AVANGRID AND THE state’s three utilities filed paperwork on Tuesday seeking an additional $521 million from Massachusetts electric ratepayers to cover the cost of construction delays caused by a political dispute in Maine over a transmission line expected to deliver hydro-electricity from Quebec to New England.
Even with the additional costs, the companies say the deal for 1,200 megawatts of hydro-electricity will save Massachusetts ratepayers money. A typical Eversource residential customer in eastern Massachusetts is projected to save $1.35 a month, or $16.20 a year, once the project is completed in 2026, according to paperwork filed with the Massachusetts Department of Public Utilities.
The project, called New England Clean Energy Connect, is a partnership between Hydro-Quebec, the provincial utility in Quebec, and Avangrid’s Central Maine Power subsidiary. Hydro-Quebec will supply the power and Avangrid is building the transmission line to deliver it from Quebec to Lewiston, Maine, where it will feed into the New England power grid.
The project has never received as much attention as the state’s forays into offshore wind, but in many ways it is more important. It offers 1,200 megawatts of firm capacity, power that could be particularly valuable during winter months when New England electricity prices tend to skyrocket as natural gas for use by electric power generators is often diverted for home heating.
Questions have been raised about whether Quebec’s dam-generated electricity can really be considered carbon free and whether the province can continue to export power as demand increases within its own borders. Yet Hydro-Quebec insists it won’t renege on its commitment to the New England Clean Energy Connect project even though the price today seems low.
One official said the Clean Energy Connect price is about 8 cents a kilowatt hour, well below offshore wind prices currently running in the 15 cents a kilowatt hour range.
Sen. Michael Barrett of Lexington, the co-chair of the Legislature’s Telecommunications, Utilities, and Energy Committee, said Quebec was once viewed as the source of an unlimited amount of hydro-electricity. He says that’s no longer the case, but the deal negotiated during the Baker administration looks very good today.
“This contact at this price I don’t think we’ll see the likes of it again,” Barrett said.
Elizabeth Mahony, the commissioner of the Department of Energy Resources, and Liz Anderson, chief of Attorney General Andrea Campbell’s energy and ratepayer advocacy decision, also said the deal will be good for Massachusetts.
“This transmission line should drive down overall electricity prices and deliver new, reliable power to Massachusetts and New England as we transition to clean energy. We look forward to clean hydropower to begin flowing to our state soon,” the two officials said in a statement.
Construction work on the New England Clean Energy Connect transmission line was shut down in November 2021 after voters in Maine approved a law retroactively blocking the line from being built. Nearly two years later, the project was given the greenlight to resume construction when courts in Maine ruled the voter-approved law violated the state’s constitution and other courts did away with other legal hurdles.
Under terms of the power purchase agreement negotiated between New England Clean Energy Connect and the state’s utilities, the energy suppliers were entitled to recoup any increased costs associated with the change in law that triggered the two-year construction delay. The agreement filed Tuesday indicates those increased costs totaled $521 million, bringing the total cost of the project to just over $1.5 billion.
Officials said the increased cost does not include close to $100 million Avangrid and Hydro-Quebec reportedly spent fighting the Maine ballot question that was heavily subsidized by NextERA, another utility operator.
Given the benefits of the project, it’s unclear why the negotiations between New England Clean Energy Connect and the three Massachusetts utilities took nearly two years to complete. There were reports the two sides were frequently at odds, all denied by the parties. To reassure everyone, the Legislature approved and Gov. Maura Healey signed into law in December 2023 a bill spelling out that the utilities were entitled to reimbursement for any additional money they paid New England Clean Energy Connect.
The deal negotiated by the utilities and New England Clean Energy Connect means the first-year cost of the power will rise from $9.29 per kilowatt month to $13.61 a month, an increase of $4.32. The contract has escalators that will kick in in subsequent years over the 20-year life of the contract. Those numbers are in prices per kilowatt month, which couldn’t be immediately translated to the more standard per kilowatt hour price
The documents filed with the DPU said the cost of the hydro-electricity energy will come in well below “forecasted market prices,” saving ratepayers a total of $3.4 billion over the 20-year life of the contract.
The transmission line in Maine was originally expected to be finished in late 2025, but under the deal released Tuesday the completion date can be moved back twice in six-month increments. If both six-month delays are taken, officials said the project wouldn’t be up and running until August 2026.
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