Why Maine voters did Mass. a favor

THE GOOD PEOPLE of Maine have done Massachusetts’ electric ratepayers a solid, as the expression goes. On Tuesday, Maine voters approved Question 1 on their ballot by a nearly 60-40 percent margin. Question 1 will deep-six the electric transmission line intended to push expensive Quebec hydropower into Massachusetts, where ratepayers of the state-regulated electric utilities would be forced to pay for the power as it displaces significantly less expensive market-based power.

Maine’s Question 1 had three components: retroactive application of measures to 1) ban construction of “high-impact” transmission from the upper Kennebec region; 2) require legislative approval of such transmission anywhere in Maine; and 3) require legislative approval of such projects using public land.

Why is Maine’s action so important to the customers  of the state-regulated utilities in Massachusetts? Let’s list a few of the reasons:

• According to my analysis, the purchase of hydro-electricity from Hydro-Quebec and construction of the transmission line from the Quebec border to Lewiston, Maine, will end up costing $5 billion more than purchasing the energy on the region’s existing wholesale market;
• The power from Quebec is coming entirely from existing resources, so it provides no net greenhouse gas reduction;
• The power from Quebec does not provide important capacity benefits because the contract does not provide physically firm power (electricity available at any time) that meets the industry’s stringent reliability standards;
• The Massachusetts Department of Public Utilities gave the Massachusetts utilities a $426 million remuneration gift over the contract’s term for merely signing the paperwork and giving ratepayer money to foreign-based companies;
• The contracts inadequately protect against a power shell game – allowing market-priced power historically provided over an existing line to shift to the new line at a higher price;

• None of the 40 or so non-state regulated municipal utilities in Massachusetts are participating in the purchase, a key independent review of the deal.

Most important of all, Maine voters have struck a blow against heavy government intrusion into competitive electric markets. Remember that electric market deregulation was intended to get regulated utilities out of the generation business. It was never intended to put state government in their place.

Why does it matter to have government in charge of huge financial decisions – with all its trappings of lobbyists, special interests, bureaucrats, and campaign contributions – instead of the non-discriminatory free market?

You don’t need to hear my answer. Some time ago I contacted a columnist for a Maine newspaper to let him know about the unsavory origins of Massachusetts’ quest to buy power from Hydro-Quebec over a new transmission line, which by that time had relocated from New Hampshire to Maine. While the columnist expressed some interest in hearing that the legislation for the deal was immediately preceded by an unusual pattern of campaign contributions, he didn’t think his readers would be interested.  Why?

“Everyone here thinks Massachusetts is corrupt to the core, anyway,” he said.

Mike Hachey is an independent energy consultant with nearly 40 years experience in both the regulated and unregulated power sectors.