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Hydro-Quebec commits to discount bulk transmission sales to benefit Maine customers

image credit: The Daniel-Johnson Dam and Manic-5 generating station. Credit: Hydro-Quebec
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DW Keefer is a Denver-based energy journalist who writes extensively for national and international publications on all forms of electric power generation, utility regulation, business models...

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  • Jul 14, 2020

Hydro-Québec has agreed to sell power into Maine at a discounted price via a planned transmission line known as New England Clean Energy Connect.

The $950 million project is a partnership between Iberdrola business unit Avangrid and Hydro-Québec. As planned, it would  transport 1,200 MW of hydropower from Canada through Maine into Massachusetts and the New England power grid.

The transmission line has been opposed in Maine by some local power producers, environmental groups and local residents who claim the project would not provide enough benefit to the state. Opponents gathered enough signatures to add an initiative to the November ballot that would allow voters to say whether or not they support the power line. That referendum is the subject of a lawsuit filed in state court in May.

If built, the proposed project would consist of 145 miles of new High Voltage Direct Current (HVDC) transmission line that will tie into the existing transmission system. Additional project components include upgrading 50 miles of existing alternating current (AC) transmission lines, construction of a new converter station, a new substation and multiple system upgrades.

All of the U.S. project components will be located in western and southwestern Maine. A new HVDC transmission line would enter the U.S. at the Canadian border in Beattie Township, Maine and run through working forest for 53 miles before merging with an existing Central Maine Power-owned transmission line right-of-way in The Forks, Maine, for 94 miles. A new DC/AC converter substation would be located in Lewiston, and a new 345 kilovolt substation would be located in Pownal, Maine.

The new agreement between Maine and Hydro-Quebec is intended to guarantee that the state directly benefits from the transmission line.

As part of the agreement, Hydro-Québec will sell electricity into Maine at a discounted price. Hydro-Québec also will accelerate $170 million in benefits negotiated in 2019, including rate relief for Maine consumers and incentives for broadband, electric vehicle charging stations and heat pumps.

Under the commitment, Hydro-Québec will sell 500,000 megawatt hours per year of hydroelectricity to Maine via NECEC, if permitted, at a discount of $4.00/MWh. To implement the commitment, the Governor’s Energy Office (GEO) and Hydro-Québec will finalize either: 1) a 20-year power purchase agreement with one or more Maine buyers at the discounted price; or 2) if a power purchase agreement is not entered into, Hydro-Québec will pay a total of $40 million in installments over 20 years to an entity designated by the GEO that ensures benefits to Maine retail energy customers.

In addition to the commitment to sell power to Maine, and pending review by the Public Utilities Commission,Hydro-Québec agreed to accelerate the start of payments to begin upon the issuance of final permits rather than at the transmission line’s commercial operation date.

Hydro-Québec agreed to provide the following funds:

  • Rate Relief: $140 million in installments over 40 years, including $90 million of rate relief for retail electricity customers within Central Maine Power service territory and $50 million for the Low-Income Customer Benefits Fund to reduce energy costs for low income customers.
  • Broadband: $10 million to capitalize a Broadband Fund to provide grants that support the implementation and maintenance of high-speed broadband infrastructure in the communities that host the transmission facilities. Payments will be made in installments over five years.
  • Heat Pumps: $10 million for the installation of high efficiency air source heat pumps, that may include targeted initiatives to reach low-and moderate-income individuals in Maine. Payments will be made in installments over five years.
  • Electric Vehicles: $10 million for the Hydro-Québec EV Fund to fund the deployment of fast charging infrastructure in Maine. Payments will be made in installments over five years.

The commitment comes after Maine Governor Janet Mills wrote to the Hydro-Québec in March to report that many Maine people were worried that the power would go to Massachusetts and not directly to Maine consumers. The Governor expressed her hope to secure the transmission line’s uncontracted power at a rate that would be advantageous to the state.

In May, the Maine Department of Environmental Protection granted permitting approval to the transmission line. The decision found that the project has met or exceeded all environmental standards established by the department and that no other alternative routes would be an improvement on the current project design.

Also in May, AVANGRID Networks filed a lawsuit challenging the constitutionality of a referendum proposed by transmission line opponents. The lawsuit included support by the Maine State Chamber of Commerce and the Industrial Energy Consumer’s Group.

The lawsuit argued that the proposed referendum suffers from two constitutional flaws: 

First, the lawsuit claims the referendum exceeds the legislative power provided to the people under the state Constitution. Maine state courts have previously recognized that referendum power is limited to legislative acts. The lawsuit claims that the proposed referendum aims to reverse one particular Certificate of Public Convenience and Necessity granted to a specific single entity. 

Second, the lawsuit claims the referendum violates the separation of powers provision of the Maine Constitution. It said the referendum usurps executive power by seeking to reverse a Maine Public Utilities Commission process and resulting certificate, and the judicial power by seeking to reverse a Maine Law Court’s judgment affirming the regulatory order.

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