Debunking The IBEW’s Myths About The Northern Pass

The IBEW recently sent a letter to New Hampshire legislators touting the value of the Northern Pass transmission project and warning of the dire consequences of any legislative action involving state energy policy.

(Click on the images below to view)

IBEW Letter to Legislators

Northern Pass Transmission Project Question and Answer

The letter included an enclosure titled “Northern Pass Transmission Project Question and Answer” – containing ten questions with ready-made answers directly from the IBEW.

REAL Questions

We provide REAL answers below to the same 10 questions that the IBEW used in its mailing, and we are also adding three new questions up front that may be of interest.

REAL Question 1: Why does the New Hampshire IBEW support Northern Pass when IBEW officials in New York strongly oppose a similar transmission project as a job-killer?

New York’s IBEW Local 97 and the state’s IBEW Utility Council have come out strongly against New York’s Champlain-Hudson transmission project because these kinds of exclusive import lines would cost jobs on a net basis, not create them.

According to the New York unions, accepting new transmission lines designed solely to import Hydro-Quebec power would be tantamount to “throwing upstate generators under the bus for a buck, potentially destroying hundreds of jobs and devastating the tax base of local communities. This exclusive cable from Canada will not allow any New York State power generation to compete, which will also set back renewable energy development in the state. Bad news for our battered economy.” The New York IBEW article can be found here.

Northern Pass would be exactly the same bad trade-off for New Hampshire. Northern Pass is a fixed extension cord hooking Hydro-Quebec into the New England grid. Northern Pass will have no “on ramps” for New Hampshire power producers to get their electricity to the market. New Hampshire energy producers are shut out.

Northern Pass does nothing to address the issues of transmission capacity inside New Hampshire that are hamstringing our own renewables development. As the recent tax dispute between Coos County and the 99 MW Granite Reliable wind farm shows, constraints on the state’s own internal transmission capacity are forcing new wind farms to operate at well below their rated capacity. This puts existing projects at risk and chills future developments.

Northern Pass favors Hydro-Quebec but disadvantages our home-grown renewable energy efforts. Any minor, temporary job creation from building the lines would be more than offset by the loss of the job opportunities that would flow from a more vibrant, competitive, home-grown New Hampshire renewables sector.

And we haven’t even talked about the loss of jobs Northern Pass would cause in tourism, hospitality, home-building and related businesses. Doesn’t the IBEW have electricians who work in these sectors?

We won’t speculate as to what may motivate New Hampshire’s IBEW to support Northern Pass. In our view, the IBEW’s position does not seem to be based on logic, analysis, review of the impacts of similar proposals in other states, a true concern about jobs, or any understanding of New Hampshire values.

REAL Question 2: Who stands to benefit from Northern Pass?

Not the people of New Hampshire! Just follow the money … to Hydro-Quebec, Northeast Utilities and PSNH (a wholly-owned subsidiary of Northeast Utilities).

Northern Pass is an elective, private, non-needed transmission proposal. No regulator at the federal, regional or state level asked for Northern Pass. It is all about making money for the project sponsors. The project sponsors’ claims of jobs, tax revenues, energy price savings, greenhouse gas reductions, fuel diversity and other supposed benefits merely disguise the embarrassingly large sums of money that Northern Pass stands to make at New Hampshire’s expense.

As an arm of the Quebec government, Hydro-Quebec will have the exclusive right to use 100% of the capacity of the Northern Pass lines to export HQ’s electricity to demand load centers in southern New England. Increased exports are a critical part of HQ’s long-term business plan, because unregulated exports make more money than regulated domestic sales. At recent New England wholesale prices, the 1200 MW line will produce more than $20 billion (yes, $20 billion!) of electricity export sales for HQ over the life of the project.

As the owner of Northern Pass, Northeast Utilities will receive guaranteed profits paid by Hydro-Quebec. NU has won approval from federal regulators to charge Hydro-Quebec the now-infamous 12.56% profit margin on the investment in the project. This means NU will reap annual payments exceeding $68 million each year. These profits will go to NU and its investors, with nothing for New Hampshire ratepayers.

PSNH proposes to lease roughly 100 miles of existing transmission lines rights of way (ROWs) to Northern Pass. The lease payments have not been disclosed, but we estimate they will be up to $50 million each year. This would represent a huge subsidy to this financially troubled utility and would help Northeast Utilities keep PSNH afloat.

Add up the numbers and we see that the project sponsors – HQ, NU and PSNH – stand to collect more than $700 million each year from Northern Pass. Even if Northern Pass’s claims of public benefits were accurate, and they’re not, any public benefits are absolutely dwarfed by the money that will flow to the private sponsors of this project.

REAL Question 3: Why is new legislation needed to update the state’s energy framework to account for private, for-profit, non-need transmission lines?

Private, for-profit, non-need transmission lines are a new phenomenon. They present a wide range of new issues that are not addressed by the state’s current legislative framework.

The state’s approach to transmission lines was developed many years ago when all new transmission lines were subject to an extensive planning and review process and a “need” determination that included allocation of the costs to ratepayers. Regulators made certain that new projects served a clear, identified public need (for example, rural electrification), because the public would be on the hook to pay project costs.

Private, for-profit, non-need transmission lines are entirely different. There is no limit to the number of individual projects that may be proposed or built because the projects are not part of any unified plan or process and are not subject to the disciplined scrutiny that accompanies ratepayer funding. There is no regulatory determination of need and no regulator even asks for the projects. The lines are proposed solely to make money for the transmission developers.

As a result, there is no process whatsoever – at the federal, regional or state level — for careful identification and balancing of all public benefits and all public costs. At the state level, the New Hampshire Site Evaluation Committee considers only a sharply limited set of approval criteria that are widely understood to tilt the playing field toward project approval. That may have been all that was required for old-school transmission lines that were already deemed necessary after a detailed, rigorous regulatory examination, but it’s not enough in the new world of private, for-profit, non-need lines that can meet NH SEC criteria while at the same time imposing massive “externalities” or costs on the state.

The new energy legislation under consideration this session would address what is missing in the evaluation of these new private, merchant projects that arrive unexamined on our doorstep. Should private, for-profit transmission lines be required to be placed underground, so that private sponsors cannot reap excess profits by imposing visual blight and other externalities on New Hampshire communities? Should state ROWs – highways and rail beds – be made available for siting underground transmission lines? Should the NH SEC approval criteria be updated and revised so they better fit the new world of private, for-profit, non-need lines? How should new generation and transmission development dovetail with the state’s renewable energy goals and other energy policies? Should a temporary moratorium be placed on new transmission line projects until these basic issues are resolved by the legislature, or to give the state time to adopt an energy policy?

These are important, serious energy policy issues that belong squarely in front of the legislature. It is disheartening to see the IBEW’s efforts to derail these legislative and policy discussions by mischaracterizing them as an attack on an individual project.

The questions posed by the IBEW are answered below.  Click on each image to read the answer provided in the IBEW Question and Answer document.

IBEW Questions

IBEW Question 1: Will the estimated 1,200 jobs per year for the construction of this project go to people in New Hampshire?


The REAL Answer
We start with four points to correct the IBEW’s misleading impression of “1200 jobs”.

First, the jobs study prepared by Northern Pass’s hired economist left out half the equation. The economist estimated new job creation from construction of the lines, but did not include any offset for job losses caused by the Northern Pass’s massive negative impacts. The project will adversely affect the state’s tourism, recreation, hospitality and new home construction sectors, among others. As just one example, literally thousands and thousands of acres of residential development land will be reduced to no-build or low-value build status because of the damaging visual impact of the lines. Every home that does not get built because of Northern Pass represents a dead-weight loss of several jobs a year during the construction period. Also, the declines in real estate values will cause a negative “wealth effect” among affected property owners, reducing their spending and causing a ripple effect through the state’s economy.

Second, with only a handful of exceptions, any new jobs from Northern Pass will be temporary, lasting only during the three-year construction period. Northern Pass’s best case does not involve any significant permanent job creation.

Third, much of the temporary job creation is calculated by a black-box model that purports to run spending through the economy and estimate new job creation. It works like this. The model assumes a construction worker in Coos County will spend, say, $10 on lunch. Put this together across all the construction work and, voila, the model spits out, say, 25 new jobs in burger joints. These are counted as Northern Pass jobs. After the recent financial-engineering-based market meltdowns, does anyone really believe these black box models anymore?

Fourth, Northern Pass’s claims of temporary job creation are vastly overstated. A competing jobs analysis conducted by PolEcon Research (January 2012) knocked Northern Pass’s jobs estimates down by more than 50%. Two REAL members who manage forest land and conduct regular clearing operations tested Northern Pass’s analysis of new logging and land clearing jobs against their own detailed numbers and concluded that Northern Pass’s estimates were overstated by at least 300%.

And finally, let’s look at the actual question – will any new jobs be for New Hampshire workers? As we understand it, the construction of high-voltage, direct current transmission lines is a highly specialized business requiring extensive worker expertise. We simply don’t believe the high-quality temporary construction jobs will stay in New Hampshire. We expect they’ll be filled by experienced out-of-state crews.

In sum, the claimed job figures do not allow for the likely job losses in other sectors and are based on a discredited model, the work itself would be temporary and the best of the jobs would go to trained out-of-state crews.

