Remember the last time a special use permit from the President of the United States was sought for a cross-border energy project from Canada?
For the Keystone XL pipeline, part of TransCanada's $15 billion in liquid and natural gas projects, things didn't turn out so well under President Obama. President Trump, however, reversed course, and the U.S. Department of State issued the presidential permit in March, prompting TransCanada to drop its claim under Chapter 11 of NAFTA as well as a separate legal challenge. “We greatly appreciate President Trump’s Administration for reviewing and approving this important initiative," said Russ Girling, TransCanada's president and CEO, in March, "and we look forward to working with them as we continue to invest in and strengthen North America’s energy infrastructure.”
Another part of that cross-border energy infrastructure has been in the works on the eastern seaboard since October 2010, when Northern Pass LLC, an organization owned by EverSource Energy (formerly Public Service of New Hampshire and its New England sister utilities), proposed the Northern Pass Transmission line. The project, now estimated to cost from $1.6 billion, would carry more than 1,000 MW of Hydro-Quebec hydropower 192 miles into southern New Hampshire to be poured onto the New England grid via the New England Independent Systems Operator, or ISO-NE. (Site Selection first covered the project in 2010.)
Its potential for lowering high energy costs in New England with Quebec hydropower should mean encountering smoother sailing. But as the ongoing coverage from New Hampshire Public Radio documents, opponents have been vocal, and voters have been divided. "The application to state officials was likely the longest and most complicated in the state’s history," NHPR reports, "and 161 individuals, interest groups, and municipalities asked to be allowed to participate in the process to evaluate the merits of the project."
Big milestones have been reached in the past month, however: a draft record of decision (ROD_ from the chief of White Mountain National Forest (U.S. Forest Service) on Sept. 1, and the August issuance of the final environmental impact statement (EIS) from the US Department of Energy (DOE). (A DOE official confirms that while the Keystone XL presidential permit for the pipeline border crossing came via the Department of State, such permits for electrical transmission lines fall under DOE authority.)
According to the final EIS from the DOE, New England will see a 9-percent reduction of carbon emissions when Northern Pass is deployed, as well as more than $734 million of additional economic output within New Hampshire.
“This proposed decision by the U.S. Forest Service continues to move Northern Pass forward so that it will have all necessary state and federal permits to begin construction by mid-2018,” Eversource New Hampshire President Bill Quinlan said on Sept. 6. “It is consistent with the key findings of other permitting agencies, including the Department of Energy, the NH Department of Environmental Services and the NH Department of Transportation.”
The cost went up by $200 million in 2015 when demands were made to bury more line. Northern Pass announced an improved route that included 52 additional miles of underground line to avoid any potential view impacts in and around the White Mountain National Forest (WMNF) or along the Appalachian Trail. Some insisted that much more line — if not the entire thing — be buried. But the Draft ROD supports the project’s conclusion that burial along I-93 is not a reasonable alternative, and states that the improved route “is a reasonable way to transmit electrical power through the WMNF in a minimally impactful way when considering all available alternatives.”
Among the statements in the ROD by WMNF Forest Supervisor Thomas G. Wagner were several putting the temporary impacts from construction in context vs. the long-term benefits: "I believe the intensity and duration of these effects is more than outweighed by the benefits associated with bringing additional hydropower to the New England grid," he wrote. Moreover, said the Forest Service, the project will increase the reliability of New England’s power supply, by reducing reliance on imported natural gas; help to reduce greenhouse gas emissions consistent with public policy goals and the New Hampshire Climate Action Plan; and provide “meaningful benefits to air quality” in the forest.
“Meeting long-term energy needs in a sustainable, secure, and cost-effective manner for this region of the country is certainly in the public’s interest,” the Forest Service stated. That's especially true as nuclear power plants in the region are closed, eliminating one key source of carbon-free energy production.
Among other recent milestones:
The Massachusetts Play
The new transmission line also is a major part of two proposals submitted by Eversource and Hydro-Québec in July in response to the Massachusetts Clean Energy solicitation resulting from a law passed last year by the Massachusetts Legislature to provide for new sources of clean energy for decades into the future.
“Northern Pass is the most mature and comprehensive solution to meet the region’s clean energy goals and will help provide stability over the price and supply of the energy for years to come,” said Lee Olivier, executive vice president of strategy and business development at Eversource Energy.
The Northern Pass Transmission project is anticipated to lower New England’s annual energy costs by more than $850 million.
An official in the DOE's Office of Electricity Delivery and Energy Reliability says the final EIS was issued on August 16, and regulations require 30 days to pass from that date before a final record of decision can be issued. That means it could be issued as early as September 18. The draft ROD by the Forest Service, meanwhile, has to be out on the street for 45 days before a final ROD can be issued. And even after all the federal agencies have signed off, a presidential permit only authorizes the crossing of the border. The siting of the line is under the ultimate authority of the New Hampshire Site Evaluation Committee (NH SEC), whose final phase of the permitting process began in April.
