N.H. regulators authorize Northern Pass Transmission to begin operations as public utility

transmission construction project jcp&l elp 1

The New Hampshire Public Utilities Commission, in an Oct. 14 order, approved a settlement agreement between PUC staff and Northern Pass Transmission, finding that it would be for the public good to grant Northern Pass authority to operate as a public utility, subject to certain conditions.

Those conditions, which are in the settlement agreement, include that Northern Pass must:

·      Obtain all necessary permits, licenses and approvals to build the Northern Pass Transmission line, including a certificate of site and facility from the state Site Evaluation Committee (SEC)

·      Contribute $20 million over a 10-year period to be allocated by the PUC to energy efficiency programs and other clean energy initiatives

·      Hold New Hampshire electric ratepayers harmless from costs associated with the possible regional allocation of costs for a portion of the line

The settlement agreement provides that Northern Pass may not begin business as a public utility until such time as it has obtained all necessary federal and state permits, the commission added. The agreement further states that Northern Pass may not begin business as a public utility until such time as the commission has approved the petition for lease by Northern Pass of certain rights of way owned by Eversource Energy.

The commission also said that it “authorizes Northern Pass to commence operations as a public utility subject to the conditions in the settlement agreement.”

As noted in the order, Northern Pass last October filed a petition to begin business as a public utility. Northern Pass is owned by Eversource Energy Transmission Ventures, which in turn is a unit of Eversource Energy.

The commission added that Northern Pass intends to build, operate and maintain the 192-mile, high-voltage electric transmission line from the international border between New Hampshire and Canada to a substation in Deerfield, N.H.

The proposed construction is related to a transmission service agreement between Northern Pass and Hydro Renewable Energy, a unit of Hydro-Quebec, the commission noted, adding that under the agreement, Northern Pass is to develop, site, finance, build, own and maintain the line, and sell firm transmission service to Hydro Renewable Energy over a 40-year period.

Since Northern Pass intends to own, operate or manage facilities in the state for the transmission or sale of electricity ultimately sold to the public, Northern Pass meets the definition of public utility, the commission said.

Northern Pass and commission staff filed the settlement agreement in June, and a hearing was scheduled for July. The commission also noted that at the hearing, the Society for the Protection of New Hampshire Forests (referred to by the PUC as the Forest Society), requested that any PUC order approving Northern Pass’s petition to begin business as a public utility include an “explicit statement” that the commission is not adjudicating any property rights. The Forest Society also requested that the commission require that regardless of its public utility status, Northern Pass may at no time avail itself of the eminent domain process “regardless of whether the law changes,” the commission said. In addition, the Forest Society asked that the PUC affirmatively find that any public benefit does not violate any rules governing affiliate transactions.

Discussing rate treatment as part of the settlement agreement, the commission noted that the 345-kV radial AC line portion of the project, which extends from Franklin to Deerfield, could be included in regional rates in the future if ISO New England identifies a specific reliability need and incorporates the AC line into the regional grid as a component of the most cost-effective solution to meet reliability needs. If FERC designated the AC portion of the project as a reliability upgrade, the costs would be recovered through regional transmission rates from all New England ratepayers, including New Hampshire ratepayers, the commission said.

Thus far, FERC has not determined whether to include the costs of the AC line into regional transmission rates, and in the settlement agreement, Northern Pass agrees that it will not initiate a proceeding to seek recovery of the AC portion of the project through regional transmission rates.

If ISO New England determines that the AC line should be included in regional rates, then Northern Pass commits to work with staff and the state Office of Consumer Advocate (OCA) to limit as much as possible any potential rate effect on New Hampshire ratepayers, the commission added.

For the DC portion of the project, which extends from the Canadian border to Franklin, Northern Pass agrees to not seek recovery from New Hampshire retail electric customers, whether under the ISO New England tariff or any other future cost mechanism that allocates costs to New Hampshire electric ratepayers.

Furthermore, the commission added, if the DC portion of the project becomes eligible for regional cost allocation through the FERC Order 1000 process or any other regional cost-sharing mechanism, then Northern Pass agrees to hold harmless New Hampshire retail electric customers from the state’s regionally allocated share of the costs.

Northern Pass commits to that agreement so long as the project costs are being recovered through any such regional cost-sharing process or mechanism, the commission said.

Noting that Northern Pass is a unit of Eversource, the PUC said that it finds that Northern Pass has the necessary, technical, managerial and financial expertise to operate as a public utility.

The commission also said that it finds that the $20 million public interest payment, to be paid in installments of $2 million per year over the first 10 years of the project’s operation, will benefit customers by allowing the commission to direct the use of that payment to energy efficiency programs and clean energy projects under its supervision.

The commission also said that it believes that the rate treatment provision applicable to the DC portion of the line could constitute a significant benefit to ratepayers in the event that ISO New England designates that portion as eligible for regional cost recovery.

“We therefore approve the agreement in its entirety, adopt the conditions set forth therein as our own, and find that commencement of business as public utility subject to those terms and conditions will be for the public good,” the commission said.

Noting that Northern Pass’s petition states that the project extends from the Canadian border to Deerfield, the commission said that it limits the authority of Northern Pass to operate as a public utility to those towns from Pittsburg to Deerfield, as identified in Northern Pass’s petition.

“Based on our review, it appears that Northern Pass, out of an abundance of caution, asked for authority to operate as a public utility in Raymond, Candia, Chester, Auburn, and Londonderry to permit the installation of the AC Upgrades on Eversource lines,” the commission said. “We do not find this activity to constitute the operation of a public utility.”

The AC Upgrades involve replacing certain structures along the path to allow the line to transmit a greater level of power, and under the FERC-approved transmission service agreement between Northern Pass and Hydro-Quebec, Northern Pass has agreed to pay for those upgrades on existing structures, but will not build additional structures or operate new transmission facilities in the Eversource ROW between Deerfield and Scobie Pond, the commission said.

“[W]e deny Northern Pass’s request to operate as a public utility in the towns of Raymond, Candia, Chester, Auburn, and Londonderry,” the commission said. “This ruling does not prevent the installation of the AC Upgrades required by the ISO New England, or interfere with Northern Pass’s obligation to pay for the associated costs.”

Regarding the Forest Society’s request that the commission make specific statements on property rights, eminent domain and affiliate transaction rules, the commission said that its granting of permission to Northern Pass to operate as a public utility is not an adjudication of real property rights.

Northern Pass’s status of a public utility subjects it to the full array of applicable laws and regulations identified in the settlement agreement, and like any public utility, Northern Pass will be required to diligently comply with the PUC’s affiliate transaction rules, the commission said.

Among other things, the commission said that whether amendments to the state’s eminent domain law will apply to Northern Pass and its proposed transmission facilities is a matter it must leave to the legislature, and that it declines to issue the findings requested by the Forest Society.

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