Cost overruns are the latest impediment to the completion of the long-embattled transmission project through western Maine. Developers of the project are trying to determine how to deal with them before construction can resume.
Developers of the New England Clean Energy Connect have secured permits and won court battles, including one that effectively overturned a referendum aimed at scuttling the $1 billion project.
But those fights have been costly and so is construction, which was halted by the Maine Department of Environmental Protection in 2021 but allowed to resume two months ago.
Now NECEC developers are hoping to renegotiate a deal that involves Avangrid, Central Maine Power’s parent company; Hydro-Quebec, the electricity supplier; and Massachusetts utilities.
A spending bill in the Massachusetts Legislature would greenlight those talks.
The original contract puts Massachusetts ratepayers on the hook for the project. Renegotiations would determine how any additional costs would be shared.
The Massachusetts House gave initial approval to the spending bill in April, but is still tacking on amendments.
It needs Senate approval and Gov. Maura Healey's signature before becoming law.
The Healey administration is reportedly backing the contract renegotiation. With its up to 1,200 megawatts of Canadian hydropower, the NECEC is a key component to Massachusetts hitting renewable energy targets mandated by state law.
But while Avangrid has racked up legal and permitting victories, it has warned that delays and inflation could affect project costs. Avangrid CEO Pedro Azagra told financial analysts in February that the company would be seeking price relief through renegotiated contracts for the NECEC, as well as an offshore wind development off the coast of Nantucket.
The exact nature of the cost overruns is unclear. Officials for Avangrid declined to comment. However, Azagra indicated in February that inflation, interest rate increases and supply chain issues were an issue.
Litigation, including the April jury trial that allowed the project to move forward, may also be a factor. During that trial, Avangrid officials testified that permitting delays forced developers to restage construction crews. Witnesses also repeatedly testified about problems procuring transmission poles from its contractor.
Avangrid and Hydro-Quebec also spent more than $63 million trying to convince Maine voters not to scuttle the project during the 2021 referendum campaign. Hydro-Quebec was originally expected to make $12 billion from the project.
The NECEC is projected to power up to 1 million homes in the Bay State, but it is also framed by supporters as helping to reduce regional greenhouse gas emissions. NECEC developers say the project will reduce carbon emissions by 3.1 million tons, a figure sharply disputed by some Maine environmental groups, including the Natural Resources Council of Maine, which joined NextEra and other energy producers in trying to stop the project.
While the opposition successfully convinced nearly 60% of Maine voters to halt the NECEC, Maine's law court found that part of the referendum was unconstitutional. A subsequent jury trial that concluded in April reversed the referendum result, prompting the DEP to lift its hold on construction. Project developers were optimistic that work would resume but wary of providing a definitive timeline.
Resuming construction may hinge on renegotiations of the contract with Massachusetts utilities.
