNH-favored Northern Pass project, if it ever gets built, would only exacerbate the situation for PSNH ratepayers by making PSNH power even less competitive and reducing the value of PSNH power plants.

PSNH is hitting back against House Bill 1238 with its typical full-court press of lobbying and PR, and we can expect a packed house of PSNH apologists at tomorrow’s hearing. PSNH has even resorted to starting a Facebook page – “Save PSNH Plants” – where you can see PSNH’s tired arguments for preserving the current system plants as a “safety net” that protects PSNH employee jobs and a hedge against unforeseen changes in the energy market. The pitch is a little like saying that we should pay Ford and its workers to make Edsels half a century later, just in case the price of Prius batteries goes through the roof. Make no mistake: PSNH is asking for the continuation of what amounts to a massive ratepayer subsidy for as far as the eye can see.

Public investments have gotten a bad name lately, but it is at least clear that sound commitments of public dollars to energy should be targeted, strategic, and forward-thinking. They should help move us, in concert with the much larger capital decisions of the private sector, toward a cleaner energy future. Instead, PSNH is fighting for New Hampshire to keep pouring its citizens’ hard-earned money, year after year, into dinosaur power plants. That’s a terrible deal for New Hampshire, and CLF welcomes the House’s effort to open a discussion on how to get us out of it.

The nation’s attention may be focused right now on the twists and turns of New Hampshire’s First in the Nation primary. But new pollution data from the Environmental Protection Agency put a more troubling spotlight on New Hampshire – and on its largest utility, Public Service Company of New Hampshire (PSNH). 

According to the data, PSNH is the region’s top toxic polluter, and PSNH’s coal-fired power plant in Bow, Merrimack Station, releases more toxic pollution to the environment than any other facility in New England. Because of PSNH, New Hampshire as a whole is first in New England in toxic pollution.

The numbers tell a striking story.  In 2010, Merrimack Station released 2.8 million pounds of toxic chemicals to the environment, mostly in air pollution.  That’s an astonishing 85% of the 3.3 million total pounds of toxic pollution released in New Hampshire in 2010. When you add in PSNH’s coal-fired Schiller Station in Portsmouth and its gas and oil-fired Newington Station in Newington, PSNH was responsible for a total of 3 million pounds of toxic pollution in 2010, more than 90% of New Hampshire’s toxic pollution. 

PSNH’s pollution isn’t saving energy consumers anything – PSNH’s rates are among the highest in New England because of the escalating costs of maintaining PSNH’s old, inefficient power plants. And those rates are slated to steadily climb as PSNH customers – mostly residents and small businesses – watch large commercial and industrial customers reject the costs of PSNH’s above-market coal-fired power to buy from cost-effective, competitive suppliers. As a result, most New Hampshire residents are left with the raw deal of paying among the highest rates for the dirtiest power in New England.

The data is a fresh reminder of why CLF is fighting so hard to hold Merrimack Station accountable for violating the Clean Air Act. In November, CLF made the case in federal court that PSNH’s failure to obtain permits for changes at Merrimack Station has meant that PSNH has evaded requirements for state-of-the-art pollution limits that would reduce its emissions of a wide range of toxic and other pollutants.

It’s true that PSNH’s much-touted and hugely expensive scrubber project now coming online at Merrimack Station will ultimately reduce some types of toxic pollution to the air. But PSNH wants to increase its energy rates by 15% to pay for the scrubber. Other required pollution controls, including those imposed by important new federal rules, may lead to further costs. This will make PSNH’s power plants an even worse deal for New Hampshire ratepayers.

Merrimack Station also sends more carbon dioxide into the air than any other source in New Hampshire, and the scrubber won’t change that. Burning coal is a dirty way to generate power that imperils the climate, and it is time for New England to abandon it for cleaner alternatives that safeguard our health and environment and transition us toward a new energy system.