IBEW Question 2: Will this project lower electricity costs for New Hampshire homeowners and businesses?


The REAL Answer
Northern Pass’s claims of lower electricity prices are just plain wrong. One need look no further than PSNH’s most recent rate increase on January 1, 2013, a whopping 34% increase in the default energy service rate from 7.11 cents/kWh to 9.54 cents/kWh. PSNH is the largest electricity supplier in the state, accounting for the majority of statewide customer sales. The average residential family will see its PSNH bill go up somewhere in the range of $6-$8 per month, just from this single increase.

Looking forward, PSNH’s rates are going in only one direction, up, because of the company’s strategic mistakes and mismanagement. Even using Northern Pass’s best case claims of price savings (roughly $1.00 per month for the average family), the claimed savings would be simply overwhelmed by PSNH price increases of this magnitude.

And Northern Pass’s claimed wholesale price savings of $20-$35 million annually in New Hampshire – equating to roughly $1.00 per month for the average residential family — don’t add up. This claim is based on a 2010 study of wholesale price effects by Northern Pass’s own consultant. The study’s methodology and findings have been challenged by a newer review (PA Consulting Group, June 2012) that finds much lower wholesale price changes than claimed by Northern Pass.

Even if we assume some wholesale price effect from the additional supply of power via Northern Pass, it is uncertain how much, if any, of the savings may flow through to retail customers. For example, PSNH has a substantial portion of its energy supply provided via long-term, fixed price contracts. This means PSNH, and its customers, have only partial exposure to any wholesale price changes. PSNH customers will pay the supply contract’s fixed price plus PSNH’s expenses and profit margin, not reduced wholesale prices.

The IBEW claims that customers may see savings because of future power purchase agreements between Hydro-Quebec and New Hampshire utilities. If these arrangements made any sense for New Hampshire, why aren’t they in place right now, as they are in Vermont? And why would Hydro-Quebec sell power on a long-term basis at a discount to wholesale prices? That would be financially irrational.

IBEW Question 3: Will this project provide additional taxes to the state and local communities?


The REAL Answer
Northern Pass and the IBEW claim Northern Pass will generate $22-$27 million in increased tax payments to our communities. This is demonstrably false.

First, the claimed additional tax revenues are based, once again, on only half the equation. Northern Pass and the IBEW omit the offsets that will come from lower tax receipts due to property devaluations. With literally thousands of properties set to be impacted by Northern Pass, towns can expect a large wave of tax abatement requests if the line is built. The net tax impact may be negative for some towns and for the state as a whole.

Second, the IBEW fails to disclose that the claimed tax revenues are written with disappearing ink. The transmission lines will be depreciated for tax purposes starting immediately, and the tax assessment will go down in tandem. Depending on the depreciation rate and other factors, the tax assessment of the line could drop by 50% (or more) during the initial phases of the project.

Third, there is no mention by the IBEW of the common practice of “utility tax terrorism” in New Hampshire. Once utility projects are up and running, it is standard practice for the project owners to go town-by-town seeking tax abatements and threatening litigation if their demands are not met. Small towns with limited resources for legal counsel and valuation experts find themselves almost powerless. An example of this can be found here.

Northern Pass has given no assurances of which we are aware that it will refrain from similar attempts.

IBEW Question 4: Will the power from this project stay in New Hampshire?


The REAL Answer
No! The IBEW can try to blind legislators with some faux physics, but they can’t change the facts.

According to ISO-New England, New Hampshire generates roughly 70% more electricity than it consumes. New Hampshire is a net exporter of electricity. All else held equal, additional supplies of energy to the New England market obviously will not be coming to New Hampshire. If Northern Pass is built, additional supplies will go to demand load centers in southern New England, particularly Massachusetts and Connecticut.

The IBEW’s attempt at glossing over the facts with a discourse on electrons is ridiculous. Think of it this way. With New Hampshire already a net exporter of electricity, if a new wind farm is built and the wind developer sells 100% of the production to a utility buyer in Vermont, does anyone commonsensically think that the power is somehow staying in New Hampshire and providing New Hampshire benefits because electrons are fungible? Of course not. And Northern Pass is no different. The power would go to areas that are net importers.

IBEW Question 5: Will Northern Pass use eminent domain to build this project?


The REAL Answer
No, but not for the reasons stated by the IBEW.

Northern Pass will not use eminent domain because the New Hampshire legislature adopted HB 648 to prohibit private, for-profit, non-need projects from seeking eminent domain. But for HB 648, we believe it is 100% certain that Northern Pass would have sought to abuse private property rights by applying for eminent domain authority. Northern Pass’s own filings with the federal government disclosed the intention to use eminent domain.

The IBEW claims Northern Pass has all the necessary property rights to build the transmission lines along the existing PSNH transmission corridors from Groveton south to Deerfield. This is untrue.

Northern Pass does not have any rights to cross the White Mountain National Forest. Any WMNF crossing on the proposed route will require a new, discretionary special use permit from the US Forest Service. The permit may not be issued unless the Forest Service finds, among other things, that there is an “overriding public need” for the transmission lines and there are no practical alternatives that don’t involve a WMNF crossing or involve less impact. We believe that Northern Pass, as a private, for-profit, non-need project, and one that could be sited elsewhere with less impact, clearly does not meet the high hurdles for a WMNF crossing.

There are also substantial issues with the existing PSNH rights of way elsewhere along the proposed route. Specific deed language limits tower heights in certain areas to no more than 60 feet. In other areas the existing ROW is too narrow to safely accommodate multiple lines. Some parts of the existing ROW were acquired by eminent domain and their use is limited to the electrification projects covered by the eminent domain petitions. Across the entire ROWs we expect to see disputes and litigation regarding the “overburdening” of the corridor by placing Northern Pass’s massive towers and lines on rights of way that were not intended for this use. Similarly, the existing ROWs were not intended to be used by private, for-profit, non-need lines, raising questions as to any future use by Northern Pass or similar projects.

Any purported transfer of land use rights to Northern Pass for the existing PSNH corridor would require a specific approval by the NH Public Utilities Commission. We would expect any such proceeding to be sharply contested by stakeholders and the public.

IBEW Question 6: Can the line be built underground?


The REAL Answer
Yes. The SB 361 Commission specifically found that it is technically and economically feasible to bury transmission lines such as Northern Pass along state-owned rights of way. Two other major projects in the region – Northeast Energy Link and Champlain-Hudson Power Express – have proposed buried lines. There is no longer any credible argument that line burial somehow doesn’t work or is too expensive.

The IBEW makes the wholly unsupported claim that using buried lines could cause “thousands of local jobs” to be lost to specialized out-of-state companies. Seeing as the IBEW and Northern Pass claim only 1200 total construction jobs, and much of the work would involve land clearing (local and unspecialized), it is difficult to make any sense of the IBEW’s position.

Follow the money. The main reason Northern Pass opposes buried lines, which would be most sensibly sited on already graded and softened state highway or rail rights of way, is to keep the project sited largely on PSNH’s existing transmission corridor. This way PSNH can collect rental fees (ultimately financed by Hydro-Quebec) to shore up PSNH’s weak financial position. If the lines are buried along state ROWs, the state will collect the rental payments from Northern Pass.

IBEW Question 7: Can the Northern Pass project be constructed in existing state-owned rights of way, such as Interstate 93?


The REAL Answer
Yes. This was an explicit finding of the SB 361 Commission.

IBEW Question 8: Will this imported renewable energy displace local green energy projects?


The REAL Answer
This is a real risk.

New Hampshire renewables generators sell substantial portions of their output to out-of-state utility buyers. If other New England states act on current proposals to expand “renewables” definitions to include large Canadian hydro, New Hampshire renewables producers may lose these markets. There are active discussions in Connecticut and Massachusetts on expanding the definition.

Depending on the pricing terms, any long-term power purchase agreements between Hydro-Quebec and buyers in the New England region could also displace local green projects.

We emphasize that unlike a traditional “reliability” upgrade to the transmission grid, Northern Pass does not make any improvements to the grid that can help New Hampshire renewables producers. Northern Pass gives Hydro-Quebec an advantaged route into the market while offering nothing but more challenges to our local renewable industry.

IBEW Question 9: Do large-scale hydroelectric reservoirs produce large amounts of methane (a greenhouse gas)?


The REAL Answer
Yes. Large-scale hydro projects, including Hydro-Quebec’s own developments, emit large amounts of greenhouse gases during the initial phases of operation. This has been confirmed by recent research at Hydro-Quebec’s Romaine facilities. See the research paper here, particularly chart and discussion at p.15. A summary is here.

The bottom line is that large-scale Canadian hydro is not “green”. With greenhouse gas emissions during initial periods exceeding those of natural gas-fired power plants, large Canadian hydro is no solution to global warming concerns.

Equally important, the massive environmental destruction that accompanies the construction of the reservoirs and dams, including re-routing rivers, flooding vast areas and destroying natural and wildlife habitat, is a powerful negative in any objective evaluation of these projects.

In REAL’s view, it is clear that the new Quebec hydro projects that would feed electricity to Northern Pass would not be permitted to be built in the United States because of the environmental damage. To accept Northern Pass is to accept the environmental injustice of “outplacing” environmental destruction from our own communities to the First Nation homelands in Quebec.

