Concerned that Maine electricity customers would get shortchanged in a pending decision to build a hotly disputed transmission line, Public Advocate Barry Hobbins did a little political calculus.
Maine Public Advocate Barry Hobbins
The state’s utilities watchdog, Hobbins reflected on the voting records of the three sitting members of the Public Utilities Commission, key deciders of the project’s fate. He concluded that they would be likely to endorse Central Maine Power’s $1 billion plan to deliver hydro power from Quebec to markets in Massachusetts, without major concessions for ratepayers.
Beyond a much-debated promise of lower electricity rates in the future, CMP’s original offer included nominal benefits – about $22 million to communities along the 145-mile corridor and a slug of construction jobs and tax revenue. Hobbins wanted more.
Together with Tony Buxton, an attorney who represents industrial energy users, Hobbins initiated negotiations that lasted months and included a former Maine utility regulator who attended on behalf a newly elected Gov. Janet Mills. In the end, CMP and its Canadian energy partner, Hydro-Quebec, agreed to a benefits package worth $258 million.
But that settlement is controversial. Critics slam it as a backroom deal. They’ve been ramping up pressure on Mills, who endorsed it two weeks ago, to reconsider her support. And they are flooding the PUC with email, lodging a record 1,240 comments so far, most of them pleading with the commissioners to reject the New England Clean Energy Connect project and calling the settlement an environmental sellout.
But for Hobbins and Buxton, the deal they helped negotiate “left nothing on the table.” Now, in a document filed at the PUC, the details of how the settlement came about and the key players involved has come into view. In a narrative style unusual in such filings, the document opens a window into the thinking of Mills, who has been both damned and praised for signing onto the agreement. Among the highlights:
• Mills had a representative at the negotiations – former Public Utilities Commission chairman Tom Welch – soon after her election victory.
• Former Gov. Paul LePage previously tried to negotiate benefits directly with Hydro-Quebec, CMP’s Canadian partner, but failed before leaving office.
• CMP’s initial bid paled in comparison to competing projects in New Hampshire and Vermont. Negotiators used that shortfall as leverage to gain the $258 million worth of benefits for Maine, and a guarantee that the project’s developers — not electricity customers — would pay for them.
The document details how Mills kept tabs on the protracted talks, meant to secure “tangible benefits for the citizens of Maine,” in the words of the negotiators.
“We wanted to be transparent about the process, because there have been a lot of statements made about it,” said Hobbins, a former Democrat leader in the Legislature. “This is a way to talk about the evolution. Because there was no backroom deal.”
Hobbins said he pushed for an extended benefits package after sizing up the voting records of the current three-person commission and noting the broad legal definition of public need. Handicapping a PUC vote is always speculative, but Hobbins concluded that the LePage-appointed commissioners would be more likely to support business interests in this case. Those factors led him to anticipate that the project would gain approval.
The project would include a new, clear-cut corridor through 52 miles of commercial timberland in western Maine. The environmental impacts of that corridor are a key sticking point for critics, who are buoyed by growing pushback from communities along the route. Wilton residents this week voted at a special meeting to oppose the project, the ninth community along the route to do so.
“Taken in its entirety,” wrote Susan Ely, an attorney for the Natural Resources Council of Maine, “CMP’s proposed contested (settlement) is actually just a weak attempt to mitigate a flawed project, thinly disguised as something that will benefit Maine. We are not fooled.”
Now it’s up to the PUC staff and commissioners to consider the settlement, and the process that helped create it.
Staff attorneys held a hearing Thursday at which parties participated in a final question-and-answer session on the settlement, known formally as a stipulation. The meeting will inform an upcoming staff recommendation leading to the final PUC vote.
AT THE TABLE
The negotiations led by Hobbins and Buxton also featured Robert Dorko, president of the Industrial Energy Consumer Group. A manager at Sappi Fine Paper, Dorko represented manufacturers at the table. Also present were executives from CMP and its parent company, Avangrid, as well as Hydro-Quebec, the provincial utility that has a power contract with Massachusetts.
The talks were attended by Welch, a widely respected energy attorney who served three terms at the PUC before retiring in 2014. Welch also had previously represented CMP, in between his jobs in state government.
