Pinocchio Fact Checker: Arguments against HB 648 Bragdon/Forrester

Pinocchio Fact Checker: Arguments against HB 648 Bragdon/Forrester Amendment

In the spirit of the "Pinocchio Fact Checker," Bury the Northern Pass looks at the rhetoric and reality of arguments against  HB 648 Bragdon/Forrester amendment (648 B/F)

1. Providing electricity is a public purpose, and eminent domain should not be restricted.  

     That may have been the case in the old days when utilities were government owned, highly regulated, and essentially an arm of the government.  But it is entirely different in today’s world of de-regulation and investor-owned utilities. To disprove this objection you need go no further than current 371:1, which bans eminent domain for generation plants because, in the de-regulated environment, generation plants are private businesses.  Electricity is no longer recognized as a special public good.  648 B/F simply carries the logic of 371:1 to close the loophole that would allow private transmission lines to use eminent domain.

2.  648 B/F is not needed because Article 12-a already provides full protections to landowners. 

Not true.  Article 12-a will not provide ANY protections until, at best, the very end of the process.  A landowner threatened now by an abuse of eminent domain has no claim under Article 12-a.  A court will throw out any claim and say “let the Public Utilities Commission (PUC) process run its course before we hear any case.”  So, a landowner has to wait until the private transmission line developer petitions for eminent domain to the PUC under 371:1, and then wait for the PUC decision. This is unfair for landowners.

And remember, the PUC is a VERY activist agency that frequently substitutes its own judgment in areas where the legislature has spoken clearly.  The PUC does not have to take landowner interests into account – it balances ratepayer and utility interests.  There is a real risk the PUC, enamored of renewables and essentially working for utilities and ratepayers, will stretch to find a way to allow takings of land.  If the PUC grants a taking and the landowner appeals under 12-a to the NH courts, the courts will give the PUC a huge amount of deference and will set aside a PUC decision only if it is an “abuse of discretion” or is unsupported by any facts.  For these reasons – delay, litigation cost, PUC incentives and deference of the courts to the PUC – the supposed protections of 12-a are illusory.  Landowners need 648 B/F for any meaningful protection at the front end of the process.

3. 648 B/F unfairly targets a single project, Northern Pass.    

Not true. The Bragdon-Forrester language (and the original HB 648 language) is general in scope.  The bill targets property rights and eminent domain abuses.  Opponents of 648 B/F can’t even argue that the bill would principally affect Northern Pass.  There are now two private transmission lines proposed for New Hampshire – Northern Pass and Northeast Energy Link.  And many more private transmission lines are at various stages of consideration at federal, regional and state planning bodies. The potential for abuse of eminent domain by private transmission lines is a large, growing problem and a very appropriate subject for legislation.

4. But Northern Pass was already proposed, so 648 B/F is unfairly trying to stop an EXISTING project. 

Northern Pass has absolutely no regulatory status in New Hampshire at the current time.  The project has made no application or filing with the PUC. The project doesn’t even have a route!  This argument is like saying that if a company comes to New Hampshire and announces it plans to build a nuclear waste facility, but it doesn’t have any town identified yet or any specific plans and has not yet made any regulatory applications, there can no longer be any legislative actions about nuclear waste.  There is nothing unfair about 648 B/F given the inchoate state of Northern Pass.  And on narrow legal grounds, Northern Pass is in no way “vested” for purposes of having rights protected from future legislation. 

Northern Pass may also claim that it is "unconstitutional" under the federal or state constitution to take away its vested contractual rights (i.e., transmission services agreement between NU, NSTAR and HQ’s US subsidiary) based on its ability to have the use of NH's eminent domain statutes because it entered into contracts that affect interstate commerce and it has started the federal regulatory process for approval of its transmission line. 

This is also nonsense.  Article 12-a of the NH Bill of Rights was enacted more than four years prior to the announcement of Northern Pass in explicit recognition of the Supreme Court's invitation to the States to alter the outcome of the Kelo holding.  648 B/F does nothing more than make the statutes conform to the proscriptions of Article 12-a.  There is no ex-post-facto problem at all in conforming ancient legislation to recognize that which the Constitution already prohibits.

 5. 648 B/F will chill future energy investment in New Hampshire.     

