Avangrid resuming construction of Mass.-financed hydro line
CEO says Maine project expected to cost $1.5 billion
THE TOP OFFICIAL at Avangrid said construction of the Massachusetts-financed transmission line carrying hydroelectricity from Quebec into Maine is slated to resume next week, and his presentation suggested the project could be up and running this year.
In an earnings call with financial analysts, Pedro Azagra, the CEO of Avangrid, said the company notified regulators in Maine on Thursday that it is resuming “critical path construction activities” on August 3 in connection with a substation in Lewiston.
The New England Clean Energy Connect project has been on hiatus since 2021, when voters passed a law scuttling it. Avangrid went to court to challenge the legality of the referendum and scored a series of legal victories, including a Supreme Judicial Court ruling in August 2022 declaring the voter-approved law unconstitutional. After other issues were resolved, the Maine Department of Environmental Protection said in May that Avangrid could resume construction, but until Thursday’s earnings call there was no indication when work would start.
The project is a key part of the effort by Massachusetts to decarbonize its energy usage. The project is expected to provide enough steady, reliable electricity to power 1 million homes.
Azagra lauded the Massachusetts House and Senate for including in a spending package a measure allowing the Department of Public Utilities to approve a revised contract with the state’s three utilities for the transmission line that reflects the delays caused by the law changes in Maine.
Azagra said the company plans to spend a total of $1.5 billion on the project, roughly $500 million more than original forecasts. He said $638 million has been spent already.
“Once complete, New England Clean Energy Connect will benefit all of New England by reducing the region’s dependence on fossil fuels and providing more stable energy prices,” he said.
In another section of the presentation, the company projected New England Clean Energy Connect would yield 6 to 7 cents in adjusted earnings per share in 2023, which suggests the project, a joint venture with the provincial utility Hydro-Quebec, will be completed sometime this year. Avangrid officials declined comment.
Azagra also seemed pleased with the deal the company reached with three Massachusetts utilities to terminate a power purchase agreement they signed last year for the Commonwealth Wind offshore wind farm. Avangrid said rising inflation, interest rate hikes, supply chain disruptions, and the war in Ukraine had reduced profit margins to such a low level that the project could no longer be financed. Under the deal, Avangrid must pay the utilities $48 million, money that would be rebated to customers. The termination agreement still needs the approval of the Department of Public Utilities.Azagra said the $48 million represents the company’s security deposit on the project. “This outcome is significantly better than our peers who paid up to $350 million to terminate their respective offshore wind contracts,” Azagra said without elaborating.
It’s unclear what projects Azagra was talking about. Other offshore wind farm developers have written down the value of their projects because of the changing economic conditions, but they are looking to regulators for some price relief instead of terminating their projects.