Hydro-Quebec Says It Will Offer Maine A Deal On Electricity Transported By Proposed CMP Powerline

Jul 10, 2020

Canadian energy giant Hydro-Quebec says it will offer Maine a cut-rate deal on a slice of the electricity carried by a powerline that Central Maine Power wants to build through Maine's western woods. The rest of that supply is contracted to serve customers in Massachusetts.

Earlier this year, Democratic Gov. Janet Mills wrote a letter to Hydro-Quebec's top brass, saying that Mainers were "expressing concern" that the electricity was going to Massachusetts and not Maine consumers.

Sophie Brochu, who took over as Hydro-Quebec's CEO in April, says she gets it.

"I don't want to judge the past. But I think that coming to Maine with the transmission line, it was obvious there should have been, and now there is, an energy package with it."

Under the agreement, Hydro-Quebec is offering to sell a half million megawatt-hours a year to a large Maine buyer at a discount of $4 per megawatt-hour, compared to the going price in what is called the "day ahead" electricity market. The Mills administration says that would be worth $2 million annually to state consumers — although Dan Burgess, the director of the governor's energy office, says who, exactly, that buyer may be is yet to be determined.

"It could be anyone from a large industrial user, it could be a hospital, a university, it could be an opportunity for economic development, which is especially important right now,” says Burgess. “And I think we're going to be working to identify who that buyer or buyers might be in the coming months."

Burgess says that the process for finding and awarding a contract to the eventual user has yet to be worked out. He adds that approval from the state's Public Utilities Commission will not be needed. In an email, Commission Chair Philip Bartlett agreed that the agency does not have jurisdiction.

But one former PUC member, David Littell, says the PUC should play a role.

"At the end of the day, the PUC has to be involved in watch-dogging this. I mean the energy office right now doesn't have the structure and the ability to do that."

Littell says he believes the Mills administration will seek that consultation, and, he says, it deserves credit for improving the value of the overall deal for Mainers. He also says the injection of a comparatively small but still significant amount of below-market energy into Maine — enough to power 70,000 homes — should have a small but real effect of lowering prices for everyone.

He warns, though, that state officials should be careful when finalizing the details: the language of Hydro-Quebec's offer, he says, could give it the ability to charge Maine buyers more than they might pay if they just bought electricity in the real-time market.

"During some hours there will be the possibility that Maine ratepayers actually could pay more than the going rate for power. That could be nailed down by the attorneys for the state in later negotiations, if HQ is willing to let them nail it down. But it's not a clear discount for all hours."

Hydro-Quebec CEO Sophie Brochu says it is not the company's intent to reduce the value of the discount for Maine.

"The idea of Hydro-Quebec is not to arbitrage anything in there, that's for sure. It really is to flow whatever Maine could get, less four dollars."

Arguments are already emerging over the true potential value of the latest pot-sweetener by Hydro-Quebec. Project opponents in the environmental community say it could be worth only about 12 cents off a $100 ]utility bill. Nick Bennett, staff scientist at the Natural Resources Council of Maine, calls that "nothing."

"It's especially nothing if you see that in the context of CMP's recent rate increases, which first happened in March and beginning of July and totaled more than four dollars a month."

Hydro-Quebec is also offering to accelerate a previously negotiated benefits package worth $170 million for Maine clean energy projects and direct rate relief over the 20-year contract. In 2018, then-CEO Eric Martel said the electricity contract would bring in some 10 billion Canadian dollars in revenue. Maine voters will consider a referendum this fall that would attempt to reverse regulators' decision approving the project.