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Thu November 14, 2013
New England States Debate Sharing Costs For New Power Lines
A rift has developed among New England states over who should pay for transmission lines needed to carry electricity from renewable energy projects.
The issue is whether ratepayers across the region should foot the bill for power lines needed for southern New England. The debate has pitted Vermont against some of the more populated states to our south.
Southern New England – in particular Massachusetts and Connecticut – needs more renewable generation to meet their clean-energy mandates.
But the supply to meet that demand is mostly in the north –wind power from the mountains of Maine, or hydroelectricity from vast reservoirs in Quebec.
Kerrick Johnson is vice president of the Vermont Electric Power Company (VELCO), which operates the statewide grid. He says the region is already looking at more than $4 billion worth of new transmission – and that’s before the projects needed for renewable energy are added in.
“We start from a position that those who stand to benefit from a transmission project in service of their public policy goals, that they should fund the project,” he said.
Johnson is worried about the impact on electric rates if the new projects are built. He points out that new transmission lines to carry electricity to the south would run through states that most likely don’t need the power.
“The problem is; what are you paying for? If there is 150 mile transmission line from extreme northern Maine to move wind power down to Massachusetts or southern Connecticut, we don’t know that would benefit Vermont to a great degree,” he said.
The debate over who pays has centered on the concept of socializing costs. That’s the idea that all ratepayers should share the expense of projects that benefit society and the region as a whole. The cost of lines deemed necessary to keep the grid running reliably are now spread out across the region.
Proponents of socializing the cost of projects needed to meet a particular state’s renewable energy targets say the same logic should apply.
New England states are split on the issue. Opposing the automatic cost sharing for the new power lines are Vermont, New Hampshire and Rhode Island. Officials from Massachusetts, Connecticut and Maine are in favor.
Barbara Kates-Garnick, is undersecretary for energy for Massachusetts. She said all the New England states should help pay, because the benefits – such as reaching greenhouse gas reduction goals – are shared regionally.
“It’s an easier way to give a signal to the marketplace in many respects by having an allocation plan that is regional,” she said.
Vermont officials question whether the regional cost-sharing system is fair for consumers. Chris Recchia is commissioner of the department of public service, which represents Vermont ratepayers. He said transmission projects – and how costs should be shared – need to be evaluated on a case by case basis.
“There are transmission organizations that are voting on this that really make all their all their money by building transmission,” he said. “Our concerns with the socialized formula is that projects will come out of the woodwork that nobody thought of before and, given a different cost structure, might not be put forward.”
The proposal being debated by utilities and state officials in New England is to share 70 percent of a project’s cost regionally, with 30 percent borne by ratepayers in the state that would use the power. The question will ultimately be decided by Federal Energy Regulatory Commission.