IBEW Question 10: What is the impact on the wood-fired (biomass) plants? Will this project force them to close?


The REAL Answer
Northern Pass won’t necessarily force the biomass generators to close, but it will present new challenges for them. See the discussion above regarding displacement of local green energy projects.

 

Jeffrey Rose Should Not Be Confirmed As The Next DRED Commissioner

Governor Hassan has nominated Jeffrey Rose – a known Northern Pass sympathizer – to be the next DRED commissioner.  DRED will play a major part in determining whether Northern Pass is granted the state level permits it requires to build the project.

Rose’s nomination must be confirmed by the Executive Council

REAL‘s letter to the Executive Council requests that Rose’s nomination be rejected.

 

Northern Pass’s Next Target: Public Land

With Northern Pass’s land purchases for a new route blocked by Coos landowners and the Forest Society, REAL believes Northern Pass’s last-ditch effort will target state-protected conservation land, specifically the Connecticut Lakes Headwaters Tract (“Headwaters Tract”).  The 171,000 acre Headwaters Tract, accounting for 3% of New Hampshire’s land area, is the crown jewel of the state’s conservation efforts.  It would be a travesty and a breach of the public trust for these lands to be violated by Northern Pass’s private, for-profit transmission lines.  These lands are perpetually conserved for the use and enjoyment of the public, and the conservation terms expressly prohibit any commercial uses.  The state of New Hampshire must immediately and firmly say “no” to any attempt by Northern Pass to hijack public lands for its destructive, private project.

Northern Pass is Blocked and Desperate

Northern Pass’s torrent of money (more than $30 million spent to date on land purchases) has failed to erode the stubborn integrity of upper Coos County landowners.  Working in tandem with the Forest Society, holdout landowners have so far successfully blocked each new attempt by Northern Pass to ram an above-ground transmission line route through the North Country.

The situation is getting desperate for Northern Pass and its publicly-traded parent company, Northeast Utilities (NU).   They suffered a major setback when they failed to meet the long-promised December 31, 2012 deadline to secure a new route.  Unfortunately for the project sponsors, sandbagging has a short shelf life for public companies.  On February 20, NU’s top executives will have to face the public again to report the company’s full-year results, and they’ll be grilled about what’s gone wrong with Northern Pass.  NU and Northern Pass have only one way out, and that’s to somehow nail down a route through upper Coos County.

As the old proverb says, “desperate times call for desperate measures”, and that’s what we expect from Northern Pass.  REAL believes Northern Pass may be quietly trying to pressure the New Hampshire state government to take sides (Northern Pass’s side) and let them cross through state-protected lands.  This looks like the only chance left for Northern Pass to cobble together a route in a short time.  The route would still have gaps, but a state “pass” would go a long way to connecting the dots for the project.

Connecticut Lakes Headwaters Working Forest Is Under Threat by Northern Pass

Based on Northern Pass’s most recent land purchases and the potential ways to link together Northern Pass’s acquired properties, REAL believes there is a significant chance that Northern Pass will try to force its transmission lines through part of the 171,000 acre Connecticut Lakes Headwaters Tract (the “Headwaters Tract”).

The crossing area most likely being targeted by Northern Pass is shown by the red circle on the map below (click to expand).  This part of the Headwaters Tract is located in Stewartstown, New Hampshire.



The Headwaters Tract is a gem of the North Country.  The protected lands extend across the towns of Pittsburg, Clarksville and Stewartstown and constitute 3% of the total land area of New Hampshire.

The Headwaters Tract is the backbone of the upper Coos economy, serving as a major tourist destination for outdoor recreation.  Preservation of the Headwaters Tract from non-traditional commercial development was a long, highly complex joint project involving the federal government, the New Hampshire state government, various conservation organizations and private businesses, foundations and individuals.  The Headwaters Tract may well represent the most significant conservation achievement in modern New Hampshire history.

What Are The Facts?

The Headwaters Tract is conserved land and the state of New Hampshire holds the conservation easement.  So how would it be even remotely possible for Northern Pass to cross this protected land?

Let’s start with the facts.  REAL has reviewed the conservation easement for the Headwaters Tract.  The easement is held by the Department of Resources and Economic Development (“DRED”), a state government agency.  Our detailed analysis of the easement is hereWe believe that any crossing by Northern Pass would be flatly inconsistent with the clear terms of the conservation easement that protects the Headwaters Tract from non-traditional commercial uses and ensures the land is preserved for public use and enjoyment.  In other words, we don’t believe the state even has the right to allow Northern Pass to cross the Headwaters Tract.

That should be the end of the story, but let’s assume for the moment that REAL’s analysis is wrong, and there is somehow some wiggle room in the easement language that could potentially allow Northern Pass’s transmission lines.  Or assume Northern Pass seeks to amend the easement to allow the transmission lines.  Nothing changes.  Under the structure of the easement, granting Northern Pass a crossing would require a specific, affirmative, discretionary action from the New Hampshire state government, specifically the officials at DRED.  As a policy matter, regardless of specific easement terms, we believe it would be a major mistake for DRED or any other arm of state government to allow state-protected lands that have been conserved for public use and enjoyment to be hijacked by a private, for profit, elective, non-needed transmission project such as Northern Pass.  State lands are the people’s lands, and the people’s right to use and enjoy these properties free from the degradation caused by massive above-ground transmission structures is far more important than the financial interests of private developers.

REAL’s bottom line is this: the state does not have the right to allow Northern Pass to cross the Headwaters Tract.  And even if the state somehow thinks it does have this right, a decision to allow a crossing would be terrible public policy.

How will Northern Pass respond to this apparently impossible uphill climb?  Unfortunately, Northern Pass’s playbook would likely be the same one they’ve used in other contexts.  First, they’ll argue, falsely of course, that the proposed transmission lines would have substantial benefits for New Hampshire.  Then they’ll make claims (baseless ones, of course) that the Headwaters Tract was intended to be available for projects like Northern Pass.  Next, they’ll likely offer the state lots of money (we’d guess many millions of dollars) and other things (perhaps some extra land that’s been bought in Coos County but won’t be needed if the state will let them through).  Finally, they’re likely to signal that they will show support for politicians who align with them and show lack of support for those who don’t.  (We made that last point sort of delicately.  But you know what we mean — by now we’ve all heard the common claim that PSNH has more power in Concord than state senators.)

What Is To Be Done?

How can we prevent this threat to the Headwaters Tract?  We need to speak out now to protect our public land.

First, the people of New Hampshire need to come together and tell our elected and appointed officials – tell them loudly, clearly, and repeatedly – to KEEP NORTHERN PASS OFF THE HEADWATERS TRACT AND OUR OTHER PUBLIC LANDS.

Second, for the officials who want some detail, we need to explain that no matter what Northern Pass claims, THE HEADWATERS TRACT CONSERVATION EASEMENT DOES NOT PERMIT NORTHERN PASS’S TRANSMISSION LINESThe state has no right to grant a crossing.

Third, for the officials who want to keep it simple, let’s stay with the big picture:  STATE-PROTECTED LANDS LIKE THE HEADWATERS TRACT THAT ARE CONSERVED FOR PUBLIC USE AND ENJOYMENT MUST NOT BE TURNED OVER FOR PRIVATE, FOR-PROFIT PROJECTS LIKE NORTHERN PASS THAT DEGRADE THE LAND AND IMPAIR THE PEOPLE’S ENJOYMENT OF ITTHE RIGHTS OF THE PUBLIC MUST PREVAIL OVER THE INTERESTS OF NORTHERN PASS.

The time may come soon for the public to rise up and defend our public land.  REAL will be closely monitoring Northern Pass’s next steps.  If and when Northern Pass announces a plan to cross the Headwaters Tract or other public lands, we will issue a call to action.

Northern Pass must not be allowed to ruin our public lands.

Northern Pass’s Unhappy Valentine’s Day

Thanks to the success of the opposition, Northern Pass and its owner Northeast Utilities (“NU”) are facing an impossible task.  And the timeline is keyed to, of all things, Valentine’s Day.

The Coming Evaporation of Northern Pass’s TSA

Northern Pass’s Transmission Services Agreement (“TSA”) fixes February 14, 2014 – just one short year from this Valentine’s Day — as the deadline for the project to obtain all necessary siting and operating approvals.

With the project blocked in upper Coos County, Northern Pass does not have a route under its ownership or control.  And even if a new route could somehow be cobbled together and announced today, it would take a minimum of 2-3 years (that is, into 2015 or 2016 at the earliest) to complete the detailed environmental impact study that makes up the core of the federal permitting process (Presidential Permit and Special Use Permit to cross White Mountain National Forest).

REAL can say with 100% confidence that Northern Pass will not have all the necessary approvals in hand by February 14, 2014.  The Valentine’s Day 2014 deadline is impossible to meet.

The consequences of missing the deadline are severe.  On February 14, 2014, without a new agreement between NU and Hydro-Quebec (“HQ”), the TSA will terminate automatically [1] because the approvals are not in place.

Why It Matters

Having the TSA terminate is a big deal. The TSA is the foundation of Northern Pass.  The TSA defines the exclusive rights of Hydro-Quebec to use the transmission lines; it sets how much money HQ has to pay Northern Pass to reimburse the capital costs of the project ($1.1 billion+); it sets the annual fees HQ has to pay Northern Pass for usage of the lines ($200MM+ each year); and it establishes the now-infamous 12.56% return on equity ($69 million+ each year) that NU will receive as the owner of Northern Pass.