New Hampshire may never be willing to relinquish its leading spot on the presidential primary calendar. But living with New England’s largest source of toxic pollution despite its unacceptable costs – to ratepayers and the environment – is a distinction that New Hampshire should be doing everything in its power to lose.

photo credit: l . e . o/flickr

With each passing day, the dire reality of PSNH’s coal-fired business model is becoming clearer in New Hampshire.  The cost of operating PSNH’s obsolete power plants continues to grow, accelerating the Company’s death spiral where fewer captive ratepayers are saddled with unsustainable above-market rates as more PSNH customers choose to buy power from better managed competitive suppliers.  We are also learning that Northern Pass will make the situation worse for ratepayers, not better, and that PSNH and its Northern Pass partners are poised to pull in huge profits.  In just the last few days:

• PSNH revealed that, as it has begun bringing online its $450 million scrubber project at PSNH’s 50 year old coal-fired Merrimack Station, the bill is now coming due. If state regulators at the New Hampshire Public Utilities Commission (PUC) approve passing the cost on to ratepayers, the energy rates for PSNH customers – already the highest in New Hampshire by a wide margin – will go up by at least 1.2 cents per kilowatt hour, or almost 15%.  CLF is seeking to intervene in the PUC proceeding on the rate increase.  PSNH, unsurprisingly, wants to keep CLF out, in addition to any other party seeking to intervene on behalf of ratepayers.  There is no better illustration of the folly – for ratepayers and the environment alike – of major new investments in coal-fired power plants than PSNH’s flawed effort to extend the life of Merrimack Station.  These investments are a disaster for ratepayers, and don’t even ensure compliance with the plant’s environmental requirements – a case CLF is making right now in federal court with regard to other modifications to Merrimack Station.
• Large commercial and industrial customers with the buying power to avoid the high rates for PSNH’s fossil power continue to do so in dramatic numbers.  PSNH announced that, in September, about 82% of these customers were buying power elsewhere in the market (accounting for 93% of the power delivered to these customers) – a phemonenon known as “migration.”  Meanwhile, more than 99% of New Hampshire residents in PSNH territory were left behind to pay PSNH’s already exorbitant rates.  The scrubber rate increase is going to make this situation even worse for residents – additional businesses will find other suppliers and PSNH will need to jack up its rates even more.  More cost-effective competitive suppliers are cleaning PSNH’s clock among large customers.  Given the company’s excessive and increasing rates, residential ratepayers are starting to vote with their pocketbooks for more sustainable energy supplies.
• It is becoming increasingly clear that the current Northern Pass proposal is designed around PSNH’s bottom line, not the interests of New Hampshire ratepayers.  As we’ve mentioned before, the large customer “migration” problem and its upward pressure on homeowners’ electric bills are likely to get worse with Northern Pass, which would further depress regional wholesale electric rates and encourage more customers to leave PSNH.   Adding in the cost of the scrubber will only widen the divide between the businesses that can choose other suppliers and potentially benefit from Northern Pass, and the residential customers who are currently  stuck with PSNH. A new wrinkle emerged last week – testimony from PUC staff showing that PSNH’s consultants estimated a year ago that Northern Pass will cannibalize PSNH’s already meager revenues from Newington Station, PSNH’s little-used power plant in Newington, New Hampshire, that can operate with either oil or natural gas.  Northern Pass would mean it would almost never run and that the investments ratepayers have made over the years to keep Newington Station operating will essentially be lost.  This same dynamic will apply to the rest of PSNH’s power plants:  Northern Pass will diminish their market value further exposing New Hampshire businesses and residents to the risk of excessive costs.  Once again, a series of poor decisions and self-interested advocacy by PSNH (at the expense of ratepayers) is forcing the legislature to intervene.

The costs of PSNH’s coal-fired power plants are becoming untenable, and a radically redesigned Northern Pass proposal and other alternatives could help PSNH meet its customers’ power needs more cheaply and with less damage to public health and the environment.  Instead of planning for a cleaner energy future, PSNH is working only to preserve its regulator-approved profits.  CLF will be using every tool at our disposal to force a rethinking of PSNH’s approach.

