Northern Pass: too big to fail?
When the Northern Pass Transmission Project was first proposed, it was framed as too big to fail. Six years later, it may be time to take a hard look at that assumption, and to recount the burdens the proposed project has put on government, organizations and individuals in New Hampshire. The $2 billion corporations backing Northern Pass are Eversource and Hydro- Quebec – major forces in the energy industry used to getting their own way. In 2010, they seemed confident it would make quick work of the process and the project would be up and running by 2014.
However, they made too many assumptions about how welcoming New Hampshire would be, were clumsy in how they rolled out the proposal and were dismissive of local concerns, property rights and how Northern Pass would change the character of the North Country.
They responded to opposition by trying to buy their way out of it. Spending took off in a land acquisition fight with conservation interests that slowed the process, and when the project’s quest for use of eminent domain was squashed in the Legislature. Some $45 million later, Northern Pass owns 5,000 acres of land it will never use because landowners opposed overhead lines and they were forced to change the route.
These fights also meant lost time on the economics. The energy market changed: natural gas prices dropped dramatically with new discoveries and technologies in the mid-Atlantic shale fields. Northern Pass is now faced with much lower prices in the regional wholesale electric market and the power from Hydro-Quebec is higher than the regional price. The cost of the project has increased almost 40 percent since 2010. Northern Pass went from a low-cost provider of electricity to an over-market resource.
Over the last 30-plus years, the former Public Service of New Hampshire has built projects and, after cost overruns, asked ratepayers for bailouts. Now they are just asking for the bailout upfront. The need for ratepayer subsidies suggests that the Northern Pass is weighed down by its uneconomic position in the market. While the developers are using lobbyists, lawyers, media and community affairs specialists, and making investments in North Country civic organizations to distract from this fact, the math is the math.
A project as big as the Northern Pass impacts a lot of people, so it is no wonder the regulatory approval process has become a behemoth. The filing made to the NH Site Evaluation Committee is 30,000 pages long, and the proceeding has drawn more than 160 intervenors, including cities and towns, property owners, business, labor and environmental organizations. The Public Counsel representing New Hampshire citizens has hired half a dozen experts to review the application, at a cost of more than $1 million (paid for by Northern Pass).
After perhaps 100 days of public hearings, the SEC will deliberate and issue an order that will likely include conditions that will alter the project. Once all that is done, the appeals will get started.
Meanwhile, the Public Utilities Commission hasn’t even started on several complex regulatory proceedings that will address the use of existing rights-of-way impacting more than 600 property owners directly and more than 2,000 abutters. In separate dockets, the PUC also must manage disputes over a proposed sole source, no-bid contract for power between Eversource and Hydro-Quebec, and deal with scores of river and stream crossings.
There are also applications, agreements and other matters to be addressed by the Departments of Transportation, Fish and Game and the Division of Historic and Cultural Resources. Added to all this is a separate and complex federal review, which includes: completion of an environmental impact statement as required; Department of Energy action on a presidential permit; a special use permit to go through the White Mountain National Forest; and a potential U.S. Army Corps of Engineers Section 404 wetlands permit review.
There also remain several property rights challenges that may be filed in New Hampshire Superior Courts by disgruntled landowners, and an active appeal in the NH Supreme Court.
The regulatory march of Northern Pass NPT has already lasted longer than World War II, and the real disputes are just getting started. This huge proceeding is sucking the oxygen out of state government and risks distracting our agencies from other priorities. Given the collapsing economics of the project, the astronomical challenges in the regulatory space, and rapid changes in the energy arena, it might now be fair to ask if the NPT is too big to succeed.
Jim Monahan is vice president of the Dupont Group in Concord and has represented NEPGA, North American Power & Gas, NextEra Energy Resources, the Society for the Protection of New Hampshire Forests, the Nature Conservancy and the Trust for Public Land.