As the project sponsors, NU and HQ can of course try to come to an agreement to keep the TSA alive.  But there are two challenges.

Will Hydro-Quebec Renegotiate the Lopsided TSA Deal?

First, the financial terms of the TSA may no longer be acceptable to HQ, and this may lead HQ to seek to renegotiate the deal.  The energy world has changed radically from October 2010 when the TSA was signed.  The US market is overflowing with cheap natural gas.  Gas-fired generation is replacing other sources as the least-cost alternative, and wholesale electricity prices have been driven down sharply.  At current low US wholesale electricity prices, HQ’s new hydropower developments (for example, the massive Romaine project intended to supply the Northern Pass lines) are almost certainly not cost-competitive.  The consensus market view is that wholesale prices will remain low for the next several years.  For Northern Pass to make financial sense under the current terms of the TSA, HQ has to bet on substantial medium- to long-term increases in New England wholesale prices.

In this uncertain environment, HQ will have strong incentives to try to pare back the generous returns and other favorable financial terms NU obtained in the original TSA.  In REAL’s view, the TSA’s financial provisions are clearly tilted toward NU.  While there may be room for a renegotiated deal, we would note that NU’s “investment story” (how the company describes its business for investors and the markets) centers on the high returns the company will earn from transmission investments, including Northern Pass.  Reducing NU’s investment returns from Northern Pass may not sit well with investors.  Any renegotiation would almost certainly be challenging and may expose NU to investor doubts.

Will FERC Approve Any TSA Changes?

The second challenge is regulatory, and it is also an opportunity for the opposition to correct the outdated and false claims made by NU in 2010.  Any extension of the TSA, or renegotiation of its terms, must be filed with and approved by the Federal Energy Regulatory Commission (“FERC”). [2]  Per FERC practice, there would be a public notice and comment period, giving interested parties the chance to express their objections and views to FERC.

In REAL’s view, any re-opening of FERC’s TSA approval will almost certainly result in numerous interventions.  NU’s excessive returns on existing transmission lines have already come under attack as unfair to ratepayers.  And FERC’s approval of the TSA for the proposed Northern Pass was predicated on the project sponsors’ now-discredited claims of public and policy benefits, among other things.

For example, Northern Pass’s application for FERC approval included the now-familiar but false assertions of specific wholesale electricity price benefits, greenhouse gas reductions, job creation, increased local taxes, and benefits to the New Hampshire economy. [3]  As a result, FERC’s TSA approval was based on a flawed factual record.

We would expect many public, governmental, industry and environmental commentators to file detailed comments with FERC correcting the record on these points.  We would also expect industry (and potentially governmental) comments focused on NU’s excessive equity return and the adverse effects on consumer interests.

In short, we would expect any new FERC approval process to be highly contested, very public and highly uncertain.  In other words, instead of Valentine’s Day, Northern Pass will find itself stuck in Ground Hog Day reliving the painful public review process.

Happy Valentine’s Day, Northern Pass!  Sorry Northeast Utilities and Hydro-Quebec aren’t turning out to be such an ideal couple…

 

 

 

 

 

1. Section 3.3.5(a) provides:  “Unless otherwise agreed in writing by the Parties, this Agreement shall terminate immediately without further action by the Parties in the event any of the Construction Authorizations, AC Upgrade Approvals or Operational Approvals has not been obtained by the Third Anniversary”.   The specified approvals include, among other things, the Presidential Permit, the Special Use Permit for any White Mountain National Forest crossing, final siting approval from the NH Site Evaluation Committee, and all federal and state wetlands, alteration of terrain and other authorizations.  “Third Anniversary” is defined as February 14, 2014.

 

2. We confirmed this in general terms (without reference to Northern Pass) by telephone call on January 31, 2013 with an attorney in FERC’s General Counsel’s office.

 

3. Here are some of the flawed claims in the original FERC application (footnotes omitted):
“First, low carbon hydro-electric power from Québec will help reduce greenhouse gas emissions and meet the New England RGGI requirements. To the extent that hydro-electric power purchased from Québec displaces gas-fired generation in New England, greenhouse gas emissions associated with the production of electricity will be reduced by up to 5 million tons of carbon dioxide per year during the term of the transaction, which is equivalent to the annual emissions of nearly 900,000 cars.

Second, low carbon, hydro-electric energy transmitted over the NPT Line will provide fuel diversity benefits that ISO-NE has determined to be essential at this time.

Finally, the NPT Line will produce significant economic benefits to New Hampshire’s economy and its residents, including creating 1,100 to 1,300 jobs annually in New Hampshire during the development and construction phase of the project (from 2013 to 2015), increasing local tax bases, and helping the state’s economy by providing low cost, clean energy.”

NORTHERN PASS VS NATURAL GAS

We all know the familiar pattern that PSNH and its parent, Northeast Utilities, use to spin the Northern Pass public relations effort:

  1. State “conclusions” that support the Northern Pass project.
  2. Base those conclusions on misrepresentations, half truths and faulty logic.
  3. Ignore the obvious discrepancies until they become public.
  4. Attack those who tell the truth.
  5. Go back to step 1.

A recent example is found in an August 28, 2012 Union Leader story entitled “Worries about region’s use of natural gas surface.” First thing to note is this: only pro-Northern Pass PSNH officials are quoted as worrying about the region’s supply of natural gas.  They are the usual suspects: PSNH President Gary Long and PSNH “communications specialists” Martin Murray and Mike Skelton.  They begrudgingly admit that New England consumers have benefited from abundant supplies of natural gas produced in this country, but they “worry” that natural gas supplies will be insufficient to power both electric generation plants and heat homes in the winter.  As factual support for this worry, they cite nothing relevant.  Perhaps they were relying on the frowns on their own foreheads.  They then blithely conclude that Northern Pass is “another arrow in the quiver” to deal with “spikes in natural gas prices or supply disruptions.”

Oh, they make veiled references to an Independent System Operator of New England (“ISO-NE”) report in July that made some recommendations on how to ensure that New England’s supply of natural gas for electricity generation and heating would continue to be robust and reliable.  However, they conveniently forget to mention that none of the ISO-NE recommendations involved the importation of big hydro power generated thousands of miles away in northern Quebec as a solution for that concern.  Indeed, nothing has changed ISO-NE’s classification of the Northern Pass project as an “elective” project. Northern Pass is not necessary to keep the lights on in New England; and its intended beneficiaries are Northeast Utilities and Hydro-Quebec.

Two months later, on October 30, 2012, a pro-Northern Pass astroturf site whose spokesperson is former Senator Robert Clegg repeated PSNH’s misleading claims about natural gas in a blog entry entitled “As Natural Gas Prices Rise, Northern Pass More Vital Than Ever.”  As sole support for this “more vital than ever” claim, Clegg cites a two week old Bloomberg News article predicting higher natural gas prices.  Clegg apparently failed to consult the US government’s own natural gas supply outlook and price forecasts.

According to an October 10, 2012 U.S. Energy Information Administration (“EIA”) release, the current price of natural gas is lower than it was a year ago; and the forecast price of natural gas for 2013 is also lower than it was a year ago.  Indeed the 2013 forecast price for natural gas at the wellhead is 27% lower than it was in 2010 when the Northern Pass project was publicly announced in NH.

As for production of natural gas, there is no supply disruption forecast.  The EIA forecasts that production will meet or exceed demand with ample domestic production expected to further reduce imports of natural gas from Canada.  Moreover, current natural gas inventories are reported to be at historically high levels for this time of year.

Admittedly, forecasting prices and supply is a risky business.  On October 30, 2012, E. Russell Braziel, President & Principal Energy Markets Consultant for RBN Energy, published a mea culpa admission that his summer forecast of a decline in the production of natural gas was in shambles.  As Braziel now states, “we are not about to be pulled back into the forecasting mode….  There is a lot of gas out there.  If it gets cold and the price runs up, that will just motivate those darned Marcellus and Eagle Ford producers to drill more.  Inventories are still in the stratosphere….  Gas producers better hope those power generators keep on burning large volumes of gas, otherwise they might find the winter no more fun than this summer was.”

And going back to Bloomberg News which Clegg seems to endorse, he forgot to mention the October 24, 2012 Bloomberg news article entitled, “Natural Gas futures Decline on Outlook for U.S. Inventories.”  According to that article, “The expectations for a larger storage injection are putting downward pressure on prices,” said Tom Saal, senior vice president of energy trading at INTL Hencorp Futures LLC in Miami. “There are indications that the market wants to continue to move lower.”

Well, who should we believe?  Before choosing, let’s consult one more source of information:  Northern Pass’s parent, Northeast Utilities.  Northeast Utilities owns Connecticut and Massachusetts subsidiaries that are in the business of selling natural gas to consumers.  What are those Northeast Utilities Connecticut and Massachusetts subsidiaries telling their customers about the forecast price and availability of natural gas?  Are they making dire forecasts of natural gas shortages and price increases in line with those made by Northeast Utilities’ Northern Pass agents here in New Hampshire?  Well, not exactly.

