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The Battle Over The Northern Pass
Published Tuesday, May 15, 2012
by Barbara Tetreault & Martha Creegan

No recent project has generated the level of controversy as the Northern Pass, a proposal to build a 180-mile transmission line from the Canadian border to Deerfield. But for all the heated debate generated by the plan and extensive media coverage, a recent WMUR Granite State poll conducted by the University of NH Survey Center indicates 45 percent of those surveyed described themselves as not very familiar or not at all familiar with the project. 


And there is much to familiarize oneself with when it comes to this complex project, which requires federal and state approvals, touches on environmental issues, and addresses control of power generation and private property rights. Northeast Utilities, the parent company of Public Service of NH and the Massachusetts-based NStar Electric Company, propose constructing a high-voltage direct-current transmission line to carry 1,200 megawatts of hydro-electric power from Hydro-Québec. The line would travel about 140 miles from the Canadian border to Franklin, where a new converter station will be constructed, and then another 40 miles to PSNH’s Deerfield substation, which would send it to the New England power pool. For most of the line, Northern Pass can use an existing PSNH right-of-way. But for the first 40 miles, from the Canadian border to Groveton, it needs a new right-of-way.


Northern Pass Transmission LLC, the corporation formed by the two utilities, will own and operate the line. Northern Pass will be reimbursed for the estimated $1.1 billion construction cost by Hydro-Québec in exchange for exclusive transmission rights for the power. A government-owned utility, Hydro-Québec is the world’s largest producer of hydropower with almost 35,000 megawatts of hydro-capacity. Documents filed with the Federal Energy Regulatory Commission (FERC) report Hydro-Québec is currently developing an additional 4,000 megawatts of new hydro-electric generation and this expansion will make “significant amounts of power available for export to the United States.”


The Battle Lines


Proponents of the Northern Pass project argue it would result in environmental benefits: it could reduce the region’s dependence on fossil fuels to generate power, in turn reducing carbon dioxide emissions by an estimated four to six million tons per year. That would move the state closer to achieving the governor’s goal of reducing NH’s CO2 emissions by 80 percent by 2050. PSNH spokesperson Martin Murray says a reduction in CO2 emissions and an increase in renewable energy sources are specifically stated as goals in the NH Climate Action Plan approved in 2009 by a 29-member task force established by Gov. John Lynch. Murray points out the importation of Canadian hydro and wind generation is listed as recommended actions in attaining that goal. 


Opposition to the project from environmental groups and property owners along the proposed line is strong and vocal. In March 2011, the U.S. Department of Energy, which must approve the project, held seven scoping meetings at which the project was hotly contested. And at town meetings that year, 26 communities passed articles opposing the transmission line. This year, the issue showed up on more than a dozen town warrants with several towns voting on "rights-based" ordinances that would allow a community to block any large energy project regardless of federal or state approval. The rights ordinance passed in the North Country communities of Sugar Hill and Eaton, but was defeated in Lancaster. Colebrook, Stewartstown and Clarksville passed articles requiring the burial of any future high-voltage transmission lines.


The project is especially unpopular in the northern part of the state where Northern Pass wants to cut a new 40-mile, 150-foot-wide right-of-way. The towers for the line would be 85 to 135 feet high—much higher than the average tree. Signs opposing the route dot the North Country landscape. Northern Pass, in April 2011, announced that it would develop a new alternative for the northern section of the route. “The first alternative simply didn’t go over that well,” Murray says. The release of the new northern alternative is overdue. Coos County property deeds reveal Northern Pass has purchased at least 25 properties in northern Coos County. Murray would not talk about property transactions or the new route other than to say Northern Pass is optimistic it will be able to put together the necessary right-of-way. “We have made very good progress,” he says.