The “chill” argument is based on the false premise that 648 B/F is unfair to Northern Pass (see #3 and #4).  Indeed, the contrary position is more likely accurate.  Businesses like certainty and clarity in the rules.  It should be 100% clear when eminent domain is, and is not, available.  This will let businesses decide how to proceed and invest.  648 B/F makes the needed clarifications and updates the old statutes.  It takes away the loophole under 371:1 that lets private transmission lines apply for eminent domain even though 12-a says no.  This levels the playing field between companies prepared to push the outer envelope of legal interpretation (Northern Pass) and those that are more conservative and responsible.

6. 648 B/F will stop "good" energy investments – new renewables plants, connector lines, the upgrade of the Coos Loop, etc. 

All 648 B/F will stop is eminent domain abuse by private projects in the energy sector.  It affects nothing else.  New renewables generation plants already were restricted from using eminent domain, under 371:1.  648 B/F changes nothing on eminent domain by generation plants – they can’t use it. 

648 B/F also changes nothing regarding “connector lines” that hook up generation plants to the grid.  It has long been accepted across the industry that connector lines do not get eminent domain in New Hampshire.  See the New England Power Generators comment letter on 648 B/F from last year – no generation plant would even try to use eminent domain for its connector line! 

Similarly, the Coos Loop upgrade, long studied by the state, is in essence a “connector line” that would add capacity to connect new wind farms and biomass plants to the grid.  This is why ISO-NE and the state have made it 100% clear that any Coos Loop upgrades must be paid for by the generators themselves.  If the Coos Loop upgrade ever occurs, it would not be entitled to eminent domain in any case under the better view that it is a connector line.  And in any case, NH’s own studies say the Loop upgrade can be accomplished within the existing ROW.

7. 648 B/F will stop “public-private partnerships” where the state, ratepayers and private businesses come together to build new energy facilities.

A project with private funding and for private gain should not be entitled to eminent domain, even if the private component is small.  That’s a matter of principle.  There are lots of different ways to get projects done, and all 648 B/F does is to make clear that private elements preclude eminent domain.

8. Northern Pass is good for New Hampshire and if 648 B/F passes, then Northern Pass dies and NH loses the benefits. 

See the Bury the Northern Pass's three-part blog for a rebuttal of all the claimed NH benefits of Northern Pass.  But even assuming for the moment that the project would be good for New Hampshire, 648 B/F in no way forecloses the transmission lines.  Northern Pass is absolutely free to go back to FERC and ISO-NE with a new project structure that would seek to have the costs of the lines allocated region-wide to ultimate electricity customers.  There is a clear path to do this – a “reliability” project, an “economic” project or a “policy” project, all under ISO-NE rules.  (Note:  ISO-NE is still in the process of developing its “policy” rules under FERC Order 1000).  If Northern Pass, when cast as a participant-funded project, cannot use eminent domain, then it can seek another project form that would take the project out of the coverage of 648 B/F and allow Northern Pass to apply to the PUC for eminent domain.

Why New Hampshire Needs to Pass HB 648 (Bragdon/Forrester amendment): Q's & A's (Part 3)

Why New Hampshire Needs to Pass HB 648 (Bragdon/Forrester amendment)

Q's & A's

Part 3

Part1 | Part 2 

Q9: I've heard a rumor that there may be an announcement of a power purchase agreement (PPA) between PSNH and Hydro-Quebec (HQ) and that Northern Pass will say this means that Northern Pass is good for New Hampshire and should have eminent domain. What is the story with a possible PPA? Does it change the eminent domain analysis? If a PPA is announced, does this mean HB 648 should not pass?

A: I doubt there will be an announcement, but let's discuss the general idea of a PPA anyway in the context of eminent domain. Whether it’s between PSNH and HQ or any other parties, a PPA would be entirely irrelevant to eminent domain and HB 648. As we discussed in Part 1 and Part 2, the whole point of Article 12-a of the state constitution (New Hampshire’s “anti-Kelo” amendment) is to reverse the Kelo logic. Kelo said that if a private development project creates economic or social benefits, that’s enough to justify eminent domain. New Hampshire voters soundly rejected that idea by adopting Article 12-a. Article 12-a says a private development project is not entitled to eminent domain, period. The project can have all sorts of pretty-looking claimed economic and social benefits – jobs, taxes, lower electricity costs, environmental benefits, you name it – and the project is still not entitled to eminent domain. And that’s as a matter of NH constitutional law.