Take a look at the video by Yankee Gas, a Northeast Utilities subsidiary pitching the low price and availability of natural gas and ease of conversion for customers.

Check out the “Excellent value of natural gas” pitched on the Yankee Gas website where the main “benefit” bullet points in favor of switching to natural gas are listed as follows:

  • “Natural gas is the least expensive way to heat your home.”
  • “Natural gas delivers value.”
  • “Natural gas is efficient.”
  • “Natural gas is clean and safe for your family and the environment.”
  • “Natural gas is reliable and convenient.”
  • “Domestic supplies are abundant.”

Finally, take a look at Northeast Utilities subsidiary NSTAR Gas’s September 18, 2012 press release touting the lowest natural gas heating price in years. In that press release, NSTAR Gas boasts about its decreasing consumer prices, claiming that, “The proposed decrease reflects a continued decline in natural gas prices due in part to abundant domestic supplies.”  (Emphasis added.)

So, we repeat:  Who should we believe:

  1. The Northeast Utilities subsidiaries selling natural gas in Connecticut and Massachusetts; or
  2. The Northeast Utilities subsidiary trying to sell us a bill of Northern Pass goods in New Hampshire?

You are free to choose, but you can’t have it both ways.

Scoping – Your Chance to Be Heard

When Northern Pass announces its new route through Coos County, DOE will quickly follow by setting an end date to the scoping period for the Environmental Impact Statement (EIS).  Once the scoping period ends, opportunities for public input to the project will be much more limited as the project moves through the regulatory process.  It is in everyone’s interest to speak up now – we may not get another chance.

The Scoping Process

Scoping is the process used to determine which topics will be included in the EIS.  It is defined as: “An early and open process for determining the extent and variety of issues to be addressed and for identifying the significant issues related to a proposed action.”  All projects are different and therefore there is no “standard” EIS.  Instead, each EIS is tailored to fit both the proposed project and the area in which it is to be constructed.  The Scope of the EIS is “the range of actions, alternatives, and impacts to be considered”.  As you can see, the EIS is about more than just “Impacts” – it provides for suggestions of alternatives and/or modifications to the proposed action.  In other words, the EIS won’t speak just to the effect of the proposed action – it will also speak to alternative approaches and/or changes that can reduce or eliminate potential impacts.

The Environment

In the 42 years since the enactment of the National Environmental Policy Act (NEPA) in 1970, “The Environment” has become synonymous with wildlife, habitats, air, water, and soil.  It’s difficult to imagine a complete EIS that doesn’t examine potential impacts of each of these traditional concerns in great detail.  There are other equally important aspects of The Environment for which potential impacts are often overlooked:  social, cultural, historic, economic, and personal.  Any proposed project has the potential to impact any of these and assessing them along with the traditional environmental concerns is critical to ensuring that ALL of the Environmental Impacts are understood before proceeding with a project.

Scoping Comments

Scoping comments are the mechanism by which citizens provide input to the Scoping Process.  By submitting a scoping comment, you are telling the EIS authors that you believe a particular potential impact or alternative should be included in the EIS.  Unfortunately, there is no guarantee that your stated impact or alternative will appear in the EIS simply because you mention it in a comment – the EIS authors are left to decide how, and to what extent, they address the issues you have raised.  Given only a general description of an impact or alternative, the EIS authors have wide discretion over the extent to which it will be covered – is the impact or alternative to be explicitly studied or merely researched?  Will the impact or alternative be lumped in with similar ones in order to expedite EIS completion?  Is the impact or alternative dismissed out of hand because it was not clearly described?  These are the decisions that will determine whether the public gets the robust, fair, and honest EIS that it deserves.

The White Mountain National Forest

The Department of Energy (DOE) is overseeing the development of the Northern Pass EIS because the project requires a Presidential Permit to cross the US Border with Canada.  The Project also requires a Special Use Permit (SUP) from the US Forest Service (USFS) in order to cross the White Mountain National Forest.  THE WHITE MOUNTAIN NATIONAL FOREST SPECIAL USE PERMITTING PROCESS DOES NOT REQUIRE A SEPARATE EIS.  Instead, the USFS will use the information in the EIS developed for the DOE when making its decision on whether to grant a SUP for The Northern Pass Project.   Instead of conducting its own investigations and/or developing its own EIS, the USFS will defer to the DOE to produce the one and only EIS for the project.

The USFS will not solicit its own public comments nor will it inspect those submitted to DOE – it will simply use the EIS produced by the DOE as the factual basis for determining whether there is a public need for the project or whether any reasonable alternatives exist.  Therefore it is absolutely critical that potential impacts on the WMNF are clearly stated in DOE Scoping Comments.  The same can be said for comments referring to alternatives.  Simply writing a scoping comment that mentions the White Mountain National Forest is not good enough to get your concern in front of the decision makers at the USFS.  You must write a comment that is not only specific to the WMNF but is also written in such a way that it is addressed in the produced EIS.  Otherwise, the decision makers at USFS will not consider your comment because they will not see it.

Effective Scoping Comments

In order to have an effective EIS, citizens must submit effective scoping comments. When writing your scoping comment, keep the following guidelines in mind:

  1. EIS Scoping is not a popularity contest.  You are not voting the project up or down and your personal opposition to, or support for, the project has no effect on the EIS process.  You may be the most passionate opponent or proponent in the world, but if your scoping comment is ineffective, it will not be considered by the authors of the EIS.
  2. The process does not provide an opportunity for the authors to make a value judgment based on the tone of comments received.  Their charter is to simply accumulate distinct topics and then decide how those topics should be covered in the EIS.
  3. If you don’t specify how an impact or alternative should be evaluated, the authors of the EIS are free to choose.  You can assume that their choice will favor the convenient over the comprehensive.
  4. If you don’t specify criteria for evaluation, the authors of the EIS are free to choose.  You can assume they will minimize the evaluation requirements in order to expedite the EIS production.
  5. If you are not specific, the authors of the EIS are free to generalize.  Generalization results in fewer impacts being covered as the authors look for similarities among mentioned impacts and cull them out as duplicates.
  6. If you do not provide supporting information, there is no guarantee that the authors will discover supporting facts.  Without supporting information, your comment can be dismissed as groundless.  Opinion and/or conjecture alone are not sufficient to have your comment considered – in fact, comments containing only unsubstantiated opinion will likely NOT be considered.
  7. If your comment strays into topics that are not directly related to the proposed action, you run the risk of your comment being categorized as “not relevant”.   Our National Energy policy may very well be a complete mess, but the EIS authors are not going to address that in the document they produce.

With these guidelines in mind, each of us should set about writing the most effective scoping comments possible.  In order to do so, follow these steps:

  1. Choose an impact or alternative that is directly related to the proposed action and stay on that topic for the entire comment.  If you have other impacts or alternatives, save them for other comments – there is no limit on the number of comments a citizen can submit.
  2. Provide a compelling and factual argument describing why the impact or alternative you have chosen relates directly to the proposed action.  The more factual background information you provide the better.
  3. Request a study be conducted to quantify the overall effects of the potential impact or the feasibility of the suggested alternative.  Be specific when describing what should be studied and what information should be gathered.  If the potential impact has seasonal variations, specify data collection be conducted year round.  If the proposed alternative has unknown costs, specify that a complete cost of design, construction, and operation estimate be prepared.
  4. Provide specific metrics for evaluation by specifying the time span for sample collection, the number and type of samples to be collected, the types of prototypes to be constructed, and the independent entity to validate the study results.
  5. Review your comment before submitting.  Ensure that it contains facts rather than opinions.  Replace emotional statements with detailed information.  Remove everything that does not relate directly to the proposed action.
  6. Submit your comment.
  7. Go to step 1.

Example

The Scoping Comments database has many comments that simply state “I am against this project” or “This project is bad for New Hampshire”.  Some are literally that short while other are wordier but essentially say the same thing.  These types of comments WILL NOT BE CONSIDERED BY THE AUTHORS OF THE EIS because they do not provide any details about a specific impact or alternative.  In order to have your comment considered, it must present specific information about an impact or alternative and it must request a specific action be taken.

Consider that the author of one of the comments above was primarily motivated by the visual blight of industrial towers and the impact that would have on tourism and the economy in NH.  A more effective comment might:

  • Describe the contrast between the existing wooden poles and the proposed steel lattice structures.
  • Compare the heights of the existing poles to the surrounding trees and draw the contrast between poles that generally sit below the tree line and proposed towers that would loom above it.
  • Provide additional information to demonstrate the importance of tourism to the local economy.  Personal experience and observations would serve just as well as actual statistics here.
  • Demand that a study be conducted that researches the impact on tourism that similar projects have had in other locations
  • Demand an analysis that applies those impacts to specific locations along the project route to quantify the economic impact of the project on the tourism industry in New Hampshire.
  • Demand a final report that extrapolates those economic impacts out over the life of the project and across all of the secondary affected industries to determine the net overall economic impact of the project on the residents of New Hampshire.

Conclusion

As citizens, when we sit down to write a Scoping Comment, we have a unique opportunity to force the project sponsors to publicly acknowledge every negative impact and every less damaging alternative available.  Writing an effective Scoping Comment is a fairly straightforward exercise.  It takes some time and a bit of thoughtful consideration but the result is well worth it.