Fearful that Northern Pass would try to use eminent domain to take property, the Legislature passed a new law, signed by Gov. John Lynch in March, which prohibits the use of eminent domain for private large-scale transmission lines that do not meet NH’s power needs. Senate President Peter Bragdon, (R-Milford) told reporters he did not believe Northern Pass could qualify under the new legislation. Governor Lynch has said he believes the state should look at importing Canadian hydropower, but has encouraged Northern Pass to work with North Country residents. Murray flatly denies any intention to use eminent domain.


Right-of-Way Goes Wrong


Last fall, Northern Pass negotiated with the Neil Tillotson Trust to purchase a transmission right-of-way across the northern tip of the Balsams property and a separate parcel in West Stewartstown for $2.2 million. When the Trust decided instead to sell to the Society for the Protection of NH Forests for $850,000 a conservation easement for 5,800 acres that included the right-of-way, Northern Pass asked the state Attorney General’s office to reject the purchase-and-sale agreement. But the Attorney General’s Charitable Trusts Unit approved the sale, rejecting Northern Pass’s argument that the trustees had a duty to accept the higher offer.


Northern Pass responded with a $3 million proposal that included $850,000 for the conservation easement, $2 million for the right-of-way and $200,000 for the Upper Connecticut Valley Hospital in Colebrook. Fueled by outrage over Northern Pass’s actions, more than 1,700 individuals sent donations allowing the Society to raise the $850,000 in just over three weeks and purchase the easement, says Jack Savage, vice president of communications and outreach for the Society for the Protection of NH Forests. Murray says the offer by Northern Pass would have provided the trust with an additional $2 million for its charitable work. Furthermore, he points out the Tillotson Trust reserved an easement right-of-way across the same property for a wind farm that would have much taller and visible wind turbines than the towers for the transmission line. Opponents of the Northern Pass note the Balsams Wind Project is a 21 to 27 megawatt local renewable energy project that has been under discussion by the Tillotson Corporation since at least 2009.


From Groveton south to Deerfield, Northern Pass would use an existing PSNH right-of-way. Because 10 miles of that right-of-way falls within the White Mountain National Forest, the project needs a special-use permit from the U.S. Forest Service. Savage says his organization is challenging Northern Pass’s right to use that existing right-of-way. He says the easements for that right-of-way were negotiated decades ago to bring electric power to homes, and now PSNH is trying to use that right-of-way for a private commercial project. “What right does PSNH have to monetize that asset paid for by ratepayers?” he asks. Savage says the Forest Society, which has property in Bethlehem along the right-of-way, has asked its attorneys to look at the issue. Murray says the easements allow PSNH to transfer its rights to others for use. “We do believe we have the right to construct this line in our existing right-of-way,” he says.


The visual and environmental effects of the line on North Country tourism and on White Mountain National Forest lands are also a concern. Savage calls the transmission line an unnecessary blight on the landscape. In a recent presentation, Ken Kimball, director of research for the Appalachian Mountain Club, says the proposed 40-mile swath through the North Country would have a serious ecological effect by fragmenting intact forests that provide habitat for various birds and mammals. Furthermore, Savage says the project could hurt the development of local renewable facilities in the state. Savage says there is no agreement in place to sell any of the power directly to NH users. “It’s really about competition—one company wanting to build its own toll road to compete with National Grid and other companies,” he says.


Murray says the criticism that the project would jeopardize the development of local renewable resource projects is a “red herring.” He says the biggest challenge for these power generators is “the dominance of and low price of natural gas.”  


Debating Demand


In its 2011-2012 Regional Profile, ISO New England, the organization that controls the region’s power pool, states the overall demand for electricity has fallen sharply due to the 2008 recession. Even though it began to climb in 2010, overall demand remains below pre-recession levels.


While added capacity is not immediately necessary, reducing dependence on fossil fuels will reduce costs for everyone in the ISO-NE region. Although NH may export more power than it uses, PSNH does not generate all the power it needs. In addition to generating approximately 48 percent of its power from more expensive fossil fuels such as coal, it purchases about 28 percent of the power it needs from the market.


