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Thu December 19, 2013
Regional Rift Over Who Should Pay for Power Lines Across New England
Federal regulators are being asked to resolve a regional rift over who should pay for new power lines needed to carry renewable electricity to southern New England.
Vermont has joined New Hampshire and Rhode Island to oppose the cost-sharing formula being promoted by Massachusetts, Connecticut and Maine. The question now before federal authorities is how much rate payers in Vermont should pay for a power line project that mainly benefits people in southern New England.
The question could not be settled among the six states in the region, so now it’s up to the Federal Energy Regulatory Commission to decide. Kerrick Johnson is a vice president of the Vermont Electric Power Company, which operates the statewide transmission grid. VELCO has organized opposition to a cost-sharing formula being pushed by Maine, which wants to export renewable electricity, and Massachusetts and Connecticut, which want to buy the green power.
“The cost allocation that was proposed puts the vast majority of costs, almost three-quarters of the cost, of a transmission project on the other states that may or may not have unmet policy needs. So fundamentally, the people who need the project the most, are paying the least amount,” Johnson said.
The policy needs that Johnson refers to are renewable portfolio standards mandated by Connecticut and Massachusetts. Those states require utilities to get a certain percentage of their electricity from renewable sources. But much of that electricity is from northern New England or Canada, such as wind or hydro projects. New transmission lines are needed to carry the power south.
"So fundamentally, the people who need the project the most are paying the least amount,” said Johnson.
Massachusetts and Connecticut say they should pay for 30 percent of the cost of these new lines, while the remaining 70 percent should be borne by rate payers regionally. VELCO, joined by regulators in New Hampshire, Rhode Island and Vermont, says the formula should be reversed. Johnson said the more populated states are trying to offload much of the cost of the new power projects on other states in New England. He worries about the impact on electricity rates as new power line projects are built. “What we’re saying is that 30 percent of the cost shared across the region, at least roughly, is a much more accurate and a much more equitable assumption,” he said.
State energy officials in Massachusetts have led the push for the regional cost share. Barbara Kates-Garnick is Massachusetts undersecretary for Energy. She argues the new power lines will benefit rate payers across New England. “Different states will be able to connect into different renewable resources, and it’s an easier way to give a signal to the marketplace by having an allocation plan that is regional,” she said.
Johnson of VELCO expects a response from federal regulators sometime this spring.
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