A PPA would be nothing more than another claimed economic benefit related to the Northern Pass project. It would not change the analysis under Article 12-a that NP is a private development project and is not entitled to eminent domain. And it would in no way reduce the need for HB 648 to close the loopholes in the 100-year-old eminent domain statutes to make them consistent with Article 12-a and to remove any loopholes that suggest private development projects can “take” property.

That’s all that needs to be said about this or any PPA, 12-a, and 648. Period.

Q10. OK. Why do you think there will be no PPA, if you don't mind my asking?

A. It's complicated. There are two things to understand. First, PSNH would have to say that the PPA is possible only because of Northern Pass, that they are taking electricity from the Northern Pass transmission line and using it in New Hampshire. They’d say this proves the Northern Pass line benefits New Hampshire.

Sounds good at first glance, but a PPA between PSNH and HQ has nothing to do with Northern Pass. PSNH and HQ could enter into the PPA right now!

Why? Because electricity already moves freely around the grid from suppliers to users, both under PPAs and spot wholesale transactions. HQ is already a major seller of electricity into New England. Right now – today – Vermont’s utilities buy gobs of electricity every day from HQ. Right now – today – HQ sells gobs of electricity into the New England grid, and when PSNH buys wholesale it is already buying HQ’s electricity. It’s the same across the board. The Seabrook nuclear plant sells a slug of its power to Vermont under PPAs. The Dixville wind farm sells most of its power to Massachusetts and Vermont under PPAs. The Berlin biomass plant will sell all its power to PSNH under a 20-year PPA recently approved by the New Hampshire Public Utilities Commission (PUC).

Got any doubts? Just look at Northeast Utilities’ webpage quoting transmission services for long-term electricity purchases from HQ in Quebec all the way down to customers in New England. (See http://www.transmission-nu.com/business/ratesum.asp.) To be clear, we don’t know the specific capacities available to each customer, but we do know that PSNH could purchase HQ power right now on a long-term firm basis with transmission over HQ’s and Northeast Utilities’ network.

Sure, the Northern Pass line would add more capacity for imports of HQ’s electricity into New England. But there is already room for a PSNH/HQ PPA. If PSNH and HQ wanted to, they could have signed a PPA years ago. To announce a PPA on the eve of the senate debate and try to link it to Northern Pass would be the height of hypocrisy.

Second, PSNH would have to say that a PPA with HQ shows that Northern Pass is good for New Hampshire because it will contribute to lower electricity prices and bring in “clean” power. As we have just shown, NP is irrelevant to a PPA. But let’s humor PSNH and look at the pricing and renewables issue.

This would be a tough one for PSNH. It would be interesting to see how PSNH would try to steer between a rock and a hard place, the Scylla of having PPA pricing so high there are no price benefits for New Hampshire and the Charybdis of having PPA pricing so low it undercuts the state’s own renewables producers.

Let’s look at the numbers. Fairly stated (that is, including an appropriate cost allowance for the Bow scrubber and the costs of the above-market small biomass PPAs), PSNH’s electricity rate is somewhere between 8.5 cents and 9 cents per kWh. This is a high rate (one of the highest in the nation) because PSNH continues to run its old, inefficient plants (Bow, Schiller, etc.), and also because PSNH has locked itself into a series of long-term, above-market PPAs. Wholesale prices run roughly 5 cents per kWh, which means PSNH’s customers are paying WAY above market for our power. We’re subsidizing PSNH’s failed business model.

Three other background numbers are important. What does HQ currently charge the Vermont utilities for their PPAs? The current price is in the range of 5.7 cents per kWh. What do alternative “base load” suppliers charge for PPAs? Vermont Yankee recently offered its power at 4.9 cents per kWh. And what does PSNH pay under its most recent New Hampshire “renewables” PPA? PSNH will be paying the Berlin biomass plant 6.9 cents per kWh. (Transmission charges are not included in these prices.)

