Baker selects backup for Northern Pass

THE MASSACHUSETTS CLEAN ENERGY PROCUREMENT took another odd turn on Friday as officials entered into contract negotiations with a second transmission company with ties to Hydro-Quebec while giving Northern Pass until March 27 to overturn a unanimous regulatory rejection in New Hampshire.

Just before 5 p.m., Baker administration officials released an update on the procurement that said Northern Pass, a partnership of Eversource Energy and Hydro-Quebec, would be given additional time to get its bid back on track. Given the limited time – just 26 business days – and the enormous regulatory hurdles involved in overturning a 7-0 vote by a New Hampshire regulatory body, the odds of Northern Pass mounting a comeback would appear to be slim.

While contract talks with Northern Pass continue, the state’s three electric utilities will also begin negotiating power supply contracts with New England Clean Energy Connect, a partnership of Central Maine Power and Hydro-Quebec that the update referred to as “the next best project.”

Northern Pass and New England Clean Energy Connect are almost identical projects in design. Both would deliver about 17 percent of the state’s power needs in the form of hydro-electricity from Quebec. Northern Pass’s $1.6 billion transmission line would run through New Hampshire while Clean Energy Connect’s $950 million line would run through Maine. Perhaps the biggest difference was timing. Northern Pass boasted that its transmission line would be operational in 2020, while Central Maine Power said it would need until December 2022 to get its transmission line up and running.

State officials said one way or another the Massachusetts utilities expect to have a contract signed with one of the two projects by March 27. After a period of review, the contracts will be submitted to the state Department of Public Utilities for approval on April 25.

Central Maine Power also has a host of permits it still needs to obtain, but the company issued a statement expressing confidence it can get the job done. “Our applications for state and federal permits are moving forward with the strong support of communities and stakeholders in Maine,” said Doug Herling, president and chief executive of Central Maine Power, a subsidiary of Avangrid Inc. “We believe the NECEC is a cost-effective response to Massachusetts’ needs, and given our experience building projects of greater scale and complexity here in our home state, we’re confident we can meet our commitments.”

The whole selection process has been something of a black box so far. A total of 46 bids were submitted for the clean energy procurement, and state and utility officials have yet to offer any detailed information on why Northern Pass and Clean Energy Connect were chosen. Friday’s update said Northern Pass offered the “greatest overall value” to Massachusetts customers but added that the permit denial in New Hampshire “has the potential to significantly impact or render infeasible the project’s ability to deliver clean energy within the timeframe proposed by the bidder.”

Another aspect of the contracting process that has drawn attention has been the involvement of the Massachusetts utilities as both bidders and bid evaluators. The state’s three utilities – Eversource Energy, National Grid, and Unitil – worked with the state Department of Energy Resources in writing the request for clean energy proposals and selecting Northern Pass, which included Eversource as one of the partners.

Once Northern Pass was denied its permit in New Hampshire on February 1, it was left up to the utilities to decide what to do next. Sources say there were disagreements among the utilities, but with prodding from Baker administration officials they ultimately reached consensus on an approach that gives Northern Pass a bit more time but inserts Central Maine Power as a backup.

The utilities reached their consensus on Wednesday and the two projects accepted the terms on Thursday, according to the state’s update, which wasn’t released until late Friday afternoon.

An independent evaluator has been monitoring the process. Indeed, the state’s update said the Department of Energy Resources and the three utilities agreed on January 31 that the independent evaluator should monitor the contract negotiations conducted by the utilities, an approach that had earlier been rejected by the Department of Public Utilities.

Eversource Energy issued a statement calling the decision to give Northern Pass a bit more time and incorporate Central Maine Power into the contracting process a “sensible balance.”

“From our perspective, the decision provides Northern Pass with the opportunity to make our case for a rehearing by our New Hampshire Site Evaluation Committee and a resumption of its deliberations,” the company said. “We have a strong legal argument for a reconsideration by the SEC. There is a path forward.”

But time is running very short. The Site Evaluation Committee hasn’t even issued a written decision yet, and most experts say appealing the group’s decision could take longer than a year.

Reaction to Friday’s announcement was muted because it was released so late in the day before a long holiday weekend.

Chloe Gotsis, a spokeswoman for Attorney General Maura Healey, appealed for more transparency.  “Today’s announcement regarding the clean energy solicitation raises more questions than it answers,” she said in a statement. “It’s unclear what happened over the last two weeks to get to this point or what criteria is being used to decide what to do in the next phase on March 27. We continue to urge the parties to fully answer the public’s questions about this process.”

A rival project developed by National Grid and Citizens Energy to import wind power from Quebec issued a statement saying their proposal delivered the greatest emission reductions at the lowest cost with minimal environmental or community impact.

“We look forward to the independent evaluator’s report to better understand the methodology by which these projects were scored and selected,” said John Flynn, senior vice president of National Grid Ventures.

Dan Dolan, the president of the New England Power Generators Association, issued a statement condemning the state’s decision to negotiate special power-supply contracts with Hydro-Quebec outside the competitive process that typically governs power purchases in New England.

“Once again, Hydro-Quebec wins, and consumers lose,” Dolan said. “Massachusetts is now all-in on Hydro-Quebec, going from the fatally flawed Northern Pass to a Maine project that still lacks virtually all its key permits. All in the name of meeting 2020 carbon emissions reduction mandates. This deeply troubled RFP, and the legislation that authorized it, has from the start been about locking-in provincially-owned Canadian hydropower. Hydro Quebec is asking for Massachusetts consumers to guarantee them revenue through an above-market contract for electricity for the next two decades.”