Mass. seeks to revive Canadian hydropower transmission line
PHOTO/Hydro Quebec
Onshore wind and hydroelectric are the cheapest forms of renewable energy in terms of building power plants, at $65 and $68 per megawatt hour, the U.S. Energy Information Administration said.
The savings for Massachusetts utility ratepayers would not be as large as originally projected if a House-approved contract renegotiation takes place for a hydropower transmission project in northern New England.
For state policymakers though, the tradeoff is worth it to revive momentum for the New England Clean Energy Connect proposal, which could become an even more important source of renewable power if the nascent offshore wind industry continues to plod through its growing pains.
The House last week advanced legislation (H 3982) opening the door for Avangrid and electric distribution companies to renegotiate part of their original contract -- which won state approval in 2019 -- following a nearly 18-month legal battle in Maine that halted work on the company's transmission project.
Depending on how those talks go, Avangrid could secure more money for the remaining construction work on a corridor linking hydroelectric power generated in Quebec through Maine to the New England power grid -- a change that both the Healey administration and the House's clean-energy point person said could carry a financial impact for Massachusetts ratepayers.
"What we anticipated when this line was originally proposed and approved was that residential customers were going to see monthly savings of $2.64," said Rep. Jeff Roy, who co-chairs the Legislature's Telecommunications, Utilities and Energy Committee. "Given these updated costs, the residential customers are going to see around $2 per month savings. So it's a reduction in the cost savings, but it's not going to be additional costs to the consumer."
Roy and other Massachusetts policymakers are under pressure to lock in sources of clean, renewable power since state law requires Massachusetts to achieve net-zero greenhouse gas emissions by 2050 and meet a range of milestones before then.
The hydroelectric power that NECEC would bring would alone represent about 18 percent of the total load in Massachusetts, according to the state Department of Energy Resources. Roy said that's clean power that "we badly need."
"We need to get all of this new renewable energy into place in order to achieve our goals," Roy said. "When you're faced with the prospect of a project that's no longer financially viable, and the prospect of having goals to reach for clean, renewable energy, we really needed to do this language to give both the developer and the Department of Public Utilities the space they need to make sure that this project happens."
To Roy and other state energy officials, the upsides of 1,000 megawatts of clean energy are important enough to warrant a change in terms. The price is still comparably lower, too: Roy said NECEC is projected to produce energy at $86.26 per megawatt hour, and some offshore wind contracts could cost $110 to $140 per megawatt hour.
"There still will be benefits to consumers, and they are going to see tremendous benefits and savings as compared to a scenario where this project wasn't built," Roy said. "... We're not going to see a cost burden on consumers as a result of this. What we're going to see is a diminishing cost savings. This hydro project still remains the cheapest source of clean energy in the region, aside from Vineyard Wind, which will be producing power by the end of the year."
"I know that it will happen if we do this legislation, and it won't if we don't," he later added.
An Avangrid spokesperson declined to comment on the House language, which was tucked into a $693 million supplemental budget bill that cleared the House without the benefit of a public hearing beforehand.
Since the developer and utilities originally reached a deal for the $950 million corridor, the project has been wracked with disruption.
Maine voters in 2021 approved a ballot question retroactively banning construction of high-impact electric transmission lines in the Upper Kennebec Region, like those used in the project, putting its future in doubt.
Developers argued they had already secured all necessary permits and spent roughly $450 million on the work before the measure's success, and in April, a jury unanimously ruled that the project can continue.
Roy said costs increased while the transmission lines were in limbo, rendering the project "financially unstable and not viable" under its prior contract.
Developers need to buy a converter station, whose price has increased by "roughly one-third" since the original work began, Roy said. Other construction costs have increased by "as much as 75 percent," he added.
The Healey administration, which Roy said is working closely with Avangrid, approached lawmakers and requested legislative action to reopen the contracts Roy said.
Sen. Michael Barrett, Roy's counterpart on the committee, said senators will "take a look at the wording" the House advanced.
"We're not promising we're going to agree with every detail of the House language, but directionally, we may well end up in the same place," he said.
A Healey administration official said the legislation would only allow reopened talks about part of the contract, applying to portions of the project that were not built due to ballot question complications.
Like Roy, the official -- who agreed to speak only on background -- forecast that contract changes would be passed along to ratepayers and argued that the benefits still outweigh the drawbacks.
The amended contract would be subject to approval from the Department of Public Utilities, the official said.
Avangrid is also behind the proposed Commonwealth Wind installation, which at 1,200 megawatts represents the largest offshore wind project in the state's pipeline.
Since last year, the company has been warning that shifting economic conditions like the Russian war in Ukraine have eliminated the project's financial viability. Avangrid is pressing to scrap power purchase agreements it previously reached with utility companies and rebid the project again in the next solicitation round, hoping that Massachusetts will once again select Commonwealth Wind but this time at a higher price.
Regulators have hesitated to let Commonwealth Wind off the hook, but the developer and utility companies this week announced an agreement in which Commonwealth Wind would pay $48 million to dissolve the contracts. DPU will now review the proposal.
Although the same party is involved in both cases, Roy said Avangrid should not view the willingness to reopen the Maine contract as a precedent for Commonwealth Wind. He called them "two totally separate circumstances."
"The [Commonwealth Wind] termination agreements, as far as we're concerned, are filed and will likely be approved by DPU, and that's the end of that story," he said.
Barrett agreed, saying Avangrid isn't "even performing the same functions in the two deals, so it's hard to carry over a lesson learned from one to the other."
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