With that in mind, we must all try to submit as many effective scoping comments as possible before the scoping period ends.  Please take the time to review your past comments – refine them, add details, and demand results.  Then resubmit your comments knowing that the authors will have to consider and address them in the EIS.  If you haven’t submitted a comment yet, please try to write one soon – the new route announcement is coming and the end of our opportunity to speak directly to the decision makers about the impacts of this project will not be far behind.

 

Comments can be entered online here or they can be emailed to info@northernpasseis.us.  You can also mail or fax your comments to

Brian Mills
Senior Planning Advisor
Office of Electricity Delivery and Energy Reliability (OE-20)
U.S. Department of Energy
1000 Independence Ave. SW
Washington, DC 20585
Fax: 202-586-8008

What Changed?

REAL looks at the Northern Pass V-String “Discovery”

For close to two years now, Northern Pass has been chanting its “90 to 135 feet” mantra to the public when discussing the height of the towers required to suspend transmission lines carrying 1200 MW of electricity through New Hampshire on its way to southern New England.  We know that private planning for this project started at least two years before the public announcement.  So they’ve had four years to study this issue.   And during that time, Northeast Utilities’s and Hydro Quebec’s engineers have had ample opportunity to calculate the minimum required distance between transmission lines and the ground as well as the minimum required distance between the transmission lines on the towers.  It’s safe to assume that they checked and double checked their computations and that the result was always “90 to 135 feet.”  It had to be – they told us so, again and again.

It’s also safe to assume that during this time, Northeast Utilities’s and Hydro Quebec’s engineers had access to state-of-the-art transmission systems designs.  They must also have had access to the latest research, industry trends, and best practices – these are multi-billion dollar corporations after all.  And still, with all of that knowledge and expertise, the result remained  “90 to 135 feet.”  It had to be – they told us so, again and again.

And then, quite recently, something changed.

The laws of physics haven’t changed, so that can’t be it.  The guidelines and regulations around High Voltage transmission lines haven’t changed, so that can’t be it.  Hence, our question: what new advancement in power line transmission occurred in just the last several weeks that would cause these companies to admit that their calculations were wrong for years?

According to Northern Pass public statements this week, the answer is, “The V String transmission tower configuration.”  With this new advance in transmission tower design, Northern Pass engineers were able to reduce the tower height estimate to a firm “85 feet.”   With all the fanfare surrounding their announcement, it would be easy to lose sight of one very simple fact: V-String is not new.   Literature advocating the use of V-String can be found dating back to 2003 – nearly a decade ago.  V-String has appeared in proposals for large scale transmission projects like this one for years.  In fact, V-String is used for the DC towers built by Hydro Quebec in western New Hampshire.  How could all of the engineers in not one but two multi billion dollar energy companies have missed such an obvious alternative design?  All Northern Pass had to do was to drive over to Warren or Bath or Haverhill and have a look.

What changed was not a technical breakthrough; what changed was the realization at Northern Pass Headquarters that their project’s ship is sinking and they need to start bailing fast to have any hope of saving it.  Their promises of a new route remain unfulfilled nearly two years after the initial public announcement.  Their promises to investors are regarded with skepticism on Wall Street.  The deceptive tactics that they have used to hide the real impacts  (and real lack of benefits to New Hampshire) from this project have left them with almost no credibility anywhere in the state.  In short, this project needed some good news to counter the tidal wave of opposition to it.

REAL believes that this V-String “discovery” is nothing more than pre-planned theatre and that Northern Pass entered into its negotiation with the citizens of New Hampshire holding many concessions back in order to use them later on in order to appear to be “cooperating” or “listening.”  This is exactly what happened early on in the project with the original “Alternate Routes” – Northern Pass took those routes off the table under the guise of “listening to the public.”  However Gary Long later admitted that they “never had a keen interest” in using them in the first place.  And so it is with the 135’ towers – they never seriously considered using them either.  By working late into the night and “discovering” decade old technology they want everyone to see how trustworthy and compassionate they are.

REAL believes this episode calls into question, once again, Northern Pass’s good faith and environmental sensitivity.  At each step of the way, the project sponsors appear to be calculating the most minimal possible step that may potentially satisfy some level of immediate concerns, rather than engaging in a full, open, give-and-take dialog with all stakeholders about the costs, benefits and alternatives.  V-Strings can come and go, but until Northern Pass fundamentally changes its attitude and approach there can be no real progress.

 

What Will You Do?

Northern Pass will announce its new route soon, REAL believes.

On September 11, the Northern Pass website posted a copy of the “project overview” presented that same day by project director Anne Bartosewicz to the Platts transmission planning and development conference in Arlington VA. The audience included FERC Commissioner Jon Wellinghoff and Lauren Azar, senior advisor to Energy Secretary Chu.

Bartosewicz’s overview was atypical of Northern Pass’s public statements. It focused in detail upon the opposition to the project. “Almost immediately,” Bartosewicz explained, the project received “negative reactions from residents in Northern NH . . . [who] mobilized through the use of community meetings and protests, newsletters, and social media.”  She further explained that in New Hampshire property rights are held as “sacred” and that the state’s first in the nation primary encourages “political activism” among its citizens.  She posed the question of how developers can “overcome the NIMBY challenges” in siting new transmission.

Bartosewicz’s effort to demonize continuing citizens’ opposition throughout the state as a northern New Hampshire “NIMBY” problem before a national audience confirms REAL’s belief that Northern Pass is gearing up to announce its new route through upper Coos County. We believe there is a substantial probability that this will occur within the next 2-4 weeks.  We base these expectations on conversations with property owners, interested organizations and other sources.  As we explain in this blog, we also base these expectations on our own assessment of Northern Pass’s incentives and potential strategies, most recently evidenced at the Platts conference.

However, we want to emphasize that we believe any route announced in this time frame will remain theoretical. In other words, Northern Pass would announce the proposed route before it has secured all the necessary land rights.  While we expect the announcement to coincide with the confirmation of several additional land acquisitions by Northern Pass, we believe important gaps will remain.  If this is correct, it would mean that the new route announcement would not necessarily accelerate the already delayed project timetable.  The critical step to move the timetable forward is for Northern Pass to acquire all necessary land rights.  In our view, a route announcement without these land rights in hand would likely be, to a large extent, a strategic exercise of smoke and mirrors.

If the route is announced, we expect this could be followed in short order with a new filing with the Department of Energy (DOE) to restart the review process for the presidential permit needed for the transmission line.  The DOE permit process can be restarted without all necessary land rights in place.  This step could give the appearance of new momentum for Northern Pass.

Why would Northern Pass “pre-announce” a theoretical route for which it has not yet obtained full land rights?  We believe there are several reasons why Northern Pass would feel this strategy is in its best interests.

First, Northeast Utilities (NU), now the 100% equity owner of Northern Pass, has come under pressure to shore up its credibility with the securities markets.  Market analysts have recently highlighted the repeated delays in Northern Pass’s timetable and now openly question NU’s projection of a late 2017 “in service” date for the project.  Northern Pass is critically important to NU’s growth story and stock market valuation, and the company has a strong motivation to try to demonstrate some sort of progress.

Second, Northern Pass will wish to create the appearance of momentum and inevitability in order to reduce resistance among landowners who refuse to sell.  Not all landowners will have the time or resources to assess the actual remaining gaps in the route.  We believe Northern Pass may feel that the route announcement will cause anxiety among these landowners and increase its chances of coming to terms with them.

Third, a new route announcement that shows relatively few “gaps” (that is, portions of the route where land rights have not yet been obtained) could increase pressure on governmental bodies and other organizations to work with Northern Pass to find solutions to what it caricatures as “NIMBY” holdouts.  Northern Pass would likely tell the story that “we’re almost there” so “don’t let just a handful of NIMBY landowners prevent our transmission lines.”  We would expect Northern Pass to lobby intensively in Concord to seek assurances of state cooperation on river crossings, road crossings and potentially on use of state land or land rights (for example, highway rights of way) to address the gaps.

Fourth, Northern Pass may expect that a route announcement within the next 2-4 weeks would discourage contributions to and thus undermine the Forest Society’s new “Trees Not Towers” campaign scheduled to conclude at the end of October.  This campaign aims to raise money to fund conservation easements on key blocking parcels along Northern Pass’s likely route.  Northern Pass has a clear incentive to create the appearance of progress in the face of the Forest Society’s significant moves to block the project and to seek to undercut the Forest Society’s efforts.

Fifth, a new route announcement and a restart of the DOE process would create a basis for Northern Pass to re-launch conversations with various stakeholders.  We would expect Northern Pass to make a new round of calls on the relevant federal, state and local government bodies, conservation organizations, and other interest groups to try to build momentum toward “yes” on the project. A new filing with the DOE to restart the presidential permit process could create the impression that the clock is ticking and it is time to try to come to terms with Northern Pass.

Finally, and perhaps most importantly, having suffered a number of critical setbacks because of the intense citizens’ opposition to the project throughout the state, Northern Pass is increasingly focused on trying to neutralize this push back, as evidenced in the Platts conference presentation. Northern Pass may see a new route announcement (even one that lacks all of the actual land rights) as a step that could be perceived as shifting strength and momentum from the opposition side to the Northern Pass side.  Northern Pass has a strong incentive to employ strategies that may sap the energy and enthusiasm of the opposition, especially now as it re-surges in Coos County and takes new forms elsewhere.

