Competition in a market leads to lower prices, right?
This is the big question that is playing out right before our eyes. In Maine it led to the high-impact transmission line proposed across thousands of acres of private property.
Note: the past 6 months have been an intense learning. For those of you on the same journey, here’s some needed definitions.
Merchant transmission line: “Merchant lines plan to sell transmission capacity to utilities and interconnectors”
FERC order 1000: “Discontinue[d] utility right of first refusal – hence competitive projects”
Both definitions from: Transmissions Basics presentation, energy.gov
Some interesting reads in the utility space today:
National Grid Pulls Plug On Twin States Energy Project Disappointing Sununu
(selected quotes below)
Not only was it supported by Sununu, a Republican, the Democratic Biden Administration selected it as part of a $1.3 billion commitment to build out the nation’s transmission infrastructure in October of 2023.
It was part of the U.S. Bipartisan Infrastructure Law’s Transmission Facilitation Program.
The project had received unprecedented support from community members and key stakeholders across New Hampshire, Vermont, and New England.
But, it appears, the project was too good to be true because National Grid was not willing to move forward with it unless New England’s retail electric ratepayers essentially guaranteed the company’s revenue stream. That’s not the way merchant transmission projects like Twin States are supposed to work.
There were also further demands from the federal government and timing hurdles, particularly the slow development of offshore wind power which was important to satisfy the bi-directional capacities of the line. Without it, officials said, the one way hydro from Quebec from north to south would put a strain on the costs of the project as well as Hydro Quebec.
From the perspective at Protect Maine Farmland, the Twin States Clean Energy link project looked ideal: located along existing corridors or buried. Federal funding. Nobody in the community was complaining. News stories always give only part of the story.
As ISO-NE moves towards the 2050 clean energy goals held by five of its six states, how will it also produce reliable, on-demand energy?
What is the status of that “slow development of offshore wind”?
Wasn’t the LS Power bid in Maine a “merchant transmission line” with a fixed price guaranteed by the state revenue stream? Oh, right, there was a question about that posed by Versant in the public docket back in May 2023. “Under the TSA, the transmission developer carries the merchant risk, not customers…Merchant project: no construction work in progress; payments only when power is delivered to Maine customers… Merchant project: no abandoned plant if the project is abandoned.” (Item 155b on this page)
From the Maine Climate Energy Working Group slides, Nov 21 2023
Lobbying Clash Intensifies Over Utilities’ Right to Build Grid
(selected quotes below)
Both utilities and supporters of competition have been stepping up their lobbying campaigns in recent months in Washington and state capitals. The two sides have traded barbs with dueling studies and white papers portraying their approach as the path to lower consumer utility bills and accelerate the pace of clean energy deployment.
In April 2022, the Federal Energy Regulatory Commission proposed a sweeping rule to overhaul regional transmission planning. The proposed rule would require such planning to consider at least 20-year impacts, including the changing power-and-demand mix and extreme weather events.
An August 2023 study prepared for ITC and six other utilities shows completed and active competitive transmission projects awarded to competitive developers experienced an average of 12 months in schedule delays and 27% in cost increases.
A 2019 study prepared for LS Power found competitive bidding yields a 40% reduction in the cost of transmission projects nationwide.
New Jersey customers will save $900 million after the state commission competitively selected a transmission project to help connect offshore wind, according to the Electricity Transmission Competition Coalition. Maine customers saved more than $1 billion after that state competitively selected two projects, it found.
Except that the Maine PUC canceled that procurement in December, because LS Power could not hold to the price in the protracted contract negotiations and the changing financing landscape.
