Two key public officials in Connecticut have endorsed a plan by Northeast Utilities and NStar to build a transmission line that could bring at least 1,200 megawatts of Canadian water-generated electricity into southern New England, but competing regional utilities oppose it.
Berlin-based Northeast Utilities and Boston-based NStar seek approval from the Federal Energy Regulatory Commission to fund and build the $700 million line with Hydro-Quebec. The U.S. utilities would pay the upfront costs, while the Canadian utility would repay them by granting near-exclusive access to the line and an energy purchasing agreement of at least 20 years.
Connecticut Department of Public Utility Control chairman Donald W. Downes and Consumer Counsel Mary J. Healey, in a joint statement filed with FERC, said they “strongly support” the funding mechanism for the transmission line, which would run from Quebec to southern New Hampshire. Only NU, NStar and other utilities that purchase power from the line would share construction costs.
“In contrast to other proposals to bring renewable power from northern New England, Canada or or both, NU and NStar are not requesting that the costs of the transmission facilities necessary to deliver the power would be socialized and added to the rates for regional transmission service in New England,” the joint statement reads.
The FERC petition filed by NU and NStar on Dec. 12 is unusual. Since New England’s electricity market underwent deregulation efforts almost a decade ago, new transmission lines have been open to a competitive bidding process and this one would not.
Competitors File Protest
“Although the commission has endorsed participant funding of transmission lines in appropriate circumstances, the commission has not addressed the rights that accrue to parties that accept responsibility for funding a new line,” the Dec. 12 filing states.
However, competing utilities say the petition should be rejected on the grounds that it sidesteps competitive bidding for new lines.
In a protest filed with FERC, New England Power Generators, which represents members that generate about 26,000 megawatts of electricity, said the petition is “setting the stage for markedly different and discriminatory rates for the very same transmission service” for any utility that might want to purchase power from the line.
But Downes said he supports the petition’s structure because Northeast Utilities and NStar would assume much of the risk of building the new line. He said that would create incentives for them to provide electricity at affordable rates.
“It’s competitive in the most competitive sense of the word because they’re risking 100 percent of their own capital on the hope that, in the end, someone will find the terms and conditions attractive enough to actually buy the electricity,” Downes said.
Northeast Utilities spokeswoman Sandra Ahearn said utilities in the region will be looking for new ways to bring in renewable sources of energy as the 10 states involved in Regional Greenhouse Gas Initiative, RGGI, aim to cut greenhouse gas emissions by 10 percent by 2018.
“We have such a gap in meeting the RGGI standards that we have to look at some other alternatives. We can’t do business in the same way,” said Ahearn. She added that the company did not anticipate the level of outcry the petition received from other utilities.
“We’re surprised they didn’t see the value in it,” Ahearn said.
With New England utility companies racing to incorporate renewable energy sources to align themselves with RGGI, two starkly different — and controversial — funding philosophies have emerged.
Maine’s Controversial Plan
Just as the participant-funded model proposed by NU and NStar has sparked debate, so has a proposal from Central Maine Power and Maine Public Service.
They are asking ISO New England, the region’s transmission organization, to regionalize costs of a local 800-megawatt wind power project. This comes at a time when the state is seriously considering a withdrawal from ISO New England.
Downes and his Bay State counterpart, Paul Hibbard, chairman of the Massachusetts Department of Public Utilities, favor the NU-NStar model because those not using the transmission line would not be asked to fund it.
On the other hand, all New England states would be asked to fund construction of the Maine project. Although Connecticut and Massachusetts would get hardly any benefit from the Maine line, the two states, which consume about 75 percent of the region’s energy, would bear the brunt of the cost.
Consumer Counsel attorney Joseph A. Rosenthal said Connecticut should not be forced to pay for the Maine wind project when it does not improve the reliability of the regional grid or provide benefit to Connecticut.
“Why should we in Connecticut pay for a line that doesn’t influence reliability?” Rosenthal said.