Monday, March 27, 2017

New Hampshire State Probe into Northern Pass Deepens

Amid Conflicting Statements, State Probes Deeper Into Northern Pass

Robert Blechl
Caledonian Record
March 27, 2017

Amid conflicting statements about federal approvals and studies questioning the need for big New England energy projects, the state’s counsel for the public is now asking the burning question – who will pay for Northern Pass?

March has been a rocky road for Eversource Energy, parent company of Northern Pass, after its partner, Hydro-Quebec, confirmed it will no longer pay for the estimated $1.6 billion development of the line in the U.S.

That reimbursement to Eversource by HQ is in a Transmission Service Agreement approved in late 2010 by the Federal Energy Regulatory Commission and renewed in 2014, with an expiration of February 2017 or another date the partners agree to in writing.

After HQ’s announcement, Eversource spokesman Martin Murray said the TSA remains “in full force.”

Since then, however, FERC spokesman Craig Cano has confirmed to The Caledonian-Record that HQ and Eversource will need a new approval if the financial arrangement has changed, as HQ said it has.

“If the partners develop a different cost recovery mechanism, then they would need to come back to FERC,” said Cano.

Who Pays?

On March 20, Peter Roth, counsel for the public with the office of the N.H. Attorney General, wrote Eversource attorney Marvin Bellis about who specifically will now pay for the Northern Pass line.

“I am concerned that the means for payment and assurance of profitability sought by HQ may have effects on the quantification of the benefits of the project to the people of New Hampshire,” said Roth.

Roth noted a contradiction from Eversource stating that HQ “will not pay to bury the line.” On the same day, however, HQ issued a press release stating it “will not pay for the line in the U.S.”

As proposed, the 192-mile line would see 7 miles buried in Coos County and 52 miles in Grafton County, with the rest overhead.

HQ’s statement about not paying for the line in the U.S. comes after conservation groups in Canada and Quebec’s environmental review board criticized HQ for not burying the line through the Hereford Community Forest near the U.S. border but paying to bury segments of the line in the U.S.

Roth seeks clarification on statements made by Eversource that he said contradict statements by HQ.

He is also asking Eversource to “please explain how HQ will recover the costs of transmission service for use of the project if HQ and [Eversource] are not successful in the Massachusetts RFP” and if the applicants have any responsibility to pay development costs if the project ever comes to fruition.

Roth, too, is asking Eversource to confirm that the TSA filed in 2010 is indeed “the governing agreement between [Eversource] and HQ for paying associated costs with the project and that neither [Eversource] nor HQ are seeking to renegotiate the TSA.”

Energy Studies

Both ISO-New England and the University of N.H. have issued reports that appear to contradict Eversource’s argument for the need of a large energy projects like Northern Pass.

According to the ISO-NE report in May 2015, “The EE [energy efficiency] forecast shows that the energy savings resulting from state-sponsored EE programs can be expected to cause electric energy usage to remain flat in New England as a whole, with energy use in Maine, Massachusetts, Rhode Island, and Vermont, declining by 2024 to levels below those that had been expected in the 2014 EE forecast. The EE forecast also projects that the EE savings will slow the growth in peak demand across the region.”

On March 7, UNH’s Carsey School of Public Policy issued a report stating, “New England does not need to increase energy use to continue to grow its economy. From 2005 to 2015, real state GDP in New England grew by 9.7 percent while energy use fell by 9.6 percent. Over the same time period real GDP for the entire U.S. grew by 15.2 percent, while energy use fell by 3.4 percent.”

The Carsey report states that during the current period of rapid transformation in energy markets there is significant stranded cost risk to electricity ratepayers for large infrastructure investments with uncertain return on investment.

The report concludes, “New England has adapted to higher electricity prices via improvements in energy efficiency and a transition to a less energy-intensive economy. The energy intensity of the New England economy is much lower than the national average.”

Murray said Massachusetts has a law specifically requiring its electric utilities to enter into contracts to purchase a large amount of hydro electric energy and off-shore wind energy and Northern Pass will respond to the Massachusetts RFP.

Referring to the ISO study, he said the success of the EE does not solve the supply-reliability-price challenge of replacing retiring base-load power plants that help meet demand today.​

Friday, March 10, 2017

Northern Pass - Dead or Alive?

Northern Pass: Hydro-Quebec Now Unwilling To Pay For Line In U.S.

