PUC Rejects Eversource Plan for 20-year Agreement With Hydro-Quebec

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Click here for the PUC’s March 27 order

The state Public Utilities Commission has dismissed Eversource’s petition for a 20-year Power Purchase Agreement with Hydro Renewable Energy saying it would violate state law.

The proposed Agreement would have allowed Eversource to buy 100 megawatts of electricity from Hydro-Quebec, then resell it to the wholesale energy market and include the net costs or benefits of its purchases and sales in its electric distribution rates.

The plan was supposed to benefit New Hampshire by making sure 100 megawatts, or 10 percent of Northern Pass’ total 1,090 megawatts of electricity, stayed in the state.

Northern Pass spokesman Martin Murray said such a Power Purchase Agreement, known as a PPA, is not required as part of Northern Pass’ permitting process that is pending before the state Site Evaluation Committee.

And the PUC’s ruling is either no big deal or a “serious setback” for Northern Pass depending on whether it is Murray or an opponent of the project as it stands explaining Monday’s order.

“…(T)he Power Purchase Agreement was proposed as a response to many, including business leaders and policy makers, who asked for a guarantee that New Hampshire, as host state of the Northern Pass project, will receive its fair share of energy from the project and economic benefits above and beyond those received by other New England states,” Murray said in an email responding to InDepthNH.org.

Murray said there is broad support in the Legislature to provide regulators with the assurance that they have the authority to consider whether proposals like the PPA would be in the best interest of customers. One such piece of legislation, Senate Bill 128, is set for a vote in the Senate on Thursday.

Northern Pass wants to import hydropower from Hydro-Quebec through high-voltage transmission lines 192 miles from the Canadian border to Deerfield.

Jack Savage, spokesman for the Society for the Protection of New Hampshire Forests, said the PUC order is not a huge surprise and is no small deal.

“This would seem to be a serious setback for Northern Pass, given that Hydro-Quebec has made it abundantly clear recently that they won’t pay for the line without New England ratepayers footing the bill,” Savage said. “And that’s a bill none of us should be willing to pay.”

The Conservation Law Foundation said of dismissing Eversource’s proposal: “The PUC found that this proposal violates state law governing the role and scope of utility companies.”

It was the second time in six months that the PUC has shot down an Eversource “scheme that would put New Hampshire businesses and families at risk,” said CLF New Hampshire Director Tom Irwin.

“From financing gas pipelines to tipping the scales for Northern Pass, Eversource keeps trying – and failing – to gamble its customers’ hard-earned money on unnecessary and unwanted infrastructure.

“As the illusion of Northern Pass’s public value continues to be shattered, it’s only a matter of time before the whole thing comes tumbling down,” Irwin said.

New Hampshire’s Consumer Advocate Don Kreis said the PUC’s decision was consistent with a similar ruling last year about putting the Access Northeast natural gas pipeline into electric rates.

“In this instance, in a sense Eversource wins by losing because now it can say that it tried to reserve some benefits of Northern Pass for New Hampshire ratepayers but, gosh darn it, that mean PUC told them they couldn’t,” Kreis said.

The Access Northeast decision is on appeal to the state Supreme Court and if Eversource wins the decision, it would likely also apply to the Hydro-Quebec PPA that just got rejected, Kreis said.

“If SB 128 passes that would have the effect of overruling the PUC on the Hydro-Quebec agreement.  But SB 128 has uncertain prospects as a Senate floor vote looms this week, and then of course action by the House if necessary,” Kreis said.

The motion for confidential treatment of the PPA’s essential terms remains pending, Kreis said. “The PUC should deny the motion because now that the contract has been rejected, there is no longer a reason to keep its terms a secret.  It’s not like anyone else has a similar deal to cut with Eversource New Hampshire.”

The PUC order concluded: “The proposal would have Eversource purchase electrical energy for a 20-year term over a new transmission line, resell that electricity into the wholesale market, and include the net costs or benefits of its purchases and sales in its electric distribution rates, through the mechanism of the (Stranded Cost Recovery Charge.)

“That proposal, however, goes against the overriding principle of restructuring, which is to harness the power of competitive markets to reduce costs to consumers by separating the functions of generation, transmission, and distribution,” the order states.

“Allowing Eversource to use the SCRC mechanism as a ratepayer financed ‘backstop’ for its proposed 20-year PPA would serve as an impermissible intermingling of a generation activity with distribution rates,” the order states.

The trial-like adjudicative proceedings are scheduled to begin next month in Concord and run about 40 days over the following months before a subcommittee of the Site Evaluation Committee must approve or deny Northern Pass’ application by Sept. 31.

The subcommittee will weigh a number of factors, including whether the project provides a “public benefit.” Northern Pass must also win federal approval.