Despite years of permitting delays and hundreds of millions in unanticipated expenses, the proposed Central Maine Power transmission corridor is on-schedule and on-budget, according to the company.
“We believe all permits will be completed in 2020 and the project’s COD (commercial operations date) remains December 2022,” CMP wrote, in response to written questions mediated by Serra Public Affairs.
While CMP has not budged on its completion date for the New England Clean Energy Connect (NECEC), the construction window is significantly shorter than was anticipated when the project was conceived, according to earnings reports that executives from Avangrid, CMP’s parent company, have made to investors as part of their legally mandated filings with the U.S. Securities and Exchange Commission.
James P. Torgerson, the CEO and director of Avangrid, Inc. told investors earlier this year how the NECEC proposal came to be.
“And we look, similarly, in Western Maine, where we've always thought about having some kind of intertie into Quebec,” he said in February. “And so we basically took the next couple of years and plotted out what we viewed was the optimal path for transmission in these 2 areas, a path that would avoid any national forest, would avoid any sensitive areas, but would obviously then enable clean energy into New England. And that is really where NECEC was born.”
During the time period Torgerson is referencing — early 2017 — the company had ample reason to be optimistic about NECEC’s chances to sail through the permitting process.
In February 2017, Avangrid Networks CEO Bob Kump painted a rosy picture of the company’s prospects for continued growth in Maine, based in part on support from then-Gov. Paul LePage and the then-sterling reputation of CMP. Maine’s largest utility company, Kump noted, had recently been recognized for “excellence in customer service and satisfaction” by J.D. Power, an industry tracking and consulting firm.
The company had also just completed a $1.4 billion upgrade of its infrastructure, called the Maine Reliability Power Program, and hit few permitting snags or public opposition.
“Did that on time, on budget. And through that entire process, we got tremendous support not only from legislators, politicians but our regulator as well as communities, believe it or not, who view this as an opportunity for economic development,” Kump said at the time. After filing for NECEC permits in September of 2017, Avangrid unveiled the NECEC pitch to Massachusetts in response to a massive clean energy RFP, and stated at the time that the company was “confident in the permitting schedule.”
In a February 2018 press release, CMP President and CEO Dough Herling cited the “strong support of communities and stakeholders in Maine,” while predicting that, having filed for all relevant permits in mid-2017, “the company expects to receive state approvals later this year, and final federal permits in early 2019.”
In response to a question from investor Jingren Zhou during a February 2018 earnings call, Avangrid CEO Kump said the application to Maine PUC for a Certificate of Public Convenience and Necessity was going well. “We’d no interveners virtually at all in that, or our presidential permit. So again, we feel like we’ll have all permits and approvals in hand by first quarter next year.”
Another investor, Michael Sullivan, asked for more information.
“Bob, can you just give us a little more detail on the permitting process? I mean, you spoke to it — to being no interveners, but is it just one approval? And when does that happen? And then similarly for the federal permit as well.”
“Those 2 big ones are just that,” Kump replied. The state permit, he said, would be done by the end of 2018. “We've been told already because of the lack of interveners that it will just be an environmental assessment. So it gives us comfort that we'll be able to get that permitting done by first quarter.”
That optimism remained in place for a few more months. In a July 2018 earnings call, Torgerson said “And we really have strong support from the Maine governor and the local community. All but one of the communities along the path have filed letters of support and those ones that didn't just have said they are supportive, they just haven't filed the letter in support of it at this point.”
But from that point on, very little has gone right for CMP in the arena of public opinion. An unrelated pricing scandal undermined public faith in the company, communities along the proposed transmission corridor began to object, and environmental groups began filing hostile testimony before Maine’s regulatory agencies.
Earlier this month, JD Power ranked CMP dead last among 667 national utilities in business customer satisfaction — which, as critics pointed out, ranked it below PG&E Corp, the Californian company associated with massive intentional blackouts for millions amid wildfires.
