Bowles sued on renewable policies

The developer of a major wind power project in Maine is suing top officials in the Patrick administration for steering state subsidies to renewable energy projects in Massachusetts.

TransCanada Power Marketing Ltd., a division of a company based in Calgary, said the governor’s policies discriminate against out-of-state suppliers of renewable energy and violate the Commerce Clause of the US Constitution.

The court battle is likely to highlight a sensitive issue associated with the Patrick administration’s push for renewable energy: whether electric ratepayers in Massachusetts should be required to subsidize green energy projects — and jobs — located out of state.  

The case’s outcome could also affect Cape Wind, the controversial wind turbine project proposed for Nantucket Sound. TransCanada is seeking to block a Massachusetts policy that directs utilities to negotiate long-term power contracts only with Massachusetts–based renewable energy projects. Under that policy, Cape Wind is currently negotiating a long-term contract with National Grid, the state’s largest electric utility.

State officials named in the lawsuit include Ian Bowles, the governor’s secretary of energy and environmental affairs; Philip Guidice, the head of the Division of Energy Resources, and the three commissioners of the Department of Public Utilities. A spokeswoman for the officials said they would have no comment. Robert Buchanan Jr., a Choate, Hall & Stewart attorney representing TransCanada, also declined comment.

The state’s Green Communities Act, passed in 2008, requires electricity sellers operating in Massachusetts to steadily increase the amount of power they acquire from renewable sources from the current 5 percent to 15 percent by the year 2020. Electricity sellers are allowed to buy renewable power from any generator that feeds into the New England power grid, on the theory that reducing the grid’s overall dependence on fossil fuels benefits the entire region.

But while the bulk of the region’s electricity is consumed in Massachusetts, Connecticut, and Rhode Island, most of the renewable energy projects are coming online further north. According to a 2007 analysis of the Massachusetts program, 32 percent of the renewable power came from Maine, 17 percent from New York, 16 percent from New Hampshire, 16 percent from Canada, 12 percent from Massachusetts, and negligible amounts from other New England states.

TransCanada is challenging two initiatives of the Green Communities Act. One requires electricity sellers to attempt to negotiate 15-year contracts with Massachusetts-based renewable energy projects and the other requires them to buy solar power from local suppliers. TransCanada says the two provisions violate the Constitution and also inflate the subsidies Massachusetts customers have to pay by limiting which projects qualify.

Bob Grace, president of Sustainable Energy Advantage LLC in Framingham and an expert on the renewable energy market, said he has seen a proliferation of initiatives by southern New England states to support renewable energy development within their borders. He said those initiatives can have the effect of limiting demand for what are often more economical projects in northern New England. “You can see why TransCanada would feel threatened,” he said.

TransCanada operates natural gas pipelines and sells and generates electricity. It owns Kibby Wind Power in Franklin County, Maine, a $300 million project that is half completed, generating enough electricity to power 25,000 homes.

The TransCanada suit says it is well established that states cannot discriminate against renewable power suppliers outside their borders. As one example, it cites a 2001 publication prepared for the National Association of Regulatory Utility Commissioners that said “absent a significant change in Supreme Court application of the Commerce Clause of the US Constitution, the restriction to in-state generation will, if challenged, be found unconstitutional.”