Is New England Moving Towards Importing Canadian Hydro as a Counterweight to Its Reliance on Natural Gas? Updates from the Conference of New England Governors and Eastern Canadian Premiers and From NESCOE

by Foley Hoag LLP - Energy and Cleantech
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Back in June, I noted that the New England states had tasked the New England States Committee on Electricity (“NESCOE”) with exploring the possibility of importing more large-scale Canadian hydro into New England.  Earlier this month, the Conference of New England Governors and Eastern Canadian Premiers (“NEG-ECP”) met in La Malbaie, Quebec, and indications from that conference are that importing Canadian large hydro is still very much on the table, particularly in light of increasing concerns that New England is becoming over reliant on natural gas.

The NEG-ECP issued resolutions relating to energy, climate change, and alternative vehicle fuels, among other topics.  The resolutions are generally phrased to avoid controversy and express support for basic, feel-good principles.  But that is not to say that the resolutions are entirely symbolic.  Regional efforts to address climate change and energy needs are likely to become increasingly significant as largely state-driven policies to reduce greenhouse gas emissions interact with global and regional energy markets and regional energy infrastructure needs – see, for example, the regional renewable power procurement under development at NESCOE.  And although the resolutions on alternative fuels and transportation are interesting (both express support for regional efforts to deploy alternative fuel infrastructure), it is the resolution on energy that hits upon the current hot issue – the potential for large quantities of large-scale Canadian hydro power to be imported to demand centers in Southern New England.

The most relevant portions of the “Resolution Concerning Energy” are its warning that “New England’s increasing reliance on natural gas-fired electric generation poses challenges to electric reliability and diversity of supply sources;” its expression of the NEG-ECP’s “commitment to increasing cost-effective clean energy trade opportunities;” and its statement that

the NEG/ECP acknowledges that the New England states have undertaken analyses to assess the relative costs and benefits associated with various means to address natural gas market issues and incremental low-carbon energy import opportunities; and recognizes the ongoing leadership of the Eastern Canadian provinces in introducing new clean energy resources for both domestic and export markets . . .”

NESCOE released documents during the NEG-ECP conference that provide context to the Resolution Concerning Energy and insight into what the policymakers at NEG-ECP might have in mind.  First, NESCOE released a study, prepared by Black and Veatch, that concludes that over the next 15 years, absent infrastructure improvements, reduced demand, or new generation, New England will experience natural gas capacity constraints causing high gas and electric prices, as well as reliability risks.  That Study also concludes that, while not the most cost-effective solution, large-scale import of Canadian energy could provide significant long-term benefits.  Second, NESCOE released a Whitepaper on incremental hydropower imports into New England, which offers a preliminary overview of the logistics of importing large amounts of energy from Canada into New England and outlines some potential risks and benefits of doing so.  A further “Hydro Imports Study” sponsored by NESCOE is underway and will analyze the economic and emissions implications of importing large quantities of additional Canadian hydro-power into New England via new transmission lines.

NEG-ECP’s resolution and the related NESCOE documents seem to reflect a growing sense among New England policy makers that large-scale Canadian hydro has a role to play in meeting demand in New England, particularly given concerns about the increasing regional reliance on natural gas-fired generation and the region’s ability to meet ambitious RPS targets.  As I described in June, the contours of that role are hotly debated and policy changes aimed at expanding that role are likely to be controversial (as was Connecticut’s reworking of its clean energy policies that resulted in Governor Malloy signing in Senate Bill 1138).  As befits a topic of such wide importance to the region, broader public attention is being brought to the matter: the Boston Globe ran a thoughtful editorial on the topic on Sunday.  This important issue deserves debate from a range of voices.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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