Gov. Janet Mills on Friday announced a $170 million deal with Hydro-Quebec to provide discounted electricity to the state through Central Maine Power’s transmission corridor, though opponents of the project said it would largely benefit industrial users.
Under the agreement, Hydro-Quebec will provide up to 500,000 megawatt hours of electricity a year to Maine based on a 1,200 megawatt capacity of the proposed New England Clean Energy Connect. The amount could fall if the transmission corridor’s capacity is reduced. It is enough energy to power 70,000 homes or 10,000 businesses, according to the governor’s office.
“I have heard people say that the NECEC will deliver power directly to Massachusetts but not to Maine,” Mills said in a Friday statement. “With this new commitment, we ensure that Maine consumers access power directly from the line at a discounted price.”
The Democratic governor emerged last year as one of the highest-profile backers of the project, which has polled as widely unpopular in Maine and is facing a November referendum that aims to kill the corridor but is being challenged as unconstitutional by Central Maine Power and allies.
The deal requires Mills’ energy office and Hydro-Quebec to negotiate either a 20-year power purchase agreement with one or more buyers at a discounted rate by the end of 2021, or Hydro-Quebec will pay $40 million in installments over 20 years to an entity picked by the state.
Hydro-Quebec also pledged to speed up disbursement by one or two years of about $170 million in benefits for the state that were already promised in a deal with the state last year, including ratepayer relief and incentives for broadband expansion, electric vehicle charging stations and heat pumps.
Friday’s announcement was praised by business, energy and labor officials who back the project. Barry Hobbins, Maine’s public advocate, said Friday that while he was occasionally asked for input, most of the negotiations were handled by Mills’ office.
He said the deal was finalized about a week ago and “ensures that Maine ratepayers will receive lower cost electricity as a result of this project” and see those benefits sooner. But skeptics of the project said the deal would do little to benefit residential ratepayers.
Gordon Weil, a former public advocate, said the flaws from the original deal still existed, arguing the money set aside for rate relief would be essentially worthless by the end of a 40-year disbursement period due to inflation. He also said the details of the agreement would be more favorable to industrial users, such as paper mills, given the amount of power involved.
If a deal is not brokered, Weil said the second option would be “small potatoes” for residential consumers compared to the amount of money entities like Central Maine Power make off them. The utility reported $792 million in operating revenues for 2019, according to its fourth quarter 2019 Federal Energy Regulatory Commission report, down from $826 million in 2018.
“Sure, it’s better than nothing, but not by much,” Weil said.
He also criticized the discounted energy, noting that the agreement does not include a capacity requirement from Hydro-Quebec and customers would not necessarily get power if an index price outlined in the agreement dipped into the negative over a period of time.
The $1 billion transmission project would bring Canadian hydro power to the regional grid. It includes 53 new miles of corridor and upgrades to existing power lines running through western Maine.
Mills noted in a March 6 letter to Hydro-Quebec President Eric Martel, that residents are concerned only Massachusetts will reap the benefits of the additional power. She asked if the leftover energy could be directed to Maine customers “if the excess power is of significance and if it were made available to Maine communities over a substantial period of time.”
The corridor is mired in legal challenges. Opponents are challenging the validity of a key state lease for land involved in the project, while CMP’s parent company, Avangrid, a U.S. subsidiary of the Spanish utility giant Iberdrola, is challenging the constitutionality of the referendum question in a case set to go before the Maine Supreme Judicial Court..
CMP has argued the question is unconstitutional because the proposed law would single them out when laws must apply evenly. Secretary of State Matt Dunlap has partially agreed while saying voters should still get the chance to weigh in.
The project has the required state permits from the Maine Department of Environmental Protection, the Land Use Planning Commission and the PUC. CMP still needs permits from the Army Corps of Engineers, a presidential permit to cross the border to Canada and potential permits from local towns in Maine.
Correction: An earlier version of this report misstated the terms of an index price under the agreement.