Since the procurement was terminated...
Since the procurement was terminated...
what happens next?
As those in Maine know, last week was a wild week. Our dairy farm neighbors lost three buildings; we had to do greenhouse repairs during the storm, and ultimately lost one after it got dark. That’s several feet of rebar pointing straight up that used to be buried in the ground. Other friends were flooded out of their house.
And, while over half the state had lost power, two major electricity related political events happened:
1. The PUC terminated the procurement for the LS Power transmission line (more on that below.)
2. The Board of Environmental Protection postponed their vote (indefinitely) on a new rule that would require 82% of new cars sold in Maine by 2032 to be electric vehicles. Probably not in good taste to vote on that when a third of the state is still without power.
I found out about the LS Power proposed transmission line on August 21st, 2023. Exactly four months later, the PUC terminated the procurement. You can read the terse language in the procedural order issued a day later.
I attended the PUC deliberation, knowing ahead of time that it would be scripted and brief. The transmission line proposal was the last item discussed. The entire deliberation was 11 minutes, the transmission line topic took 3 minutes.
Those of us in the room breathed a big sigh, shed a few tears of relief, and have enjoyed a much more peaceful holiday than might have been expected.
So what happens next?
LD 1710, the originating legislation, is still law, sitting at Title 35-A (Public Utilities) 3210-I. This means we can expect the PUC to issue a new procurement sometime in the future. Do I think LS Power will bid again? I believe it to be unlikely (personal opinion.)
The other two bidders are believed to have been MEPCO and Maine Power Link.
MEPCO (a CMP & Versant jointly owned company) has a defunct bidder website which is still accessible. The rumor, as posted earlier, is that they have a line from Lincoln to Pittsfield for which the easements have already been 95% acquired. That proposed line crosses rail trails (public lands) which means that it would require a 2/3rd majority vote of the legislature to get approved.
Why didn’t MEPCO win the bid, since they apparently were planning on using (mostly) pre-purchased easements? The likelihood: price. Their bid was (probably) much higher than the bid offered by LS Power.
As I described before, I believe LS Power put in a low-bid that maybe-sorta made sense in 2022. Interest rates have changed significantly since then. This was what I wrote on November 11th (rates have changed since then): “Now I know that 4.77% and 3.47% seem really close. But, as you and I (hopefully) learned in sixth grade math, the Return on Investment difference is staggering. LS Power would earn $1.27 BILLION more by investing in treasury bills today. At least according to the numbers that have been published.”
So: LS Power knew by early to mid 2023 that the interest rate landscape was shifting. According to the RFP, they had put up $100k as a bid security deposit (item 9 in the docket). But, having 3-5 employees working on the project full-time for a year, and traveling extensively, and keeping a lobbyist on retainer means that the bid security deposit was only a small percentage of their investment.
Did they want a face-saving way out?
LS Power, the utility companies (CMP and Versant), and Massachusetts were supposed to have all ironed out their differences and signed on the dotted line by June 30th, 2023. That didn’t happen. Landowners started receiving letters at the very end of June.
By the time I heard about the project- in August – LS Power was still stating publicly that they intended to file for the CPCN in September. That didn’t happen.
Around this time, we also started hearing the rumors that the negotiations were having problems. If you fully read the docket, it is extremely clear that negotiations had been going nowhere long before the landowners received letters.
So why send those letters? By June it was already obvious to anyone in the know that due to the interest rate changes, this project was no longer priced right. It also was surely obvious to insiders that the negotiations weren’t going so smoothly.
Sending the letters assured that LS Power would create a groundswell of animosity in the local communities. (If LS Power was unaware of how New Englanders feel about above ground power lines, they haven’t really done enough research. Stop CMP Corridor referendum. Northern Pass Failure. Etc.)
Of course, it is easy for any and all of us to fall for the sunk-cost fallacy, which goes like, “Well, I’m already $100k, or $1m, or two years into the project…so might as well extend that next $100k, $500k, etc.” Also known as “throwing good money after bad,” sunk-cost fallacy is the reason people keep investing in things, relationships, or situations that aren’t working. Common psychological problem.
Did the local grassroots activism have an impact?
Maybe.
We know the negotiations were going poorly, essentially from day one. It’s not super savvy to make your losing bidders negotiate with your winning bidders. It’s also not super savvy to accept a bid that is too low.
My current guess is: the grassroots activism was the cherry on top, the straw that broke the camel’s back. And now most of these central Maine towns have put in place moratoriums, with ordinances on the way or already voted in.
Instead of somewhere between $20 million and $50 million (my guess) budgeted for land acquisition costs, LS Power was seeing they faced community organizing, municipal ordinances, lawsuits, and - who knows – collective bargaining? with hundreds of landowners – in addition to potential referendums that would learn from the lessons of the last one. And if it went on too long, a change in political power could crush the project.
What’s next?
Well, me and my friends are subscribed to the PUC docket, so we will receive notice when the next procurement is issued. MEPCO will probably bid again, and will probably win. The Legislature will probably not give 2/3rd approval to cross the rail trails, because 50% of the state doesn’t want to see Northern Maine become a land of wind turbines, dead birds, and disturbed animals.
So then, MEPCO will need to track a new proposed corridor. And the cycle starts over.
An interesting note
LS Power recently announced they had completed construction of a transmission line upgrade in NYC. It was $600 million and 93 miles. It included 2 new substations and 650 new monopoles.
What’s that at a normalized price per mile?
So seriously, PUC and others: why is it not just easier to upgrade the existing lines?