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 burynorthernpass@gmail.com. 

The 2004 Bombing of a Hydro-Quebec Tower

In  "Cross Border Issues in Protecting Critical Infrastructure from Terrorism"  (2006), Kevin Freese, a U. S. Army researcher, discusses threats to the North American power grid, including its potential vulnerability to accidental or malicious disruption in Canada. A case in point for the latter is the 2004 bombing of a Hydro-Quebec transmission tower (a so-called Mae West pylon) in the Eastern Townships. The tower was part of a transmission line carrying electricity from a large hydro dam in James Bay, Quebec, to metro Boston. Discovered by a hunter in November, 2004, the bombing did not disrupt the flow of power into the U.S., although it was apparently meant to, and Freese finds the implications of this incident significant.

A group named the International Resistance Initiative (IRI) claimed credit for the bombing as a gesture of protest against the "sacking and pillaging of Quebec's resources" by the United States, a reference to the U.S.'s increasing dependence on Canadian energy, especially hydro-power. It also accused Hydro-Quebec of exploiting the province's natural resources. Freese comments that Hydro-Quebec's James Bay electricity network has caused much controversy because of its environmental impact, both actual and potential, and because of its impact upon the Cree nation.

But the real target was meant to be the U.S. Although the H-Q transmission network is vast, the bombing was carried out within a few miles of the U.S. border. Freese believes that this signals the IRI's intent to cause a blackout and major disruption in the U.S. In fact, he notes, if the bombing had been successful, it might have blacked out much of Canada as well.

Although the attack was amateurish, Freese finds it significant that the IRI issued its communique claiming credit to the al-Jazeera Arab satellite television network. Its suggests that "more hardened and callous" organizations have "potential allies" like the IRI close to the U.S. who are prepared to launch attacks on critical infrastructure beyond our borders but upon which we are becoming increasingly dependent.

Freese concludes that homeland security cannot be judged strictly a domestic issue, especially when it relates to critical infrastructure such as transmission lines. While America's neighbors Canada and Mexico proclaim protection of infrastructure as vital, "local problems complicate their ability to protect these targets."

Freese's concerns about Canada in 2006 were echoed last month, December 2010, by Canada's Defence Department itself. In Critical Energy Infrastructure Protection in Canada, a study commissioned by the Defence Department, author Angela Gendron warns that almost ten years after 9/11 Canada still has not formed a reliable strategy to protect energy infrastructure. The reality belies all the rhetoric, she comments.

As the Vancouver Sun phrased it on January 5, 2011, inaction by the federal government has left key energy assets vulnerable to a range of threats, from terrorism and natural disasters to the emerging danger of a cyberattack.

Canada's energy infrastructure remains a target for terror.

As it evaluates the Presidential Permit application by Northern Pass, it behooves the U. S. Department of Energy to consult the U. S. Department of Defense about Canadian protection of energy infrastructure. We await their findings.

Bury Northern Pass, a group of concerned citizens in Grafton County, belongs to the No Northern Pass Coalition. To join the mailing list, write to burynorthernpass@gmail.com.

Hydro-Quebec, Serious Cold, Dark Winters, and Why a Premier Lost his Job

This blog draws upon material in two New Brunswick newpapers, a Times &Transcript article, Jan. 1, 2011, and a Daily Gleaner article, December 31, 2010.


In the province of New Brunswick, the news story of 2010, possibly of the decade, was the proposed deal to sell NB Power, or at least a large part of it, to Hydro-Quebec. The deal fell through, and analysts are now conducting the post-mortem.

On October 27, 2009, amidst great “fanfare and ceremony,” New Brunswickers woke up to learn that their Premier, Shawn Graham, had struck a deal to sell almost all of NB Power’s generation and transmission capacity to Hydro-Quebec in return for a 30% cut to industry’s rates and a freeze on residential rates. For five years. After that, HQ would set the rates. The deal had to be confirmed in just five months, March 31, 2010. On March 25, 2010, HQ pulled out, and the deal was dead. The NB party in power, the Liberals, lost the 2010 provincial election. Graham is gone.

What happened?

UNB political scientist Don Desserud explains that it was a “bad deal” for NB because the deal makers forgot the most critical point: “the company that provides [NB] with our heat and light in a province that has serious cold, dark winters should not be owned by anybody except the people of the province.” David Alward, leader of the opposition party, condemned the lack of transparency in the negotiation process and predicted that NB would go from “self-sufficiency to self-destruction” if it allowed HQ to take over.  

Further, the surprise announcement to the citizens of New Brunswick stunned, then outraged them. “Where on earth did this come from? It just came out of nowhere, the enormity of the proposal and the clear lack of consultation with people.”

Citizen response to the province’s loss of ownership, unequal treatment of customers, and the secret negotiations began immediately. It came via social media, the internet, and highly visible opposition. A 25,000 member Facebook protest group emerged; multiple marches on the lawn of the provincial legislature in Fredericton occurred, one with upwards of 4,000 protesters. The Council of Canadians, with its web presence, got involved. “These days,” said Energy Minister Craig Leonard, “it’s very easy for people to engage.”

Both Desserud and Leonard conclude that the successful protest has changed the face of politics in NB for a very long time. There are certainly other factors in the death of the deal, but people now feel empowered to turn a government around, and that feeling won’t go away any time soon. Desserud notes that “political parties have to treat the civically engaged public differently because the voters could turn on them en masse in the next election.” Leonard draws the lesson for politicians: “when you plan on doing something that massive, if you don’t consult, if you don’t engage people beforehand, it’s very easy for them to voice their opinion against you.”

Great fanfare and ceremony. The trappings of a coronation, as Jeff Woodburn phrased it.  Surprise announcements. Creating a sense of urgency. Enormous plans. The clear lack of meaningful consultation with the real “stakeholders,” the citizens of New Hampshire. Serious cold, dark winters. The danger of allowing Montreal to call the shots on energy prices and supply in this country when the going gets tough, as it did in the recent drought in Quebec that dropped hydro dam resources by 25%. The parallels between the NB-HQ deal and the proposed Northeast/PSNH-HQ deal are obvious. It’s an old story.

The new actor in it, however, is the engaged, cyber-networked “grass roots” opposition. These days it’s easy to link up with people as appalled as you are and share information, take action. In fact, utilities industry “playbooks” target public opposition as the number one downfall of transmission projects, not the regulators, the terrain, the environment, or any other factor. Public opposition galvanizes political resistance and leads to legal action.

One such playbook warns its corporate clients that utilities used to be able to decide what they wanted to do and largely do it. It was “decide, announce, defend.” With an alert, informed, networked public and deregulation, now it is often “decide, announce, defend, abandon.” Many transmission projects are indeed abandoned as bad deals for the people.

The utilities industry tries to discredit the public opposition that blows the whistle as NIMBY (not in my backyard) sentiment, or even BANANA (build absolutely nothing anywhere near anyone). We’ve heard PSNH trivialize us as NIMBY; perhaps we’ll earn the BANANA badge too before it's all over. But no one really believes this rather desperate effort to minimize the issues. This is about serious cold, dark winters, about not ceding energy control to a foreign government, and about many other critical issues. This is wrong for the White Mountains, as former state Senator Deb Reynolds argues, and a bad deal for all of New Hampshire. New Brunswick figured it out quickly and correctly. So have we.

Bury the Northern Pass, a group of concerned citizens in Grafton County, is a member of the No Northern Pass Coalition. To join the email list, write to BuryNorthernPass@gmail.com.