Beacon Hill inaction leaves Avangrid in awkward spot
Firm had been counting on adjustments to its transmission line contract
ON JULY 27, the CEO of Avangrid told financial analysts that his company was preparing to resume work on the Massachusetts-financed transmission line carrying hydroelectricity from Quebec into New England.
From his remarks, it was clear that Pedro Azagra green-lighted construction because of the willingness of House and Senate lawmakers in Massachusetts to support efforts to tweak the company’s contract with the state’s three utilities. Both branches had included provisions in spending bills that would allow state regulators to adjust the contract terms to offset rising costs caused by legal and regulatory delays associated with the project in Maine.
Azagra said the cost of the project had increased to $1.5 billion, up from earlier estimates of $1 billion. So, theoretically, the provision being considered in the Legislature could have been worth as much as $500 million to Avangrid.
But four days later the House and Senate passed a pared-down spending bill that left out the provision Avangrid had been counting on. It left the energy company in the awkward position of resuming construction on the project with no guarantees it would recover the money it was spending.
Avangrid declined comment.
The snafu is another example of how a Legislature dominated by Democrats often makes decisions that make little sense to outsiders.
New England Clean Energy Connect is a joint venture of Hydro-Quebec and Avangrid, with Hydro-Quebec supplying the hydroelectricity and Avangrid building the transmission line carrying the power from the Canadian border to Lewiston, Maine, where it would feed into the regional power grid.
The project is a key part of a bid by Massachusetts to reduce its reliance on fossil fuels and meet carbon emission goals. Construction of the transmission line halted in 2021, when voters in Maine passed a law retroactively shutting down the project.
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 by then the company had a contract for a $1 billion project that had ballooned in cost during the delay to $1.5 billion.
The Healey administration urged lawmakers to pass a law allowing Avangrid to recover from utility ratepayers the extra costs associated with the delays caused by the referendum and the legal challenges, and both the House and Senate included similar but not identical one-paragraph provisions to accomplish that in so-called supplemental spending bills. The total cost of the House bill was $693 million; the Senate bill came in at $513 million.
Instead of finding common ground – which has been difficult this year on Beacon Hill – on the overall bill, the House and Senate on July 31 adopted a new, pared-down supplemental spending bill that included $180 million for hospitals, $20 million for Massachusetts farmers, and a measure allowing horse racing simulcasts to continue.
Rep. Jeffrey Roy of Franklin, the House chair of the Legislature’s Telecommunications, Utilities, and Energy Committee, said the issue is going to be addressed. “The supp is still in the works,” he said. “I know that it’s still alive.”