HQ Says Relationship With NP Still Strong, Others Say Project As Proposed Likely Dead

Robert Blechl

March 10, 2017
Caledonian Record

After reports in the Quebec press Wednesday about Hydro-Quebec abandoning Northern Pass, the Canadian company responded Thursday to say it has no intention of pulling out of its relationship with Eversource Energy, its American partner.

One thing that has changed, however, and significantly, is that HQ is no longer willing to pay for the NP line in the United States and wants Massachusetts rate payers to pick up the tab.

That announcement, confirmed by Hydro-Quebec, is a break from the 2011 Transmission Service Agreement between HQ and NP parent company, Eversource Energy, that states HQ would reimburse Eversource for all development costs of the now-estimated $1.6 billion NP transmission line.

That change, in short, means HQ is unwilling to assume all the risk of the project and it now calls into question if it makes economic sense for either partner to proceed with the project as it’s currently proposed.

“Facts on the ground have changed,” said Bob Baker member of the North Country-based Responsible Energy Action LLC, a citizens’ education, advocacy and action group focused on N.H. energy policy.

“The transmission line now costs at least half a billion more than originally planned,” he said. “The capacity of the line has been reduced by 20 percent. The wholesale market price of electricity in New England is lower than its been in 13 years. So the original deal no longer makes sense. It is dead. If there is a new deal, it is slowly being revealed by reading between the inconsistent lines published by HQ and Eversource on their respective sides of the border. HQ is no longer willing to take on the risk of loss.”

HQ’s announcement came after a Wednesday story in Le Journal de Quebec stating HQ would be paying for the line in the U.S.

In a press release Thursday, HQ said “it has no intention to abandon the project” and “wishes to reiterate the position we shared with numerous Quebec media on Wednesday: Hydro-Quebec will not pay for the line in the U.S. [and] Hydro-Quebec will make sure this project is profitable for Quebecers.”

HQ said it now intends to submit the project to the request for proposals that Massachusetts will soon be issuing.

It is unclear, however, if HQ and Eversource N.H. have a renewed Transmission Service Agreement filed with the Federal Energy Regulatory Commission.

In December 2013, Eversource requested an amendment to its 2011 TSA with HQ, noting delays in the project and stating, “The parties have agreed to replace the term ‘third anniversary’ with the term ‘approval deadline,’ which is defined to mean Feb. 14, 2017, or such other date to which the parties shall mutually agree in writing.”

Spokespersons at FERC said that to date there is no signed and renewed TSA between Eversource and HQ on file.

On Thursday, Eversource spokespersons Martin Murray and Kaitlyn Woods declined to say if Eversource has a renewed TSA with HQ, what the terms of it are, and if it plans to present it to investors to assure them HQ will remain committed and Northern Pass as proposed is moving forward.

Baker said just like the first TSA amendment proposed in December 2013, the parties would want to file it 60 days beforehand to get a FERC approval by February. That hasn’t happened.

In the 2011 TSA, Eversource didn’t take any real risk and the risk was mostly on HQ, said Baker.

“This is how it’s changed,” he said. “HQ now says we will only build NP if the rate payers in New England, and especially in Massachusetts, pay for the transmission line through a long-term contract where they agree to a high rate … They are not going to do the project unless they are guaranteed a payback … They don’t see the profit under the original model.”

Tuesday, December 27, 2016

Mostly Small NH Towns v. Big Utilities


North Country Towns Gear Up For N.H. Supreme Court Fight Against Big Utilities

Argue State Allowing Utilities To “Escape Taxation”

Case to be heard Jan. 5, 2017

Robert Blechl
Caledonian Record
Nov 26, 2016

Municipalities across the state, including many in the North Country, have filed argument briefs in their years-long tax abatement fight against two big utilities, a case now scheduled to be heard before the N.H. Supreme Court Jan. 5.

The municipalities argue the appraisals provided by Eversource Energy and the New Hampshire Electric Cooperative as well as by the New Hampshire Department of Revenue Administration in towns are unreliable, do not provide an opinion of the value of the actual assets in the individual towns, and the DRA’s “net book approach … allowed property to escape taxation.”

At stake for the two utilities are millions of dollars saved through significantly reduced property taxes, a potential boost to company profits.

At stake for small towns, which argue the utilities are trying to get out of paying their fair share of taxes, is a reduction in tax revenue that could put a strain on town services and increase the taxes of all other taxpayers.

In July 2015, the New Hampshire Board of Tax and Land Appeals ruled in favor of the towns, concluding the unit method of valuation sought by Eversource and NHEC - a method through which they seek to reduce their property taxes by one-half to two-thirds - does not represent the fair market value of the utility properties.

