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
March 10, 2017
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.”