Electricity rate payers should sit up, take notice
Hysteria, rhetoric and falsehoods aside, New Hampshire needs the Northern Pass project. New Hampshire businesses and residents pay the sixth highest electricity costs in the nation and the only change on the horizon is higher prices. New England’s electricity grid is regional — which means that what happens in one state affects the cost of electricity in all of the other states in the region. Recently announced closings of base load power plants like Vermont Yankee in Vermont and Brayton Point in Massachusetts have resulted in thin capacity and even projected shortages in some regions of New England.
New Hampshire residents pay electricity generators for both capacity and energy. Every year, New England’s system operator (ISO-NE) holds a forward capacity auction to ensure that our grid has enough capacity to reliably supply the region with electricity. In the most recent auction, because of a capacity shortage in Massachusetts due to Brayton Point’s closing, capacity payments in New England increased from $1.2 billion to $3 billion. That means that New Hampshire ratepayers will pay an additional $162 million for capacity above the $108 million they were already paying. As for our regular payments for the energy we consume, ISO recently announced that New Englanders paid 54 percent more in energy markets in 2013 than in 2012. Most of the increase can be attributed to an overreliance on natural gas for electricity generation, rising natural gas prices and pipeline capacity restrictions in New England. Natural gas sets the marginal rate (clearing price) for electricity 80 percent of the time, making New England ratepayers, according to ISO, highly vulnerable to fluctuations in the natural gas markets.
It is for these reasons that Northern Pass matters. The project, and others like it, can provide much-needed relief for ratepayers by furnishing the region with 1200 megawatts of cheap, reliable base load power. That means that 1200 megawatts of more expensive power won’t be on the grid — reducing the marginal rate for electricity and substantially lowering costs to ratepayers.
Northern Pass doesn’t come without its share of controversy, the bulk of which is centered on transmission lines used to bring electricity from Canada to the New England grid. However, claims by many elected officials that Northern Pass could bury the line like “similar projects” in the region are simply unfounded. All of the projects purported to be similar to Northern Pass (Champlain Hudson/Northeast Energy Link/New England Clean Power Link, et. al.) have yet to break ground or receive the necessary permits to do so (neither has Northern Pass). The reality is that there are no existing buried transmission projects the size and scope (capacity and voltage) of Northern Pass anywhere in the world, let alone in New England.
Many Northern Pass opponents also portray the different proposed projects importing Canadian hydropower to the Northeast as a zero sum game. The truth is that we could use them all. New England is starving for new, reliable and inexpensive base load power options to offset the retirements of base load plants. Three thousand megawatts of additional imports would represent nearly 10 percent of the region’s capacity and on most days would provide 15 to 20 percent of New England’s electricity — reducing reliance on natural gas and insulating ratepayers against the volatile fuel prices that have hit residents and businesses especially hard the last two winters.
One question that opponents should answer is “If not Northern Pass, then what?” Current regulations make the addition of new coal or nuclear plants in the region a veritable impossibility. Even natural gas plants (primarily Footprint in Salem, Mass.) have faced strong opposition from environmental groups, who also happen to be part of the Northern Pass opposition. They are seemingly too willing to ignore the damage that declining base load capacity and rising electricity costs have on our economy and jobs, greatly impacting our most vulnerable citizens.
Northern Pass isn’t the perfect energy project, but we do not have the luxury of making the perfect the enemy of the good. Yes, Northern Pass requires transmission lines through our North Country, but all energy projects have perceived drawbacks: coal is “dirty”; nuclear is expensive and dangerous (despite its strong safety record in the United States); natural gas has “fracking” and pipeline opposition as well as price volatility; biomass is expensive and a polluter; wind is intermittent, has siting concerns and is heavily subsidized at both the federal (tax credits) and state level (RPS); and solar has a 15 percent capacity factor.
Northern Pass is necessary because it is by far the best of the options that legislators and bureaucrats have left us with when it comes to base load power. Northern Pass will not solve all of our energy problems. But it is an important part of our energy future, one whose positives far outweigh its negatives for all New Hampshire residents.
Marc Brown is the executive director of the New England Ratepayers Association.