A NH Revenue Opportunity

Lease State-Owned ROWs for Transmission Lines

  • State-owned highways and rail beds (ROWs) offer key siting advantages for buried lines
  • Technically and financially feasible (SB361 Commission)
  • State government gets:  revenues, avoided damages/problems/costs
  • Developer gets:  less risk, more certainty, easier process
  • Regional innovators already pushing ahead:  New York, Maine

How big is the state’s potential revenue opportunity?  Highlights from an indicative [1] analysis…

Assumptions

  • 200 mile north/south route, from Canadian border to southern NH
  • 1200MW line used exclusively by Hydro-Quebec

Approach #1:  use value benchmark from Northern Pass’s land buys in Coos County

  • $400-$1,000[2] per linear foot of ROW, or $2 million to $5 million per mile
  • Capital value of $400 million to $1 billion for 200 miles of state-owned ROW
  • Model annual rent at 5% of capital value
  • Annual rent to state:  $20 million to $50 million

Approach #2:  apply 10%-20% land rights “royalty” to HQ’s revenues from the line

  • Royalty rate from shale gas precedents
  • 1200MW = 10.5TWh/year, or $430 million/year at HQ’s 2012 export pricing[3]
  • Annual rent to state:  $40 million to $90 million

Approach #3:  use New Jersey’s new state ROW rental guidelines

  • Rentals calculated per square foot used (assume 30’ width for line area)
  • Range from $0.15 to $1.40 per square foot[4], or $25,000 to $220,000 per mile
  • Annual rent to state:  $5 million to $45 million

Approach #4:  make state-to-state contact with New York, Maine to get their estimates

Approach #5 (most reliable):  NH runs an open “tender” for use of state ROWs

  • Open to HQ directly as well as full range of transmission developers

 

 

 


[1] Contact REAL for more detail on the analysis.
[2] Some land buys were priced at up to $4,000/ROW foot, but we exclude these to be conservative.
[3] HQ’s 2012 exports produced net revenues of 4.1 cents/kWh (2012 Form 18-K).
[4] Low end of range is an “outlier” because it is only for small, low-value projects. New Jersey is working on updates that will likely raise the recommended rental ranges. Contact REAL for a summary of New Jersey’s guidelines.

 

 

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