Maine delays to CMP project drove up costs by more than $500M, Massachusetts regulators say

Yahoo

27-01-2025

Jan. 27—Political and legal disputes in Maine that delayed construction of the New England Clean Energy Connect transmission line will add more than $500 million to Massachusetts ratepayers' bills, Bay State regulators said Monday.
The Massachusetts Department of Public Utilities announced a settlement between utilities, the Massachusetts attorney general and Department of Energy Resources, and Central Maine Power, a subsidiary of Avangrid Inc., which is the operator of NECEC. The settlement approves higher costs brought on by project delays and does not include legal fees related to the challenges.
Advocates say the NECEC contract will reduce overall rates because a new source of electricity being delivered to the region will bring down the market price.
Electric customers can expect to save about $18 to $20 a year over 20 years, Massachusetts said. The NECEC project will reduce average electric costs by $1.52 a month for Eversource and National Grid residential customers and $1.63 for Unitil ratepayers. The Massachusetts order does not extend to Maine ratepayers.
NECEC will transmit 1,200 megawatts of Canadian hydroelectricity to the New England grid over 20 years, enough to power more than 1 million homes.
Maine voters in November 2021 rejected the 145-mile transmission line through the western part of the state. In court battles that followed, NECEC's backers said the project had established a right to continue construction. A Cumberland County jury decided in April 2023 that the project may resume.
The project's developer, Avangrid, resumed construction in October 2023 — nearly two years after voters pulled the plug on it.
More than 34% of construction is completed, and the project is expected to come online in 2026, Massachusetts officials said.
Regulators said increased costs are related to construction delays brought on by the voter initiative, and the settlement will permit the utilities to bill increased costs to ratepayers.
Costs paid by NECEC — demonstrated by analyses, cost projections, contracts and invoices — provide "sufficient basis" showing that an increase of $521 million, in 2017 dollars, is based on costs directly associated with the voter initiative, regulators said. Accounting for inflation, the $521 million in purchasing power now would be $677 million.
"As a result, NECEC incurred significant unanticipated costs," Massachusetts regulators said.
The utilities and NECEC began in January 2023 negotiating the transmission project's "alleged economic losses" due to construction delays, regulators said.
Massachusetts regulators said the utilities showed that the cost for energy and environmental benefits in the power purchase agreements is less by nearly $4 billion than the forecasted market prices over 20 years. In addition, regulators said "significant qualitative benefits will flow to customers" in reliability, mitigated environmental impacts and economic development.
Regulators "ultimately found that the power purchase agreements are a cost-effective mechanism for procuring low-cost renewable energy on a long-term basis," the Massachusetts Department of Public Utilities said.
The total cost that may be recovered from ratepayers is $1.4 billion over 20 years, regulators said.
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