So how would PSNH and HQ price their PPA, with these price points in the background? If the PPA is priced above 5.7 cents per kWh (HQ’s price to Vermont), PSNH would look pretty stupid for leaving money on the table and disadvantaging New Hampshire ratepayers. Indeed, if the PPA is priced above current wholesale (5 cents per kWh), PSNH will continue to lose out competitively to new wholesale-based entrants like Resident Power who buy wholesale and resell retail over PSNH’s distribution lines. PSNH’s death spiral will continue.

But to have any cost benefits for ratepayers, and to slow down the death spiral, PSNH has to price the PPA below its current “fair” energy service rate (below 8.5 cents to 9 cents per kWh). Otherwise PSNH is not reducing its energy costs at all. But if the PPA is priced below 6.9 cents per kWh (PSNH’s PPA price with the new Berlin biomass plant), PSNH will be admitting to the world that it mispriced the Berlin deal just a few months ago! And, more importantly, PSNH will be undercutting the future development of New Hampshire’s own renewables sector if it prices below the Berlin price. As I said, PSNH is stuck between a rock and a hard place. It can’t price the PPA above 5.7 cents per kWh, on the one hand, and, on the other hand, it can’t price it below 6.9 cents kWh.

Indeed, the big policy considerations militate against a PPA with HQ. If PSNH really wanted to save money for ratepayers, they’d buy from the nuclear plants at prices cheaper than HQ’s going rate. If PSNH wants to tout renewables, they’d enter more PPAs with NH renewables generators at prices higher than HQ’s going rate.

With all due respect to PSNH, we doubt they’d be able to figure their way out of this muddle. We believe that, on careful review, PSNH would be unable to make any credible case that a PPA with HQ is “good” for New Hampshire ratepayers and for New Hampshire’s renewables sector. The claims of policy benefits would almost certainly ring hollow.

Got it?

Q. Yes. It’s the frying pan or the fire for the PPA.


A. In any event, the main point is still this: no matter what PSNH and HQ do or say about a PPA, any PPA is simply irrelevant to the senate discussion on 648. It won’t change the fact that as a private project, Northern Pass is not entitled to eminent domain under Article 12-a. And it won’t lessen the need for HB 648 to remove the loopholes from the old eminent domain statutes and make them consistent with Article 12-a.

Any other questions?

Q. Nope. The answer is always the same: pass 648 Bragdon/Forrester now to complete the work of 12-a.



Why New Hampshire Needs HB 648 (Bragdon/Forrester amendment) Now! (Part 2)

Why New Hampshire Needs HB 648 (Bragdon/Forrester amendment) Now!

Q’s & A’s

                                                           Part 2

                                                    Part 1  | Part 3
                                                                                            

Q7:  Northern Pass keeps touting it claims about “economic benefits” from the transmission lines. You know, things like jobs, taxes, and electricity prices.  They also talk about environmental benefits.  Does any project get to use eminent domain in New Hampshire just because it has economic benefits or environmental benefits?

A:  No!  Under the NH state constitution, economic or social benefits don’t entitle any project to eminent domain.  We have to say first off that we do not agree that the supposed benefits claimed by Northern Pass are real (click here to see a detailed analysis of why). But even if these claimed economic or social benefits were real, they simply could not justify the use of eminent domain in New Hampshire.  This is another area where Northern Pass tries to muddy the waters.  Let’s go over the reason why any such benefits are irrelevant.

The first thing to understand is that there is a set of federal constitutional rules on eminent domain as well as a wholly separate set of state constitutional principles.  For Northern Pass, all that matters are the New Hampshire takings principles because they are stricter.  But to understand the New Hampshire rules, you also have to understand the federal approach, because our state rules were adopted to tighten up the federal principles and make eminent domain much harder to achieve in New Hampshire.

The infamous Kelo v. New London case shows the federal rules.  In that case, a split US Supreme Court said the city of New London was allowed to take Suzette Kelo’s house and other properties because the city had an economic development plan that called for redevelopment of the area with new offices and other improvements.  The city’s plan would supposedly create new jobs, higher taxes, and other economic benefits.  The US Supreme Court majority said this was enough to justify eminent domain.  Jobs, taxes and other economic benefits claimed by the city showed that the city had a “public purpose” for the takings, and the court refused to dig any deeper.

