N.H.’s transmission capacity quandary

Last year, New Hampshire enacted a renewable portfolio standard which mandates that the state generate 25 percent of its electricity needs from renewable sources by the year 2025. Though that deadline may seem remote, the length of time required to plan, site, permit and construct the generation plants necessary to fulfill that mandate means that the state needs to encourage willing and able companies to start their projects.

Elected officials should now turn their attention to the question of meeting that obligation at minimum additional cost. In particular, the state should devise a plan to create the transmission capacity needed to support new sources of generation without eliminating the economic feasibility of such projects.

Laidlaw Energy’s Berlin biomass-energy power plant is one of several renewable generation projects proposed for the North Country, which is an economically attractive location due to abundant local resources, skilled labor force, and availability of land.

In our case, the existing recovery boiler at the Fraser Papers mill site, which we will convert into a highly advanced biomass boiler, represents a valuable emplaced asset that will significantly reduce construction costs. Without these local advantages, especially the existing boiler, I believe our plan would not be economically viable.

Recent news accounts citing a New Hampshire Public Utilities Commission report project the cost of needed transmission upgrades in the North Country at $200 million and a construction time of six years.

It is important to note that this is an estimate based on accommodating all existing proposed projects, and the actual costs and construction time could be far lower depending on which projects are actually economically viable. Rather than taking them as a given, policymakers should view those figures as the upper limit, and make an assessment as to which projects are likely to proceed, and therefore need to be accommodated, and which are not.

Whatever the ultimate price tag, any plan that does not spread the cost burden beyond just the new generators will likely render most if not all the proposed projects economically unviable.

As a practical matter, such a solution is the equivalent of no solution at all. It would be as if the state required a manufacturer that wished to locate in the North Country to repave and widen Routes 2 and 3 entirely at its own expense. Generators should of course pay an appropriate share, but if the state is serious about meeting its renewable energy obligations, it must find a way to spread this cost as widely as possible.

In the absence of sufficient native renewable generation, New Hampshire’s ratepayers face two alternatives: effectively importing qualified power from out of state and sustaining alternative compliance payments as a penalty for not reaching annual renewable goals. The former transfers the economic benefits of construction, operation and harvesting jobs to other states, and the latter represents what amounts to an electricity consumption tax that will start at $3.5 million annually beginning next year and could climb to a whopping $120 million by 2025.

Upgrading transmission lines to spur renewable energy development is ultimately a public good that will benefit all ratepayers in addition to creating a new market for New Hampshire’s abundant natural resources and stable, good-paying jobs. There are ways that an upgrade could proceed with costs distributed in an equitable manner.

For instance, the PUC should continue its progress in encouraging ISO-NE, the regional electric grid operator, to spread a portion of transmission upgrade costs associated with renewable power across ratepayers of the entire region. The state could also allocate a portion of future alternative compliance payments to pay for the transmission upgrade since these funds are, in theory, to be used to promote development of renewable energy.

New Hampshire ratepayers cannot afford to take a “wait-and-see” attitude toward the state’s renewable energy obligations. Given the amount of time required to bring new generation on line, developers must begin their projects soon if ratepayers are to avoid paying escalating noncompliance penalties, and developers cannot begin until sufficient clarity is brought to upgrade plans.

Michael B. Bartoszek is president of Laidlaw Energy Group Inc.