Friday, February 8, 2013

Five Questions for Hydro-Quebec

Responsible Energy Action LLC has posted an early Valentine's message to Northern Pass. It raises the question of whether Hydro-Quebec has gotten itself involved in a dysfunctional relationship with its US partners.

Following are five questions that Hydro-Quebec should ask itself about whether the proposed Northern Pass project is really a match made in heaven.  

o   What’s up with your US partners?  They’ve made a total mess of this thing.  Are you satisfied with the work Northeast Utilities and PSNH have done to advance the project at the US federal level and in New Hampshire?  The original timetable is now delayed by three years or more.  What went wrong?  Can it be fixed?  How?

o   Are you willing to sacrifice HQ's good reputation for Northern Pass?  The public opposition to Northern Pass has caused a lot of collateral damage to the reputation of Northeast Utilities and PSNH.  If the project advances, the opposition will likely spend more time targeting HQ.  Are you concerned about the damage to your image and brand that may be generated by more public focus on HQ’s role as sponsor and beneficiary of Northern Pass? The rest of Canada already doesn't think so much of you; do you want that to start in the US too so that no state dares mention partnering with you? 
o   Does NP really make sense anymore?  How does Northern Pass make any economic sense for you in the new world of abundant natural gas and low US wholesale electric prices?  The world has fundamentally changed in the four short years since Northern Pass was designed.  When your new hydro developments now cost a lot more (10 cents/kWh) than projected US wholesale prices (5 cents/kWh), why would you want to pursue more export links? 
o  Should you pull out of the relationship?  Your framework agreement with Northeast Utilities to build and operate Northern Pass (the so-called “Transmission Services Agreement”) will terminate automatically on February 14, 2014.  Do you plan to extend the TSA?  Will you try to negotiate terms that are more favorable to you, for example, by lowering the 12.56% profit rate for Northeast Utilities?
o   Why not bury it so it’s more likely to get done?  You know all about the technical and economic feasibility of burying these kinds of lines – just look at Champlain-Hudson, an HQ project, which will have buried underwater sections but also more than 130 miles of lines buried in rail beds and highways.  Why don't you try to cut through all the problems and re-propose a buried Northern Pass?