PSNH: In a death spiral? (photo credit: CC/Nick Seibert)

In every possible way – on television, in mailings, and on the web – New Hampshire has heard again and again that the proposed Northern Pass transmission project will reduce electric rates for New Hampshire customers. The claim is at the core of PSNH’s case that the project is a good deal for New Hampshire. If only it were true…

As I mentioned in a post last month, the very design of the project as it stands is for reduced electric rates to benefit only those ratepayers that get their power from the regional electric markets. In New Hampshire, homes and small businesses in PSNH territory would see very little benefit because their energy rates are overwhelmingly tied to propping up PSNH’s old, inefficient fleet of coal-fired and oil-fired power plants.  These plants would not be able to compete with other cleaner power sources if forced to compete in the marketplace, something New Hampshire law does not currently allow and PSNH has fought to avoid. (Supposedly, an agreement between PSNH and Hydro-Québec for some power for PSNH customers is in the works, but, if it ever materializes, Northern Pass has said it would only be for a small amount of power, which would not do much to change PSNH’s overall portfolio. Northeast Utilities admitted as much in testimony before the Massachusetts DPU this week and also noted that there is “really little activity” around securing any such agreement.)

As explained in a piece on NHPR featuring our own Jonathan Peress, the above-market costs of PSNH’s aging fleet are causing large customers to buy power from (or “migrate” to) cheaper suppliers. Regulators this week turned back PSNH’s attempt to saddle those customers with its fleet’s escalating costs. But this situation is creating a so-called “death spiral,” because PSNH is forced to raise its rates again and again on a shrinking group of customers – homeowners and small businesses who do not have the purchasing power to contract with another supplier.

What does this all have to do with Northern Pass? The truth is that Northern Pass will – indeed, is intended to – make the “death spiral” worse.  If Northern Pass lowers the regional price of power as all those ads proclaim, it will make PSNH power even less competitive, causing even more customers with choices to leave PSNH behind.  PSNH spokesman Martin Murray so much as promises that result when he says in the NHPR piece that Northern Pass power will not displace PSNH generation. As Jonathan explained on NHPR, that means that the same homeowners and small businesses that will have to deal with 180 miles of new transmission lines will have higher, not lower, electric rates. This is not the Northern Pass story PSNH has been telling.

None of this makes sense. PSNH’s coal- and oil-fired power plants are bad for ratepayers and disasters for public health and the environment. As our lawsuit filed last week makes clear, PSNH’s efforts to prop up its largest plant failed to comply with even basic emissions permitting requirements and have increased that plant’s emissions. Any plan to import Canadian power with PSNH’s name on it should provide real benefits to its own customers and focus on responsibly freeing New Hampshire (and the lungs of millions of New Englanders) from PSNH’s dirty, uncompetitive dinosaurs.

ADDED: I should also point out, in the same Massachusetts DPU proceeding mentioned above, that counsel for NSTAR (the junior partner in Northern Pass) asserted that “[i]t’s entirely speculative as to what the impact of Northern Pass will be on rates in New Hampshire, and then [migration].”  Quite a statement given Northern Pass’s public relations campaign asserting that rates will go down. And we disagree with NSTAR’s counsel wholeheartedly. It is reasonable – not speculative – to expect the current proposal will lead to higher rates for PSNH ratepayers.

Merrimack Station power plant in Bow, NH. (Photo credit: John Moses)

Today CLF filed a federal Clean Air Act citizen suit in New Hampshire federal district court against Public Service Company of New Hampshire (PSNH), the owner of Merrimack Station power plant for the plant’s repeated failures to obtain required air permits. CLF’s citizen suit also cites numerous violations of Merrimack Station’s current permits and the resulting illegal emissions from the plant.

Merrimack Station  is among the most polluting coal-fired power plants in New England and is the single largest source of greenhouse gas emissions in New Hampshire, releasing over 2 million pounds of toxic chemicals every year. In addition, the plant is causing PSNH’s energy rates (already the highest in New Hampshire) to steadily climb as ratepayers are forced to foot the bill for the above-market cost of keeping PSNH’s old coal plants in operation.

CLF’s complaint contends that the plant, which is more than a half-century old and is in the midst of a major, multi-faceted life extension project, never obtained required permits authorizing renovations to major components of Merrimack Station, including much of an electric-generating turbine, even though the changes increased pollution from the plant.  As predicted by PSNH’s own projections, the changes led to more emissions of pollutants, including smog-causing nitrogen oxide and particulate matter, or soot, which causes respiratory problems when inhaled and is linked to increased hospitalizations, lung damage in infants and children, and premature death.