However, let’s keep a new route announcement for upper Coos County (and a restart of the DOE process) in perspective.  A new route through upper Coos County does not make Northern Pass into a good project for New Hampshire.  A serpentine route cobbled together through upper Coos based on finding landowners willing to sell out is necessarily a random, opportunistic path; it is a manifestly bad route in terms of community, social, environmental, visual, property value and other impacts.  And regardless of any route through upper Coos County, Northern Pass is bad for New Hampshire, our communities and our people.  All of the many reasons the opposition has fought Northern Pass up and down the state will remain in full force after a new route announcement.  Massive, destructive, unnecessary, for-profit, above-ground transmission lines do not belong in New Hampshire, let alone our most pristine areas such as the White Mountain National Forest.  A thousand new alternative routes through upper Coos County would not change this essential fact.

This brings us to the critical question.  What will you do on the day, fast approaching, when Northern Pass announces its new route?  Please think this through now and decide upon your course of action.

Here are a few suggestions:

  • Take a few moments and reflect on all the reasons why Northern Pass is bad for New Hampshire, for your community, and for your friends and family.  Remind yourself why you stand strong in opposition to Northern Pass, and recommit yourself to the opposition effort.
  • Study the new route announcement and talk it over with your family, friends, neighbors and other opposition members.  If we are right and the announcement is largely a “smoke and mirrors” strategy, do your part and explain this to others.  Don’t let Northern Pass’s strategy of misleading the public have its intended effect; instead, make the cynical route announcement into a rallying cry that strengthens the opposition.
  • Make a second donation to “Trees Not Towers” so that the Forest Society can report that during the week following the new route announcement, numerous people dug deep a second time to save New Hampshire from this travesty. (You must donate a first time, of course, to do this; donations do not need to be large to be important.  Give what you are comfortable giving, but please be counted as a donor.)
  • Enter a new scoping comment to share your thoughts about Northern Pass and its strategies.  Every scoping comment becomes part of the permanent record of opposition to the project.  Go here to make a scoping comment.
  • Send project director Anne Bartosewicz and Leon J. Olivier, CEO of PSNH, an email and tell them how you feel as a critical stakeholder in this proposed project.  Here are their email addresses: anne.bartosewicz@nu.com; leon.olivier@nu.com.
  • Spend $0.85 in postage and send a letter to Quebec’s new Premier expressing your feelings about Quebec’s attempt to convert New Hampshire’s territory and greatest assets into Hydro-Quebec’s extension cord:Premier Pauline Marois
    Édifice Honoré-Mercier,
    3e étage
    835, boul. René-Lévesque Est
    Québec (Québec)  G1A 1B4
    Canada

Please let us know what else you plan to do on the day that Northern Pass announces the new route.  Be ready to act soon.

 

Property Rights 2.0

Northern Pass’s Unfair Destruction of Property Values along Existing PSNH ROWs

New Hampshire’s strong commitment to property rights has already played a critical role in the Northern Pass debate.  The public was outraged over Northern Pass’s abusive threats to invoke eminent domain to seize families’ homes and land for the for-profit transmission lines.  The legislature responded by passing HB 648.   The new legislation protected property rights by putting  a clear halt to the ability of private, optional, for-profit transmission projects (such as Northern Pass) to seek or threaten eminent domain.

With Northern Pass now claiming they are close to reviving the project, a new property rights issue is coming to the forefront.  Property owners up and down the proposed transmission line route are discovering that Northern Pass is sharply lowering their property values or making the properties unsalable at any reasonable price.

REAL calls this “property rights 2.0”.  It’s Northern Pass’s second unfair attack on New Hampshire families, their properties and the state’s property rights traditions.  This is a political issue and a regulatory issue.  We respectfully request our elected officials, candidates and regulators to respond and to stop Northern Pass from unfairly destroying New Hampshire property values.

With the new route in upper Coos County not yet secured or announced, REAL focused on property rights impacts for the 140 miles of existing PSNH rights of way (ROWs).  We visited properties along the PSNH ROWs and evaluated the potential impact of Northern Pass.

For a substantial part of these ROWs, the existing AC transmission lines are on 40’-60’ wooden poles and at or below tree heights.  The existing lines in these areas are largely masked by the trees or landscape.  In contrast, NP’s proposed new HVDC lines, with tower heights up to 135’ or higher, would pierce the tree canopy.  They would impair what is now in many cases an uncompromised view shed.  The experience for landowners would be to convert the current unimpaired view to an exposure to HVDC transmission lines towering 50’-75’ or more above the landscape.  This is a massive change from a pastoral setting to an industrial exposure.

The hits to property values are very significant.  REAL estimates that for many properties exposed to the proposed transmission lines along the 140 miles of existing PSNH ROWs, Northern Pass would reduce land values in the range of 20% to 50%, or potentially more for unique settingsThe value of homes and other structures would also be impaired.  We also expect a significant increase in the time required to sell these properties And remember that each year of delay in a property owner’s ability to sell at a fair price (with delay priced accurately at the family’s cost of capital) is in most cases the same as an additional 10% or more loss in value.

This is not some theoretical problem or abstract policy issue.  Real New Hampshire people are suffering real harm, and it is happening today.  The threat of the Northern Pass lines – that is, just the proposal, and without the lines being approved or built – has already caused property owners to lose value.  And in some cases properties have been essentially frozen and made unsalable at any fair price.

Why do these losses in value happen?  Because there is a market for real estate and the market offers choice.  Buyers looking for residential properties in New Hampshire can choose between properties that are unimpaired and properties that may be compromised by exposure to Northern Pass’s HVDC lines.  Because alternatives are available, impaired properties are marked down in value.  This is particularly true for buyers who are seeking a pastoral setting, high-quality views or similar values.

As one illustration, REAL spoke recently with a property owner who described his exceptional view property in the Sugar Hill/Franconia area.  The owner wants to sell.  The property would ordinarily be readily marketable to “view” buyers at a premium price.  Unfortunately, the property’s view scape includes the route of the proposed Northern Pass lines.  After discussions with real estate agents about potential demand and pricing in light of Northern Pass, the owner concluded that the property is currently unsalable at any fair value.  There is simply no functioning market for an exceptional view property that is now exposed to Northern Pass – “view” buyers just stay away.

What does Northern Pass say about property value impacts?  They deny, mislead, stonewall and worse.  They take the ridiculous, common-sense-defying position that the proposed transmission lines will have no significant effect on property values.  They say the “proposed use” on existing rights of way would cause only “incremental” effects. Forgive our directness, but they must have a hard time saying this with a straight face.

As support for their position, Northern Pass offers up three “studies” of transmission lines and property values.  Two (Chalmers 2008 and Thibeault 2011) are flatly irrelevant to New Hampshire.  The third (Underwood 2011), to put it kindly, doesn’t present any reliable conclusion that we can determine.

The bottom line is that Northern Pass has offered no property-specific valuations that carefully measure the before and after effect of the proposed HVDC transmission lines on actual New Hampshire properties.   Instead of on-point analysis using actual properties affected by their proposed lines, Northern Pass channels Lenin (“A lie told often enough becomes the truth”) and simply shoves out, again and again, the same nonsensical “no significant value impact” claim.

REAL believes that Northern Pass’s unfair extraction of property value from literally thousands of New Hampshire families is a huge issue.  It’s a fairness issue and a property rights issue, and should be front and center in political discussions about Northern Pass.  Property value impacts will be part of the federal and the state regulatory process for review of Northern Pass.  To be most effective in the political and regulatory environments, affected property owners should consider obtaining a formal appraisal of their properties showing the value loss from Northern Pass. 

Northern Pass’s wrongful assault on New Hampshire property is compounded by the fact that the proposed transmission lines would pass through the heart of the White Mountain National Forest (WMNF). The WMNF is owned by the people of the United States. Every year literally millions of visitors (New Hampshire residents, US citizens and visitors from other countries) come to the WMNF to enjoy the rugged beauty, solitude, refuge and stunning vistas of the mountains and forest.

In REAL’s view, the US Forest Service should never have compromised the WMNF by granting the special use permits that authorize PSNH’s current AC transmission lines. The current lines – set on wooden poles typically at or below tree heights — are a harmful but limited invasion. By contrast, Northern Pass’s proposal – massive new metal HVDC towers piercing the tree canopy and relocation of the current lines onto new metal towers as well – would absolutely devastate the affected WMNF areas.

Common sense and respect for the public trust should be enough to keep Northern Pass away from the WMNF. But to ensure a careful, disciplined review, REAL would respectfully request the US Forest Service to use financial modeling techniques (that is, an approach similar to a ‘before and after’ real estate appraisal) to quantify Northern Pass’s degradation to the value of the WMNF. We believe that, properly measured, Northern Pass’s proposal devalues the WMNF – the people’s asset – by an amount on the order of hundreds of millions of dollars if not more. This cost must be taken into account in any fair cost-benefit analysis of Northern Pass.

REAL’s value estimates are based on our visits to properties exposed to the PSNH ROWs, our review of certified appraisals of properties impacted by Northern Pass’s proposal, our review of the appraisal literature relating to transmission line impacts and the experience of our members as investors.  A more detailed discussion of some of the background is available here.

