Hydro Bill Is a Bad Bet for Consumers

Opinion

By DAN DOLAN

When the Vermont Yankee Nuclear Power Plant closed in 2014, 620 megawatts of power generation went offline. Over the next few years, that closure will be followed by Somerset’s Brayton Point Power Station and Plymouth’s Pilgrim Nuclear Power Station, taking more than 2,100 megawatts with them.

At first, it might seem concerning for the region’s power grid to lose three major power plants. But the responses to the retirements are signs of a strong energy future for Massachusetts — a path that should be allowed to continue without the intrusion of subsidized Canadian hydro power.

Just a few weeks ago, an auction to commit to be online three years from now saw a record amount of competition. Billions of dollars in new, local investments are being made today to develop the next wave of plants and hire workers to provide reliable and competitively priced electricity supplies. By mid-2019, three new plants are slated to open in Massachusetts alone. New plants being developed in Massachusetts, Connecticut, and Rhode Island will be some of the most efficient in the country, helping us continue to serve as leaders on environmental responsibility.

And this isn’t the beginning, either. The electricity sector has outpaced every other sector of our state’s economy in reducing carbon emissions over the past 25 years. Between 1990 and 2013, carbon-dioxide emissions from power plants dropped 51%, according to the U.S. Department of Energy. Because of that, Massachusetts today has one of the cleanest and lowest-carbon-producing power-generation systems in the nation. In fact, electricity is the primary reason Massachusetts is on pace to meet its economy-wide mandate for a 25% reduction in emissions by 2020.

Unfortunately, relatively little has been done to curtail carbon emissions from the largest source — transportation. The transportation industry in New England has actually increased its carbon emissions and now emits more than double that of power plants. The next step toward a cleaner environment must be a comprehensive plan to address transportation as the main hurdle to meeting long-term Global Warming Solutions Act mandates.

The great progress made on electricity in Massachusetts should be allowed to continue, ensuring a strong energy future. Power plants are being retired and replaced without the need for state government to step in to subsidize new, cleaner investments. Canadian hydro is already part of our system, competing with all other power-generation sources to deliver the lowest price possible to consumers. But the radical plan to enter into expensive, decades-long contracts with Eversource and Hydro-Quebec will jeopardize that future.

If the Massachusetts hydro power plan is approved, energy bills are estimated to increase by up to $777 million each year for Massachusetts residents and businesses, according to a recent study by the Analysis Group, one of the most respected economics consulting firms in North America. That’s more than $20 billion over the life of the contract.

These costs are primarily driven by two factors. First, Commonwealth ratepayers would be on the hook for the construction of expensive, controversial high-voltage transmission lines, currently proposed through places like the White Mountain National Forest. Second, government-owned Hydro-Quebec, which has its own interests to consider, will not sell power to Massachusetts at a below-market price.

So why make this risky bet? A major concern for this plan is that it will enrich two utilities without a clear analysis of how Massachusetts ratepayers stand to benefit. Eversource is partnering with Hydro-Quebec in pushing to build the hundreds of miles of transmission lines, and the two are the strongest proponents of the subsidies proposal. They stand to earn hundreds of millions of dollars in profits for building these lines if they receive the subsidy from Massachusetts consumers. However, they have yet to produce an economic analysis of the cost of the proposed decades-long contracts. The Analysis Group report, which shows shocking rate increases for consumers, is publicly available and was presented at the legislative hearing on the bill.

Massachusetts is on the right path for a strong energy future. But, while new power plants are being built here through market demand, supporting jobs and contributing much-needed tax revenue to cities and towns, Eversource and Hydro-Quebec want to avoid having to compete. They shouldn’t be allowed to receive a carve-out worth billions of dollars.

This hydro bill is a bad bet for Massachusetts consumers. The Legislature should reject the bill and focus on better ways to reduce carbon emissions. The utilities don’t deserve the subsidy.

Dan Dolan is president of the New England Power Generators Assoc.