Contentious grid project wins governor’s support

Source: Benjamin Storrow, E&E News reporter • Posted: Tuesday, February 26, 2019

Opposition to imported Canadian hydropower has stymied efforts in New England to inject large quantities of low-carbon power into the region’s natural gas-dependent electric grid.

But cracks in the dam are appearing.

Maine Gov. Janet Mills (D) threw her support last week behind a proposal to build a transmission line across her state, linking hydro-rich Quebec to Massachusetts. Regulatory hurdles remain, but her approval has the potential to reshape New England’s power grid.

Proponents of the proposed 145-mile transmission project contend it will lay the foundation for a low-carbon electric grid, with Canadian imports replacing the region’s retiring nuclear facilities and averting the need for new natural gas pipelines.

Critics maintain it will distort New England’s electricity market and crowd out renewable development. They question whether it can deliver upon its promised carbon reductions.

Mills’ backing for the project came somewhat as a surprise. Maine’s newly elected governor voiced concerns over the project during last year’s gubernatorial campaign.

But Mills placed herself firmly in the supporters’ camp Thursday, touting a study conducted on behalf of Maine regulators that found the project would displace natural gas generation and reduce carbon emissions by 3.4 million metric tons. New England’s power sector emissions were roughly 35 million metric tons in 2017, according to draft projections from the region’s grid operator.

“I ran for the office of Governor with a promise to reduce our reliance on fossil fuels, to address our carbon footprint and to accept the challenge of preventing and mitigating climate change,” Mills said in a statement. “We cannot afford to do nothing.”

The governor’s announcement represents a win for Massachusetts. The commonwealth passed a law in 2016 calling on its utilities to field bids for 1,200 megawatts of hydropower. A first project, which would have seen a transmission line traverse New Hampshire, died after generating significant opposition in the Granite State.

The New England Clean Energy Connect project, as the Maine proposal is officially known, seemed on course for a similar fate after Mills voiced doubts about its impact on the campaign trail last fall. The project emerged as an early flashpoint of her young administration, pitting environmental groups against each other and uniting natural gas and Maine renewable interests.

Last week’s announcement followed extensive negotiations between Mills’ office; Central Maine Power Co. and its parent company Avangrid; Hydro-Québec, the provincially owned utility; two environmental groups; the state’s consumer watchdog; and industrial consumers.

The group hammered out a settlement with $258 million in benefits for Maine. It includes $15 million to help purchase electric vehicles, another $15 million to convert oil-fired home-heating systems to electric heat pumps, and $50 million in energy efficiency programs for low- and moderate-income households.

The agreement was enough to win over the Conservation Law Foundation, an environmental group that opposed the New Hampshire line. The Maine proposal is likely to reduce emissions on its own, but it was the benefits included for the state that put the group over the top, said Greg Cunningham, director of CLF’s clean energy climate change program.

He noted the deal includes an agreement from Central Maine Power to study its system for transmission upgrades needed to incorporate new renewable development. Even more critical is the role the line will play in winter months, Cunningham said.

ISO New England, the region’s grid operator, has long voiced concerns that the region does not have adequate natural gas pipeline capacity to ensure reliability during periods of extreme cold.

“We think it eliminates any argument for new natural gas pipelines,” Cunningham said.

Other greens are less than thrilled. The Natural Resources Council of Maine and Sierra Club have raised worries about cutting 50 miles of new transmission corridor through the state’s northern woods.

The groups have also questioned whether Hydro-Québec will actually deliver more power than what it is already importing into the region and whether it can deliver on its promised emission reductions. The provincial utility could buy fossil-fuel-generated power from its neighbors to make up for hydro sales to Massachusetts.

That point is highly contentious. Other greens note Quebec’s neighbors are subject to Canada’s national carbon tax and coal phaseout (Climatewire, Nov. 28, 2018). New York, meanwhile, is pursuing legislation to completely decarbonize its electric sector (Climatewire, Feb. 12).

Still, there is no guarantee for Hydro-Québec to deliver additional power or reduce overall emissions in the proposed contracts with Massachusetts’ utilities, said Mark Kresowik, eastern region deputy director for the Sierra Club’s Beyond Coal campaign.

“Massachusetts could be spending the money to build out renewables instead,” he said.

Power plant owners are particularly displeased. They maintain Massachusetts’ long-term hydro contracts represent a subsidy and have raised concerns about what the project would mean for the already-congested power lines between Maine and Massachusetts. If Canadian hydropower is injected into the system, Maine power plants could be crowded out, said Dan Dolan, who leads the New England Power Generators Association.

Dolan also questioned the assumption that natural gas plants would close to make way for hydropower. Biomass, oil plants and wind farms with retiring power purchase agreements are much closer to the margins than natural gas, Dolan said.

“We’re not looking for a subsidy for our facilities, we just don’t think anyone else should get one either,” he said. “They should be able to invest on their own two feet and compete in the market.”

New England Clean Energy Connect still faces a bevy of regulatory hurdles. The settlement agreement is subject to approval from the Maine Public Utilities Commission. The line also needs to obtain siting permits from two state agencies.

Massachusetts utility regulators are reviewing the proposed hydro contracts. Approval from the Department of Energy is also needed for a transmission line crossing national borders.