 While the price of natural gas currently is low, that has not been the case historically. According to ISO New England, 43 percent of the region’s electric energy was generated using natural gas in 2010. The 1,200 megawatts of hydroelectric power added to the pool could cut that dependence by about one-fifth. That reduced dependence on what can be higher-cost power means a cost savings for NH users.


Murray says Northern Pass is negotiating a purchase-power agreement to keep a percentage of the power in NH. But he argues that, even without such an agreement, NH consumers will benefit because the cheaper power will reduce energy prices regionally. According to a study by Charles River Associates prepared for Northern Pass, that savings will start at $2.32 per kilowatt-hour when the project goes online and go up to more than $3 within 10 years.


The New England Power Generators Association (NEPGA) is also opposed to the project. They say this hydropower could displace the power generated by their facilities in the New England region if NEPGA’s costs are higher and their power is less environmentally friendly. However, the organization's opposition is not to the project per se, but to the exceptions to the rules Northern Pass is seeking on both the federal and state levels. NEPGA opposes the proposed no-bid, sole-source, 40-year contract between PSNH and Northern Pass to purchase the power, claiming this violates state law as PSNH is both a power generator and a distributor.


NEPGA recently testified in favor of House Bill 1238 that would require PSNH to sell its power-generating plants. NEPGA claims this power should be purchased through a competitive bid process, which would guarantee the lowest possible price for consumers. NEPGA is also challenging the exclusive use of this line by Northern Pass and Hydro-Québec, which according to its filing with FERC in opposing this arrangement would prohibit any other power generator from access even when Hydro-Québec is not using the line's full capacity. NEPGA points to a FERC requirement that all new transmission services be provided on an open access, competitive and nondiscriminatory basis.


Dueling Studies


The state may see reduced electric rates, but this is not the only economic benefit attributed to the project. Northern Pass claims it will create jobs and generate long-term revenue for the communities that host the power line. Northern Pass contracted an independent study that found NH’s share of the lower energy cost would generate on average 200 jobs per year in the state. During the three-year construction period, the study indicates the project will create an average of 1,100 to 1,500 jobs annually. 


NEPGA commissioned its own independent analysis of the potential jobs created by the project. This study’s jobs numbers are one-half of the number estimated by the Northern Pass study for the three-year construction period. The NEPGA study claims that looking at past projects completed by the Northern Pass partners, out-of-state business and labor will play the dominant role.


The study shows the state will reap some benefit from the out-of-state workers who will spend money here. This spending is estimated to create 70 to 155 jobs and add up to $700,000 to the state coffers for meals and rooms tax.


The Northern Pass study estimates the total property tax benefit will be in the range of $25 million per year, realized in varying degrees by the towns affected by the utility line. Savage of the Society for the Protection of NH Forests challenges that estimate, saying the tax benefit would be offset by a reduction in property values along the route.


Are There Alternatives?


The Forest Society has called on Northern Pass to withdraw the proposal and look at other options. Savage notes there is an existing Hydro-Québec high-voltage line that runs through northeast Vermont into NH at Monroe, through southern NH to Massachusetts, and he suggests looking at using that right-of-way. Others, including Republican Presidential hopeful Newt Gingrich, have called for burying the line.


Murray of PSNH says Northern Pass has explored those options. The existing Hydro-Québec line is fully utilized and expanding the right-of-way would be difficult because some of the abutting land has been placed under conservation easements. He says NH would also lose out on the tax benefits and jobs associated with the transmission line. Murray says burying the line would be expensive and have environmental impacts given the geography and geology of the route. He says Northern Pass has looked at new technologies for burying the line but those technologies have only been used in pilot programs and not on a project of this size. 


 In addition to the required federal permits, Northern Pass plans to apply by the end of the year to the NH Site Evaluation Committee for state approval for the line. Murray says Northern Pass hopes to begin transporting hydropower on the line in October 2016.


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