Meet Northern Pass’s “New” Coos Route: Same as the Old Route

Northern Pass’s purchase of zig-zagging strips of land does not constitute community support, does not represent good siting for a transmission line, and does not address the massive problems created by this proposed project. Like the old route, the new Coos route is all about money for PSNH, Northeast Utilities, and Hydro Quebec, not about what is good for New Hampshire. Like the old route, the new route was developed in complete secrecy with no consultation of key stakeholders. And like the old route, the new route sticks New Hampshire with the Northeast’s only proposed transmission project to use antiquated, visually jarring, and health-threatening overhead technology.

There has been a lot of talk about Northern Pass’s new route recently. It was fueled last month by Northeast Utilities’s First Quarter 2012 earnings conference call. Leon J. Olivier, NU’s Chief Operating Officer and PSNH’s Chief Executive Officer, characterized his “conviction level” as “very confident” that Northern Pass would announce its proposed new route through Coos County in the third quarter of the year.

It’s not hard to figure out the route that Northern Pass is trying buy up across northern Coos County. A search of the registry for land acquisitions by Northern Pass affiliate, Renewable Properties, Inc., and first-hand reports from alarmed landowners reveal the patchwork collection of parcels that Northern Pass has purchased so far. But the known dots from Pittsburg east to Clarksville and Stewartstown still do not connect into a solid line. And beyond that series of dots, the new route would have to snake its way further east into Dixville, then south through Millsfield and Dummer. From Dummer, it  must reverse course and follow an expanded Coos Loop west to get back to Lost Nation (Groveton).

Representations of a “high level of confidence” to investors notwithstanding, REAL does not believe that Northern Pass will assemble a complete route from Quebec across the New Hampshire border to Lost Nation or to Whitefield by September. Northern Pass may announce a route by September, but we doubt that it will own all the land and rights required to build the project on that route. The major reason for our doubt is that Northern Pass continues to underestimate the resolve of the land owners who have bravely refused to sell their land for this project. There are many courageous northern Coos County landowners holding fast against enormous pressure; they value their heritage and environment more than all of the Hydro Quebec dollars stuffed into Northern Pass’s war chest.

Northern Pass’s land agents are desperately trying to fulfill Olivier’s prediction.  They have had to resort to pressure tactics, including morally repugnant efforts to pay relatives of the heroic landowners to convince them to sell out to Northern Pass and give their land over to the use and control of Hydro Quebec.  But as one land owner has recently written, “material things rust and wear out. Money is soon spent for brief periods of pleasure. Land on the other hand is something that can be passed from one generation to another with many valuable accounts. . . .This is what I choose to leave my children and grandchildren. This is what I am fighting for, to keep protected from this foreign invasion, a project of pure greed, not need!

Substantively, however, it will not matter even if Northern Pass is somehow able to connect the dots this summer and weave its new route back and forth across Coos County. The new route will still be the same as the old route, if not worse.

REAL will answer three questions here:

  • What you can expect to hear in the press release if Northern Pass is ever able to patch together the new route;
  • Why the “new” route will be the same as the “old” route, if not worse;
  • Why New Hampshire is being targeted for an antiquated overhead transmission line while neighboring states benefit from modern underground technologies.

What You Can Expect to Hear

Let’s accept Olivier’s “3rd Quarter” prediction for the moment. What might the announcement look like later this summer? Undoubtedly, Northern Pass will spin stories of community support and cooperative landowners.  They will try to charm us with folksy accounts of their sensitivity to family history and culture.  They will tell us that they have great community relations teams who have soothed all the unrest in the North Country except for a few noisy “special interest groups.”  They will say that the new route has the support of the communities involved—meaning the “underlying landowners.” Above all else, they will assure us that this route is the most environmentally responsible path they could possibly take from the Canadian border to Lost Nation.  And the harder they work to sell this story, the more obvious it will be that it is a complete fabrication. The much anticipated “new route” is the same as the disastrous old route, if not worse.

A Bad Idea Never Gets Better

The “new route” is frighteningly similar to the old route.  The old route was almost universally hated because it destroyed property values, threatened health and safety, and ruined the untouched open spaces that feed the most significant remaining industry in Coos County:  tourism.  The new route will be equally detested for the same reasons. The old route was rejected by every community that it passed through. The new route will evoke the same community condemnation. The old route represented the most expedient way to get Hydro Quebec’s power through Coos County on its way to Boston.  The new route will represent the next most expedient “extension cord.” The old route ran along a take-no-prisoners north-south line from Pittsburg to Lost Nation because it was predicated on the availability of eminent domain authority. After it traverses east across Coos County, the new route may also request eminent domain authority for the final leg that reverses course and strikes due west on the Coos Loop to Lost Nation.

So, what is different about the new route? It’s longer. Once it snakes its way east, then south, and then west back to Lost Nation along the Coos Loop, through Stark, the new route threatens to add up to 50% more clear cut ROWs than the old route. Moreover, it threatens to add up to 50% more visually jarring towers that destroy property values; up to 50% longer transmission lines that threaten health and safety; and up to 50% more negative impact on the tourism industry. Another difference is that the new route will almost certainly try to clear cut a new wide swath through the White Mountain National Forest in Stark, destroying more majestic vistas.

That’s it.  The new route is nothing more than the old route but longer, more detrimental to public land that has been preserved for its scenic value and more damaging to private land and businesses.

Does the new route form the least environmentally damaging way through Coos County?  Does it provide us with the least visual impact from transmission lines and towers up to 140’?  Is it that the new route attracts the most community support?  Does it provide the most separation from residents, who fear proximity to High Voltage Transmission Lines? Does it incorporate the results of honest consultation and open dialogue with the real stakeholders, especially the agencies and conservation groups that serve as stewards of preserved land in Coos County and the town governments, which speak for the majority of the actual residents of Coos County?

No.  The new route does none of these.  As the new route took shape, it became a cynical game of connecting the dots in which socioeconomic and environmental impacts simply never mattered:  each parcel was just a piece in a puzzle.  There was no consideration of wetlands, habitats, scenery, history, community, culture, or safety.  There was no consultation about the new route with conservation agencies or with towns. Indeed, Northern Pass has pursued the new route in complete silence and utmost secrecy with individual sellers, often non-residents, whom they prohibited from discussing transactions. Abutting neighbors and communities were left to worry whether their land and livelihoods would be impacted. There was never any effort to work with stakeholders to design the best technology. The sole consideration for the new route was land acquisition — location and price. Could the parcel fit into the patchwork route? What was the asking price? And in time, price no longer mattered. Outrageous sums were offered. The new route emerged as the sum of the parcels that Northern Pass could string together and buy outright with its virtually unlimited funds from Hydro Quebec. When Northern Pass was blocked from using eminent domain to seize the old route, it did not take the message to heart and consult with stakeholders; instead, it opened up its war chest and tried to buy the next most expedient route.

Northern Pass is busy inventing stories of caring land agents who were sensitive to individual’s concerns.  They are creating tales of landowners selling easements for the good of their communities.  They are finding ways to pretend that they considered the economic, cultural, and environmental impacts of their chosen route.  The truth is that they did absolutely nothing of the sort.  They looked at Coos County as a business problem:  what do we need to do to get from the Canadian border to Groveton and how much will it cost?  As they purchased parcels, adjoining parcels became more valuable to them – while non-adjoining parcels became worthless to them. Too bad for you if your property value plummets because your land was not needed. Too bad for you if Northern Pass hired your relatives to harass you into selling your land. In the end, money and pressure tactics prevailed.  Keep all this in mind if you ever hear Northern Pass’s narrative of community support, landowner cooperation and environmental sensitivity. It’s nothing more than self-serving rubbish.

Why Is New Hampshire Being Exploited?

This leads to the final question:  When it comes to efforts to link Boston/Hartford/NYC with Canadian power, why does New Hampshire get the short end of the stick, suffering with the only proposal for tall above-ground towers and 150’ to 425’ wide clear cut rights of way running through the most scenic and treasured landscapes we have, including the White Mountain National Forest?  In contrast, there are two other new HVDC transmission line proposals that would connect Boston/Hartford/NYC with Canadian power via HVDC transmission lines:  one in Maine called the “Northeast Energy Link”; the other in Vermont and New York called the “Champlain Hudson Power Express.”  Both of these HVDC projects in our neighboring states have been planned as underground and underwater projects with no overhead towers and transmission lines.

Why is New Hampshire alone being exploited?  Is it because we have a weak and compliant regulatory environment?  Is it because we have a revolving door that allows former employees of NU or its affiliates who have NU pensions and other conflicts to become PUC commissioners and to rule on any and all proceedings in which NU has an interest?  Is it because we have a revolving door that allows a powerful law firm representing Northern Pass to hire the retiring Chairman of the Public Utilities Commission? Is it because we have political donations that are regularly made by NU officials and lobbyists to key politicians in Washington and Concord?  Whether or not the actual answers to these questions are all affirmative, the public perception is that each and every one of the above reasons explains why the NU/Northern Pass/Hydro Quebec cabal dares to bully New Hampshire.

The new Coos route – just more of the same, but longer. Bad ideas never get any better. There’s no more reason for New Hampshire to accept the route this time than there was last time.

 

Note: for more information on the new route, see this post from the Conservation Law Foundation.