Welch particpated on Mills’ behalf for free and observed all but one of the negotiations, according to the document. He spoke with parties together and separately, but “not in support of or in opposition to any negotiating position or result.”
Welch’s participation had been rumored in energy circles and was the subject of a Maine Freedom of Access Act request by the Portland Press Herald on Jan. 22, and a follow-up inquiry on Feb. 14. The newspaper asked Mills’ office for communications between Welch and Mills involving the NECEC project, but has yet to receive any information.
Welch declined to talk about his involvement when contacted last month.
‘A TURNING POINT’
The $1 billion NECEC power line must gain several government permits. At the PUC, it needs a “certificate of public convenience and necessity,” which typically focuses on whether a project is needed to provide reliable electric service. But because this project is being built for a green-power mandate in Massachusetts, that standard doesn’t directly apply.
The bid process in Massachusetts initially attracted 46 proposals. An already-permitted project running from Quebec through Vermont was passed over in favor of a line through New Hampshire called Northern Pass. But Northern Pass was subsequently rejected last winter by a state siting board. After that, Maine emerged as the next best pick.
Both the Vermont and New Hampshire projects were among the most expensive, with each containing hundreds of millions of dollars of public benefits. By contrast, the Maine project was less costly to build, and contained very little public money — at least for Maine.
It turned out that CMP/Avangrid had agreed to a $50 million fund for low-income customers in Massachusetts. After the news was reported last July in the Portland Press Herald, Hobbins said he wouldn’t agree to any settlement that didn’t have the same amount of money for Maine’s poor.
“That was a turning point,” he said.
Meanwhile, other negotiations were in play. CMP had hammered out a much-smaller benefits package with a coalition of recreational and tourism interests located where the line would cross the Kennebec River, but it failed to gain traction. And LePage, a strong advocate of Canadian hydro power, had entered into direct discussions with Hydro-Quebec, reportedly over a fund to benefit small manufacturers. He was unable to reach any agreement.
These deadends led Hobbins and Buxton to seek a new path forward. Two days after the Nov. 6, 2018, election of Mills, the Public Advocate and IECG lawyers met with executives from CMP and Avangrid. They wanted to know if Hydro-Quebec would be willing to negotiate for a public benefits package comparable to those in Vermont and New Hampshire.
DIFFICULT NEGOTIATIONS
In late December, Avangrid, Hydro-Quebec, the Public Advocate and IECG, met in Portland.
“Over the next several weeks,” the document recounts, “the same parties met multiple times in intense and difficult negotiations.”
Key challenges emerged. The prices of the Vermont and New Hampshire project bids each included the cost of most or all of their public benefits packages. NECEC did not, which was one reason it was cheaper to build. That meant that any additional benefits for Maine would have to come out of CMP and Hydro-Quebec profits.
After several days of negotiations, the parties arrived at an agreement they believed was comparable to those in the other two states, led by $140 million to help lower electricity rates over 40 years.
Also in the package was carbon reduction to offset climate change, a priority for Mills. The document notes that half of Maine’s CO2 emissions come from cars and trucks, compared to 9 percent from power generation. So $15 million was earmarked for electric vehicle charging stations. Similarly, $15 million went for electric heat pumps, because six out of 10 Maine homes rely on oil heat.
Other elements were meant to reflect local needs. Those include $5 million for workforce development and business retention in Franklin County; $5 million in education-related grants for students in Franklin and Somerset counties and $15 million for broadband expansion.
Throughout this process, Mills was updated on the negotiations by her energy office and by Welch. And she personally reviewed the details.
The document states: “Gov. Mills or her staff had parsed the language of every relevant document, from the stipulation itself to tangential agreements, also with the counsel of (the Public Advocate).”
As her review progressed, Mills sought clarification on a key question: Who is guaranteeing the financial obligations under the agreement?
That query resulted in clear language in the settlement that binds Avangrid and Hydro-Quebec to making the payments.
Tux Turkel can be contacted at 791-6462 or
tturkel@pressherald.com
Twitter@TuxTurkel
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