“In the course of this project, PSNH has repeatedly violated the Clean Air Act, putting the health of the public, especially children and senior citizens, at risk,” said Christophe Courchesne, CLF staff attorney. “PSNH is not above the law and CLF is committed to holding them accountable. With PSNH trumpeting the supposed ‘clean air’ benefits of the Northern Pass project with full-page ads in newspapers across New Hampshire, it is imperative to shine a light on PSNH’s coal plants, which easily cancel out the purported benefits of Northern Pass.” Read more >

PSNH's Merrimack Station (photo credit: flickr/Jim Richmond)

I appeared on NHPR’s The Exchange with Laura Knoy this morning, and the topic was the potential energy and economic impacts of the Northern Pass project. The show provided a good opportunity to explain why the project is inspiring so much opposition, why CLF has been skeptical of the current proposal, and how Canadian hydropower could play a role in the New England electric system if pursued appropriately. There was also a segment on the project’s potential impact on property values. You can catch the replay here if you’re interested.

Joining me on the show was Julia Frayer, an economist hired by the Public Service Company of New Hampshire (PSNH) to tout the energy and economic benefits of the project. Recently, she penned a widely-reprinted op-ed and provided testimony to the New Hampshire legislature, suggesting the project will be a boon to consumers and the reliability of the electric system.

Unfortunately, and as I made an effort to point out on the show, the arguments for the current proposal are pleasant talking points without much to back them up. All the cited benefits are speculative, rather than firm commitments, and are not forthrightly presented alongside the proposal’s potential costs. As any student of economics can attest, an intelligent discussion about the economics of a project requires that we at least try to describe and compare the costs and benefits.  We know that the project may have significant negative impacts, ranging from the environmental impacts of generating the power in Canada to the potential effects of major new transmission lines on New Hampshire’s tourism and recreation industries. PSNH and the project developer, Northern Pass Transmission, LLC, have stubbornly failed to acknowledge these impacts, and there is no evidence they were taken seriously in the planning of the current proposal.

One point worth highlighting – the current plan calls for all of the supposed clean energy benefits and electric rate reductions to be delivered through the wholesale market, where Hydro-Quebec intends to sell the power delivered by the project.  But these benefits would mostly bypass the very residential ratepayers in New Hampshire who pay PSNH for electricity – because PSNH acquires very little power from the wholesale market. Instead, as customers of PSNH’s retail power, PSNH residential customers have been left to shoulder the uneconomic costs of PSNH operating several coal-fired generating units – and to pay the highest electric rates in New Hampshire as a result. Northern Pass does nothing to change this situation.  Many commercial ratepayers in PSNH territory have “migrated” in increasing numbers to other utilities that – unlike PSNH – do buy substantial power from the wholesale market to supply their customers. Residential ratepayers don’t have this choice – which means they’re saddled with PSNH’s higher costs, as PSNH loses more and more of its commercial rate base.  Again, Northern Pass does nothing to change this situation.  On closer inspection, the claimed benefits for New Hampshire consumers look more like phantom benefits than anything real.

The proposal promises to send huge profits to Hydro-Quebec, as it bids power into the wholesale market (easily paying back its investment in the transmission lines), and to provide a revenue stream of transmission payments to Northeast Utilities, PSNH’s parent company. But this structure makes very little sense because it means New Hampshire residents will continue to bear the burden of high cost power and dirty air from PSNH’s coal plants and will also face the environmental and economic impacts of a massive transmission project, while the power would only displace relatively less-polluting natural gas generation and may undermine the development of local renewable energy projects in the state. If it does indeed lower costs on the New England market, the effect will be to increase costs for PSNH’s residential customers as more large customers migrate to the competitive market and fewer customers are left to pay the costs of PSNH’s expensive coal plants.

The current proposal is coming into focus as a bad energy and economic deal for New Hampshire, and regionally the benefits seem less than impressive – especially because the emissions reductions made possible could be so much greater if there was a firm commitment to pair the new imports with the retirement of coal-fired units. As the project continues to wind its way through the federal and state permitting process, CLF will keep pushing for the project to make sense for New Hampshire and for the energy future of the region as a whole.

For more information about Northern Pass, visit CLF’s Northern Pass Information Center (http://www.clf.org/northernpass) and take a look at our prior Northern Pass posts on CLF Scoop.