Eversource and NHEC promptly appealed to the New Hampshire Supreme Court.

Representatives for Eversource have equated higher property taxes with increased costs for ratepayers, but neither utility has provided a guarantee that rates would be reduced or stay the same if their property taxes were likewise reduced.

The New Hampshire Public Utilities Commission, which regulates utilities, is the entity that approves or denies a requested rate increase.

In its argument brief filed with the New Hampshire Supreme Court in September, Eversource argues it faces regulatory restraints on income and operations and that “dramatically inconsistent assessments, including assessments more than doubling in one year in one community,” compelled it to file the appeals.

Eversource also claims the DRA establishes the market value of utility property for the state utility tax and municipal assessments “vary widely” from the DRA’s valuations.

In an argument brief filed at the New Hampshire Supreme Court in early November, however, attorneys for the towns argue, “Over 50 years ago, this court recognized that using net book to value utility property is inherently unfair and impractical because, in part, it does not address the changes in the of the assets that occur over long periods of time.”

The towns also took aim at the DRA, the agency responsible for supervising assessments in the state, which they charge with providing appraisals with errors and allying with the two utilities at the expense of the towns they represent.

In its brief, the DRA argues the BTLA ruling jeopardizes the state’s equalization process, which it said relies on the allocated values from the DRA appraisals and puts at risk the local assessments in about one-third of all N.H. municipalities that use the DRA utility property appraisal values for local tax assessing.

If the BTLA ruling stands, the DRA argues, the utility property tax that the agency said last year generated nearly $43 million in revenue could be undermined.

What the agency did not say in its argument, however, is if utility property values in some towns are being unnecessarily under-assessed.

In many small towns, utility property makes up a large chunk of their tax base, which, if they lose the case, could erode by millions of dollars.

The municipalities also argue the DRA is not being transparent and is not allowing selectmen and the public to review the basis for the agency’s valuation for local tax purposes.

“Basically, the DRA is saying ‘trust us, we’ll get it right, and we are not going to allow anyone to check our work,” attorneys Jae Whitelaw, Christopher Boldt and Shawn Tanguay, representing the towns, wrote in their brief. “This effort at reassurance rings hollow.”

Stephan Hamilton, director of the DRA’s Municipal and Property Division, was contacted several times about the case, but declined to comment.

Some towns have been spending tens of thousands of dollars annually fighting the appeals that began in 2011 and have continued each year thereafter.

Eversource, the largest electric utility in New Hampshire, is suing about one-quarter of New Hampshire’s municipalities, most of them small towns and including Littleton, Bath, Haverhill, Lancaster, Dalton, Northumberland, Whitefield, Landaff, Stark, Stratford and Stewartstown.

In Littleton, Eversource is seeking to reduce its total assessment of about $22 million to $11 million.

In Lancaster, for the 2011 tax year, the company wants to cut its assessment from $7.38 million to $3 million.

NHEC’s tax abatement appeals, filed at both the BTLA and superior court, are against towns that include Bath, Colebrook, Haverhill, Landaff, Littleton, and Monroe.

Representing the two utilities at the Jan. 5 oral argument before the state’s high court will be attorney Margaret Nelson. Representing the DRA will be Assistant New Hampshire Attorney General Laura Lombardi. Representing the towns will be attorneys Boldt, Tanguay, and Walter Mitchell.

The case could have widespread ramifications on utility property appraisal in the future, beyond the two current utilities.

Since the appeals were filed, three more utilities also standing to gain through reduced property taxes have filed briefs in support of Eversource and the NHEC - Unitil Energy Systems, Northern Utilities, and Granite State Gas Transmission.

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Towns named in the suits include: Andover, Bridgewater, Croydon, Danville, Durham, Dunbarton, Fremont, Littleton, New Hampton, Pembroke, Randolph, Sandwich, Sunapee, Bath, Bradford, Bristol, Landaff, Milan, Bennington, Chester, Dalton, Hampstead, Haverhill, Hinsdale, Hopkinton, Lancaster, Lincoln, Madison, Marlborough, Newport, Pelham, Raymond, Springfield, Stratford, Washington, Whitefield, Unity, Hinsdale, Plymouth, Antrim, East Kingston, Francestown, Gorham, Greenville, Henniker, New Ipswich, Northfield, South Hampton, Stark, Stewartstown, Stoddard, Warner, Wilmot, Nelson, Hollis, Northumberland, Colebrook, Monroe. (58)