As Avangrid executives gave continued updates to their investors, they remained upbeat. But in the details of their reports, a more complex picture was beginning to emerge — the permitting process was actually much more complicated than the early summary suggested, executives stopped emphasizing the public support as a main selling point, and timeline projections began to shift.
In addition to the Maine PUC and the Presidential Permit, the proposal has to clear a separate review process by the Maine Department of Environmental Protection and the Maine Land Use Planning Commission. It is also undergoing a review by the ISO-NE, the entity that regulates New England’s power infrastructure — the ISO-NE first has to judge whether the project is in compliance with a federal code known as 1.3.9, and then will consider issuing a certificate of approval. The proposal also needs to pass an environmental assessment by the Army Corps of Engineers, which, in response to a request from U.S. Rep. Jared Golden, is holding a public hearing on Thursday in Lewiston.
Though nearly every regulatory benchmark has changed in response to delays, CMP has not wavered in its commitment to a 2022 COD.
The third-quarter report, released on Oct. 30, showed just how dramatically the permitting timeline has shifted:
- The Maine Certificate of Public Convenience and Necessity that was originally projected to be issued in late 2018 was actually issued in April 2019.
- The Maine DEP permit that was once projected to be issued by the end of 2018 was changed to early 2019, then mid 2019, then late 2019, then the first quarter of 2020.
- The ISO-NE Impact Study, once thought to be completed in the “mid-end ‘19,” has been changed to 1.3.9 approval in the first quarter of 2020, with a certificate issuance at an unspecified time in 2020.
- The Army Corps of Engineers approval, once targeted for early-to-mid 2019, was pushed to early 2020, and then “60-90 days after [Maine DEP] approval.”
- The Presidential Permit, once projected for the end of 2019, is changed to “60 Days after ACE and 1.3.9 approvals.”
The presidential permit, issued by the U.S. Department of Energy, is required for any energy project that crosses national borders. Its main purpose is to ensure that national security, and federal environmental laws, are not compromised by a proposed project, and it relies in part on local analyses of reliability and environmental impact to make a decision. Avangrid applied for its permit in September of 2017.
Executives have also recently told investors that construction can begin before the Presidential Permit is actually issued.
If that is true, construction, which could have begun in early 2019 under original estimates, will have to wait, even by Avangrid’s optimistic projections, for a chain of events — DEP approval in the first quarter of 2020, followed by ACE approval two or three months later.
Construction is also dependent on local permits from each municipality through which it passes, a process that Avangrid says will be done piecemeal in each location.
The company also said, in its written response, that missing 2022 would not be a dealbreaker, as its Massachusetts contract “does allow for flexibility in the ultimate COD date.”
As the project winds its way through the bureaucratic permitting process, it also faces a mortal threat in the form of a citizen referendum initiative, which would ask voters to overturn the PUC decision.
But company executives are putting their best foot forward, and remaining optimistic.
On October 30, during Avangrid’s earnings call, Torgerson repeated to investors that the NECEC “is really on track.”
“We are holding to our timeline,” Torgerson said, “to start construction in the second quarter of 2020.”
Another facet of the project that has held firm is the NECEC’s budget.
“Our original estimate for the project was $950 million and it still remains at $950 million today,” CMP said, in response to questions for this article.
As part of its efforts to gain regulatory and public approval, CMP agreed to a negotiated $260 million settlement to mitigate the impact of the transmission corridor on the local environment.
But in its written response, CMP explained those costs would not cause the capital budget to balloon.
“Of the $950m in total capital costs, $10m will be allocated to the settlement,” according to the statement. “The remaining settlement amount, $250m, will come from either NECEC’s operating costs or from Hydro Quebec.”
Those types of expenses will do little to reduce the project’s potential for profitability — at Hydro-Quebec, the company that would supply the hydropower to Massachusetts, an executive said last year that the deal for 1,200 megawatts would likely bring about $10 billion in profits into H-Q’s coffers over 20 years.