At least a dozen applications for bringing power across the border have been put forward over the past half-century only to be withdrawn once the applicants confronted the staggering costs of actual construction. But others have succeeded, including the Great Northern Transmission line in Minnesota (which just received a presidential permit) and the New England Clean Power Link project crossing into the US in New Hampshire rival Vermont. That project too is a 1,000-MW cable, and is projected to also cost $1.6 billion. Hydro-Québec is a partner with TDI New England on the project, and they also have submitted two proposals to Massachusetts.
Who will pay for the project? Northern Pass Transmission, Inc. (NPT), a wholly owned subsidiary of Eversource Energy, is responsible for financing and constructing the project, and will then recover its costs once the project is in service delivering power to the region. As the organization clarified earlier this year, "when the project was initiated, it was expected that NPT would recover its costs through future revenues that Hydro-Québec would receive from the delivery of energy into the New England wholesale market. More recently, however, alternative methods to pay for new transmission projects have been proposed by states seeking to procure deliveries of clean energy to meet their climate and energy diversity goals."
If NPT is selected by Massachusetts, it said, the project's costs "will be paid by the distribution companies that purchase Hydro-Québec’s clean energy. The Transmission Services Agreement (TSA), which was initially approved by the Federal Energy Regulatory Commission in 2011 and remains in effect today, will be amended and supplemented to reflect the outcome of the Massachusetts solicitation.
“Alongside Eversource, we are very much looking forward to participating in the upcoming Massachusetts request for proposals. The clean energy legislation adopted by Massachusetts recognizes the important role of hydropower in the supply mix. We already supply over 10% of New England’s electricity, but Hydro-Québec can do more to help the region meet its ambitious carbon reduction goals,” said Éric Martel, Hydro-Québec CEO.
Northern Pass is projected to create 6,747 jobs in New Hampshire during construction and 901 permanent jobs. During construction, Northern Pass will generate more than $734 million of additional economic output within New Hampshire, and the Granite State will see an increase of $37 million in annual statewide property tax collections once Northern Pass is built. The state is projected to realize $800 million in savings due to lower wholesale power costs during the line's first decade in operation.
DOE analysis makes the case for Northern Pass pretty clearly, citing multiple reports from ISO-New England. In 2016 natural gas plants provided approximately 49 percent of the ISO-New England system’s electric energy production, as compared to approximately 15 percent in 2000. ISO-NE predicts that natural-gas-fired generation’s proportion of the system capacity mix will grow to approximately 56.7 percent by 2024. Meanwhile, "approximately 4,200 MW of non-natural-gas-fired generation (primarily oil, coal, and nuclear units) will have shut down between 2012 and 2020, and over 5,500 MW of additional oil and coal capacity are at risk for retirement in the coming years ... The May 2017 retirement of the coal-fired Brayton Point Power Station in Somerset, Massachusetts, and the upcoming May 2019 retirement of the Pilgrim Nuclear Power Station in Plymouth, Massachusetts, represent a loss of over 2,200 MW of nameplate generating capacity within two years, and 'uncertainty surrounds the future of 3,300 MW from the region’s remaining nuclear plants' ... heavy reliance on natural gas-fired capacity 'can expose the region to significant energy supply, reliability, and price issues,' ” especially because of high wintertime demand for that natural gas for heating purposes, which might cause some projected planned power outages due to limited supply.
Among other benefits: $7.5 million to the North Country Job Creation Fund to develop and retain jobs in the North Country; thousands of acres set aside for conservation, recreation and mixed-use; and the $200-million Forward NH Fund to support clean energy innovations, economic development, community investment and tourism.
Northern Pass is now awaiting the issuance of its federal permits, including DOE’s Presidential Permit, a Special Use Permit from the U.S. Forest Service, and the Section 404 Permit from the U.S. Army Corps of Engineers. All major state and federal permits are expected in 2017, and all major contractor and equipment contracts are fully executed. Northern Pass will be substantially complete by the third quarter of 2020. Following testing, the line will be in service by the end of 2020 — or as Eversource puts it, reminding the public of one reason for the region's high costs, "prior to the critical 2020–2021 winter period."
“New Hampshire and the region are facing serious energy challenges, including having some of the highest electricity prices in the Continental United States,” said Quinlan of Eversource this summer. “Customers, businesses and elected officials have been calling for solutions, and the issuance of the FEIS positions NPT well to help address these critical challenges.”
Adam Bruns has served as managing editor of Site Selection magazine since February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.
The Site Selection Energy Report features exclusive and in-depth reporting and analysis on the most important energy projects and energy policy issues impacting the world of manufacturing and industrial real estate. Topics covered include oil and gas projects, investments into alternative energy installations and R&D, tax credits and financing, electric utility issues and much more.