Sunday, January 16, 2011

What is Merchant Transmission and Why Should You Care? (Part 1)

Part 1 of a two-part blog.

Many people reading this blog are old enough to view their power company as an extension of state government that acts under regulation to serve the public by keeping the lights on at the lowest possible price. Power companies were never, in fact, so beneficent, but the words “public,” “service,” and “New Hampshire” in a dull but reassuring name like “PSNH” at least suggest as much. We gave them a certain amount of deference and respect because they were serving us, the public, and they knew what was best for us. To a degree, we tolerated their intrusions because they were acting in the public interest; in particular, we gave them the power of eminent domain to take private land when it served the greater good. Because of the stigma, we never associated the “s” word (socialism) with this collectivization, but the resemblance is obvious.

Now out of the blue comes the “Northern Pass,” and the name alone suggests something other than a public utility.  It evokes the fabled and much sought-after Northwest Passage, even though that is a route through the Canadian arctic seas, not the mountains, and in northern New Hampshire we call them notches, not passes anyway. Suddenly we went from bureaucratic, geographical public utility names like “PSNH” and “Northeast Utilities” to a mythical, nowhere name like “Northern Pass” evidently conjured up by a flatlander advertising firm as a sales pitch.
This apparent need to “sell” the Northern Pass points directly to what has happened in the electricity business.  There are now “merchant” ventures in generation and transmission, private free-lancers, so to speak, who must compete with one another in order to stay in business. To the winner go the spoils, and in the transmission business, the spoils to investors, stockholders, are huge profits.  The losers are “disincentivized,” weeded out. This is capitalism at its finest. It’s the American way.
The Northern Pass is one such merchant transmission project.  (Never mind that the Federal Energy Regulatory Commission, FERC, has just invented a new term solely for Northern Pass, "cost-based participant funded transmission line”; the concept is the same, it’s private.) Northern Pass is supposed to sell itself to us if it is to succeed and reward its shareholders. Hence the public relations push and the fancy albeit inappropriate name. If it fails to sell itself, it is supposed to go out of business.
There’s nothing wrong with “selling” one’s product, but ultimately the product must stand on its own merits, not on the advertising.  It has become increasingly clear that the Northern Pass project lacks public merit; it’s wrong for the White Mountains, a bad deal for all of New Hampshire. How many editorials, opinion pieces, news releases by elected officials, conservation and outdoor groups, business leaders, private individuals have made that point now? Their collective weight should bring the project down sooner or later if capitalism works as capitalism should. 

But the elephant in the room is eminent domain, the privilege we grant to entities to take private land. Should we give a private corporation like Northern Pass the privilege that we have traditionally bestowed upon public utilities? If Northern Pass can’t sell its product to New Hampshire on its own merits, should this private company then be allowed to take our land in order to succeed and to reward its investors anyway? Should a losing capitalist venture be shored up with a socialist prop like eminent domain? Can you spell "bailout"?
With more and more merchant transmission projects popping up in the United States, this question has come to the forefront recently. In Part 2 of this blog, we’ll look at the answers given recently by the states of New York and Montana, no and no again.

Bury the Northern Pass, a group of concerned citizens in Grafton County, belongs to the No Northern Pass Coalition. To join the email list, write to