The Supreme Court appeared almost sheepish in making this broad ruling, however, and they took special care to say that states should feel free to adopt stricter limits.  As the court’s majority said, “We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.”

There was nationwide public outrage about the Kelo decision.  People strongly objected to the idea that a big business could take their home for a new office building just because tax collections would supposedly increase or new jobs would come to town. (In fact, Pfizer never built in New London.) Responding to the public outcry, most of the states considered or adopted strict new state requirements that limited takings to a much greater extent than federal law.

New Hampshire took the lead and adopted some of the most stringent limits on eminent domain.  This was done by a constitutional amendment.  The new amendment, Article 12-a, was adopted by an overwhelming 85% popular vote.  Before the popular vote, the New Hampshire state senate, in a bipartisan vote, unanimously approved and recommended the new eminent domain amendment.  (Isn’t it ironic that just five years later, the senate is having such a difficult time upholding the very same property rights?  Remind your senator about 12-a!)

Article 12-a says, “No part of a person's property shall be taken by eminent domain and transferred, directly or indirectly, to another person if the taking is for the purpose of private development or other private use of the property.”  When you call your senator, please ask him or her to take the time to read Article 12-a.


The key limit in Article 12-a is that takings are not allowed for the purpose of private development.  Article 12-a was meant to reverse the Kelo concept that because economic or social benefits may flow from a private development, that’s enough of a public purpose to justify eminent domain.  Article 12-a turns the equation around.  Under Article 12-a, if the purpose of a proposed taking is private development, then the taking is illegal, and the economic or social benefits from the private development, no matter how big they supposedly may be, are just plain irrelevant.


Got it?  The test for eminent domain in New Hampshire under Article 12-a is the purpose of the taking.  If it’s for a private development project, the proposed taking is illegal.  Jobs, taxes, electricity prices, environmental benefits or any other claimed economic or social benefits do NOT come into the mix.

As we explained in yesterday’s blog (Part 1), Northern Pass is the poster child for a private development project.  It was dreamed up by a foreign government corporation and three investor-owned utilities for their own profit.  The proposed transmission lines are not needed to keep the lights on; to the contrary, they are all about more profit for the corporate sponsors of the project.  The lines weren’t asked for by any federal, regional or state regulator, they are essentially unregulated, and contrary to any normal public utility assets, they are for the exclusive use of just one company, Hydro-Quebec.


Let’s put this all together and summarize Article 12-a and Northern Pass with a graphic:

Private development project > no eminent domain

Northern Pass = private development project

Northern Pass > no eminent domain

Q8. Wow, New Hampshire’s 12-a really does make us the “live free or die” state, doesn't it? It’s perfectly clear that 12-a rules out eminent domain for private utility developers. So why are we even bothering with 648? Wait, wait, don’t tell me . . . I remember from yesterday. It’s that 371:1 problem. You said that in the old days when PSNH was owned by the state and fully regulated and it built transmission lines to electrify our towns, providing electricity was a public purpose.  But we’re in a new century, and electricity has been deregulated.  Private businesses now “do” electricity.


You and I can start a new business and build a hydro plant to make some money.  That’s a private business, and it doesn’t get eminent domain under Article 12-a or RSA 371:1.  You and I can start a new business and build a transmission line to make some money.  Just like Northern Pass, that’s a private business, and it doesn’t get eminent domain under Article 12-a.


All HB 648 does is update RSA 371:1 to treat private transmission lines the same as private generation plants.  Neither gets eminent domain under the state constitution, no matter how many jobs, taxes or other economic or social benefits they may supposedly provide. Right?


A. Yes, you’ve got it right, Q.  Purported economic and social benefits are entirely irrelevant to the property rights discussion, and RSA 371:1 needs to be updated to conform to 12-a. Northern Pass’s claimed benefits will probably come up anyway; let’s hope the Senate President rules any discussion of them out of bounds!  Anything else, Q?


Q. Yes. I've heard a rumor that there may be an announcement of a power purchase agreement (PPA) between PSNH and Hydro-Quebec, and that Northern Pass will say this means Northern Pass is good for New Hampshire and should have eminent domain.  What is the story with a possible PPA? Does it change the eminent domain analysis?  If a PPA is announced, does this mean HB 648 should not pass?"

A. Good question. We’ll answer it tomorrow in Part 3.