The Massachusetts Clean Energy website on Feb. 16 posted a Massachusetts Department of Energy Resources (DOER) update on the Section 83D Procurement Process through which the Northern Pass transmission project was selected to deliver hydropower to the New England grid.
Passed as part of the “Act to Promote Energy Diversity” in 2016, Section 83D provides the framework to solicit clean energy generation resources and directs the Massachusetts electric distribution companies (EDCs) to jointly and competitively solicit proposals for clean energy generation, according to the DOER update. Provided that reasonable proposals were received, Section 83D requires the EDCs to enter into cost-effective, long-term contracts for clean energy generation for an annual amount of electricity equal to about 9.45 million MWh by Dec. 31, 2022, the update added.
According to the update, as provided in the Section 83D of the Act Relative to Green Communities (Section 83D) request for proposals (RFP) for clean energy, the final acceptance of the Northern Pass hydro bid and the award of a contract are conditional upon:
- The successful negotiation of contracts between Northern Pass and the Massachusetts EDCs
- Regulatory approval of those contracts at the Massachusetts Department of Public Utilities (DPU)
Through comparing project costs and benefits to ratepayers as specified in the RFP evaluation criteria, the proposed Northern Pass project best satisfied the policy directives contained in Section 83D, including the project’s ability to assist Massachusetts with meeting its Global Warming Solutions Act (GWSA) greenhouse gas reduction goals.
As proposed, the DOER update added, the project would deliver about 9.45 million MWh of firm clean energy per year starting in 2020.
According to the Northern Pass website, the 192-mile transmission line would bring 1,090 MW of clean energy from Hydro-Québec’s hydroelectric plants in Canada to New Hampshire and to the rest of New England. The project would build a new direct current (DC) transmission line from the Canadian border to Franklin, N.H., where a converter terminal would be built to convert the electricity from DC to alternating current (AC). From there, the site added, a new AC transmission line would carry the energy to an existing substation in Deerfield, N.H., and into New England’s electric grid.
The DOER update noted that the New Hampshire Site Evaluation Committee (SEC) on Feb. 1 voted to deny a certificate of site and facility for the Northern Pass project, and to date, a formal written order has yet to be issued.
An SEC representative could not be immediately reached for comment by press time on Feb. 21.
The DOER update said that while all bidders in the RFP had permitting risk and were in various stages of obtaining their respective permits, the SEC vote has the potential to significantly impact or render infeasible the Northern Pass project’s ability to deliver clean energy within the timeframe proposed by the bidder, as well as impact other material aspects of the Northern Pass bid.
The update also noted that in light of recent developments – and in order to execute long-term contracts by March 27 and subsequently submit them for DPU approval by April 25 – the EDCs, in coordination with the DOER and with participation of the independent evaluator on Feb. 14:
- Notified Northern Pass that the EDCs will continue conditional contract negotiations with the project, with the option of ceasing discussions with Northern Pass and terminating its conditional selection by March 27
- Offered to enter into concurrent conditional contract negotiations with the New England Clean Energy Connect (NECEC) 100% Hydro project
The DOER update said that if contract negotiations are not successful with Northern Pass, then the EDCs are in a position to proceed with the next best project that satisfies the policy directives contained in Section 83D.
In a Feb. 16 statement, AVANGRID (NYSE:AGR) subsidiary Central Maine Power (CMP) said that it proposed the $950m NECEC in a joint bid with Hydro-Québec to deliver renewable energy from Québec to the New England grid in response to the RFP.
NECEC includes a 145-mile transmission line linking the electrical grids in Québec and New England, CMP said. The project would add 1,200 MW of transmission capacity to supply New England with power from hydroelectric generation, the company said, adding that host communities in western Maine would see direct economic gains from the investment and share in the regional benefits of lower energy costs and reduced greenhouse gas emissions.
CMP said that it submitted applications for all state and federal permits in mid-2017. The company also noted that it expects to receive state approvals later this year and final federal permits in early 2019.
CMP regulatory filing
CMP, in a Feb. 17 filing, told the Maine Public Utilities Commission that the Massachusetts EDCs, in consultation with the DOER, have selected CMP’s and Hydro-Québec’s NECEC 100% hydro proposal as the alternative winning bid in the Section 83D Solicitation Process.
“Due to this development and pursuant to a letter agreement with the [Massachusetts] EDCs that CMP executed on February 15, 2018 …, CMP will immediately begin negotiation of the requisite NECEC agreements with the [Massachusetts] EDCs and Hydro-Québec,” CMP said.
CMP said that the Massachusetts EDCs, in consultation with the DOER, will open concurrent negotiations with Northern Pass and the NECEC in order to execute long-term contracts with the selected bidder by March 27, and submit them for DPU approval by April 25, as set forth in the Section 83D RFP schedule.
Under the terms of the letter agreement, the Massachusetts EDCs will move forward with the NECEC proposal, provided that the NECEC has negotiated acceptable contract terms with the Massachusetts EDCs, unless Northern Pass is able to receive its SEC permit by March 27, CMP said.
In the event that Northern Pass does not meet that March 27 permit approval condition, contract negotiations with Northern Pass will terminate and the NECEC 100% Hydro proposal will be the sole winning bid, CMP said.
“In light of these developments, it is critically important that this commission continue to evaluate CMP’s request for a certificate of public convenience and necessity (“CPCN”) for the NECEC Transmission Project,” CMP said. “Therefore, CMP respectfully reiterates its request that the hearing examiners promptly issue an order that lifts the temporary suspension and reinstates the case schedule as set forth in” a January procedural order, subject to any necessary adjustments to reflect any delays to-date.
In a Jan. 31 procedural order, Maine PUC hearing examiners noted that CMP last September filed a request for the CPCN for the NECEC, and that it has been recently announced that CMP’s NECEC bids were not accepted.
Among other things, the hearing examiners said that the current schedule regarding the NECEC is suspended pending a consideration of comments on whether the proceeding should be dismissed or suspended.
Northern Pass responds to DOER
Eversource Energy’s (NYSE:ES) Northern Pass on Feb. 16 said that it appreciates the challenge that Massachusetts officials and EDCs “are facing as they strive to meet an aggressive goal of obtaining a new and significant source of clean energy within just a few short years. The selection of Northern Pass to deliver that energy was based in part because we can be in-service far ahead of any other project.”
Northern Pass said that the decision by the DOER, its independent evaluator and the EDCs strikes a sensible balance by allowing negotiations with Northern Pass to continue, while establishing a backup protocol that can be initiated if necessary.
“From our perspective, the decision provides Northern Pass with the opportunity to make our case for a rehearing by our [SEC] and a resumption of its deliberations,” Northern Pass said. “We have a strong legal argument for a reconsideration by the SEC. There is a path forward. While our negotiations with the EDCs continue, we will also focus on earning reconsideration by the SEC and the necessary permit to begin construction in order to deliver to Massachusetts and the entire New England region the many benefits that Northern Pass will provide.”