Hydro-Quebec and Natural Gas Back On Eversource Table

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Northern Pass photo


CONCORD — Eversource informed the Public Utilities Commission Monday that it will file a revised proposal to purchase natural gas capacity from the Access Northeast proposed pipeline.

Eversource also asked regulators to vacate their 2017 order denying a Power Purchase Agreement with Hydro-Quebec that was included in the Northern Pass Transmission proposal.

The state Supreme Court recently reversed the Public Utilities Commission’s 2016 dismissal of the original Access Northeast agreement and has sent the issue back to the PUC.

Eversource officials say that decision uses the same argument regarding the state’s electric deregulation law the PUC used in denying the Hydro-Quebec Power Purchase Agreement.

The PUC ruled in October 2016 the proposed agreement with Algonquin Gas for the Access Northeast project violated the state’s electric industry restructuring law.

The court said state utility regulators erred when they determined separating power generation from distribution and transmission was the fundamental principle of the state’s deregulation law. The court said instead the priority was reducing electric rates.

In its 2016 ruling, the PUC said the fundamental principle of restructuring is to reduce electric rates by developing a competitive electric market which is achieved by separating generating costs from distribution and transmission costs.

At the time, lawmakers said under the law ratepayers would no longer carry the financial risk of developing and maintaining generation facilities and instead the risk would be on developers and their stockholders.

But the state Supreme Court said the PUC “misconstrued” the restructuring statutes and failed to consider other principles contained in the law.

While the ruling pertained only to the PUC’s decision to reject the agreement with Algonquin Gas, Eversource and supporters of the company’s Northern Pass project that was denied by the Site Evaluation Committee earlier this year, say the court’s ruling addresses the same legal issues in both cases.

The dismissal prevented the SEC from considering the significant benefits of the PPA during Northern Pass deliberations, said Eversource spokesman Martin Murray.

The PUC never considered that the Power Purchase Agreement could significantly lower energy costs for customers, Murray said. That decision relied on the same legal analysis the Supreme Court rejected so the PUC has been asked to vacate the purchased power decision, he said.

“New Hampshire’s highest court has clearly determined that reducing energy costs to customers was the Legislature’s primary intent in restructuring the state’s electric utility system. The PUC’s decisions were out of step with that intent,” said Eversource New Hampshire President Bill Quinlan.

“Both of our proposals were focused on providing savings to customers by reducing high and volatile electric prices caused by natural gas constraints and by guaranteeing that New Hampshire received its fair share of direct benefits from the Northern Pass project.”

Opponents of the project note that Eversource voluntarily withdrew the Power Purchase Agreement when the SEC was considering Northern Pass.

Jack Savage, vice president of communications for the Society for the Protection of New Hampshire Forests, said, “the failure of the PPA was not among the many reasons that Northern Pass couldn’t meet the burden of proof at the SEC. In fact, coercing New Hampshire ratepayers into paying for Northern Pass through a PPA could well have been an additional reason to deny a permit.”

The SEC said Northern Pass failed to meet its burden of proof that the project would not interfere with the orderly development of the region.

The majority of the Supreme Court justices said while it gave deference to the PUC in determining its opinion, it also turned to the plain language of the law in deciding there are other fundamental restructuring principles beyond the separation of generation functions and distribution and transmission functions.

The majority opinion was written by Chief Justice Robert Lynn.

Senior Associate Justice Gary Hicks disagreed with the majority and sided with the PUC on the issue, saying the court’s ruling would “undermine the main objectives of the act and re-expose ratepayers to the types of financial risks from which the Legislature sought to protect them.”

Last month, the SEC rejected Northern Pass’s request to reconsider its 7-0 rejection of the project by the same vote.

Eversource is expected to appeal the decision to the state Supreme Court, but has not yet filed its appeal.

Eversource has 30 days from the May 24 decision by the SEC to reject reconsidering the project.

On Monday, Murray said Eversource has temporarily withdrawn the original Access Northeast gas capacity agreement and will file a revised application.

The need for additional gas capacity in New England is more acute today than it was when Eversource filed the original application, Murray said, noting the region incurred $1.7 billion in additional costs because of insufficient capacity for low-cost natural gas this winter.

Garry Rayno may be reached at garry.rayno@yahoo.com

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