Central Maine Power has agreed to give $50 million to energy-assistance programs that will benefit low-income electric customers — in Massachusetts.
CMP will provide $50 million over 40 years to several programs and initiatives in Massachusetts, as a condition of winning the bid to build a high-voltage transmission line from Quebec through Maine that will carry hydroelectricity to the Commonwealth.
None of the money will come from ratepayers in Maine or Massachusetts, according to Avangrid, CMP’s parent company. It will be taken out of profits.
The disclosure about the aid for low-income Massachusetts ratepayers is contained in documents newly filed with the Massachusetts Department of Public Utilities and reviewed Tuesday by the Portland Press Herald. They include a Memorandum of Understanding signed last month by CMP.
But Maine’s Public Advocate says the deal, which he calls “insulting,” raises questions about why Maine isn’t being offered a similar level of assistance as is being directed toward Massachusetts.
High electric rates and their impacts are an ongoing source of discussion and frustration in Maine. Gov. Paul LePage has made them an issue throughout the past seven years of his administration. LePage has fought most renewable energy proposals that feature rates that he concludes are above market prices. He is, however, a strong supporter of the CMP power line project.
LePage didn’t immediately respond to a request for comment about CMP’s agreement to help Massachusetts customers.
Scrutiny of CMP’s deal with Massachusetts also comes as the Augusta-based utility finds itself under fire for multiple events related to electric rates. The cost of recovery from a severe storm in October is being reviewed at the Maine Public Utilities Commission. The PUC also is conducting a probe into what caused bills to spike for thousands of customers last winter; hundreds of ratepayers are seeking a class-action lawsuit over the issue; and the PUC has begun a separate inquiry into whether CMP is overcharging customers.
MASSACHUSETTS MANDATE
Against this backdrop, CMP and Avangrid are seeking approvals from utility and environmental regulators in Maine to build the $950 million New England Clean Energy Connect project. CMP and Hydro Quebec have signed a 20-year contract with utilities in Massachusetts for power, with the goals of reducing carbon emissions linked to climate change and stabilizing future electric rates in the region.
CMP was required to make the payment as part of a specific policy mandated by the Commonwealth of Massachusetts, according to John Carroll, an Avangrid spokesman.
“Maine has not pursued any energy procurement initiative similar to the Massachusetts Clean Energy RFP, nor have they built in a comparable requirement in their standard procurments,” Carroll said.
He noted, however, that CMP provides $5.3 million annually to support utility services for its low-income customers through a so-called lifeline program. The money comes from an ongoing fee on all customers and is part of the overall rate base. CMP also forgave more than $448,000 through an arrears management program last year, he said, also financed through customer rates.
“Given that Massachusetts has almost five times as many households as Maine,” Carroll added, “we believe the size of the commitment strikes a balance between providing a meaningful response to the goals of the RFP, within the context of a competitive bidding process.”
MAINE AID
Massachusetts has higher household electric rates than Maine, 21.7 cents per kilowatt hour, versus 16.3 cents. But both states are well above the national average of 13.1 cents, according to the federal Energy Information Administration.
Rate comparisons aside, CMP’s deal with Massachusetts doesn’t sit well with Barry Hobbins, Maine’s Public Advocate. Hobbins said he was aware of the general outlines of the agreement, but didn’t know the precise terms until Wednesday.
“It’s pretty insulting that Massachusetts is going to receive these benefits for low-income customers and Maine hasn’t been offered anything,” he said.
Hobbins said his office has been working with Efficiency Maine Trust on a long-term study of energy issues for low-income residents. He said he’s planning to use that data to seek a similar agreement from CMP for needy residents in Maine, as part of the NECEC case before state regulators.
“It should be no less than what CMP agreed to in Massachusetts,” Hobbins said. “Not a penny less.”
Avangrid-CMP won the bid the build the transmission line last spring after Massachusetts’ first-choice project, Northern Pass, failed to get approval for a key siting permit in New Hampshire. As part of its proposal, Northern Pass also had agreed to provide money for low-income energy programs in Massachusetts.
But a comparison of terms by the Press Herald finds that CMP is committing five times more money than Northern Pass did, over an additional 20 years.
This is a summary of the Northern Pass commitment, posted Jan. 25:
“To provide additional benefits, Northern Pass has finalized an agreement with leading Massachusetts low-income advocates, including Action for Boston Community Development, Action Inc., and the National Consumer Law Center, which commits $10 million in funding over 20 years to support low-income energy programs and services for Massachusetts low-income customers.”
Carroll didn’t immediately respond to why CMP’s financial commitment was so much larger than the one hammered out with the rejected New Hampshire project.
PROJECT BENEFITS
As part of the campaign to get the needed permits, Avangrid and CMP are touting the economic benefits of the project for Mainers, even though none of the power will be sold in Maine and wind and solar projects will be unable to connect to the line.
Among the project’s benefits, CMP says, are more than 1,700 jobs a year during construction and contributions of $18 million a year in taxes to western Maine communities along the 145-mile route. CMP also estimates that Maine electric customers will save $40 million over the life of the power contract, based on estimates of future New England wholesale electric costs.
CMP also signed a separate memo of understanding with conservation groups in western Maine for $22 million in mitigation payments that would help boost tourism and recreation. Other environmental interests, however, oppose the project, in part because power lines will cross a wild and scenic gorge on the Kennebec River.
“As with all other costs and benefits associated with the NECEC,” Carroll said, “Maine utility customers and communities will benefit from cleaner air, lower energy prices, jobs, property tax payments, and a stronger economy, but they will not pay any of the financial costs for this project.”
CMP’s Memorandum of Understanding with Massachusetts became public on Monday, when power contracts were filed with state regulators in the Commonwealth.
It shows that, on June 13, CMP’s President Doug Herling and Vice President Eric Stinneford signed the memo with the Low-Income Affordability Network, or LEAN, a Massachusetts nonprofit. CMP would pay $1 million a year for the first 20 years of the project, and $1.5 million after that.
Specifically, the money would go to low-income customers of the Massachusetts utilities that will receive power from NECEC. The bulk of the funds, $700,000 a year, would be targeted at low-income energy efficiency or assistance measures, such as replacing heating equipment. The remaining $300,000 would be supplemental funding for existing technologies aimed at low-income households, including plug-in electric vehicles.
After the first 20 years, $1.1 million would go to the utility programs and the remaining $400,000 would be for supplemental programs. The exact amounts would be based on the share of electric load for each power company. Further details will be decided in the future, according to the memo.
As part of the agreement, CMP also would give $500,000 a year over a 10-year period ending in 2028 to the University of Massachusetts in Lowell. The money would be used for energy-technology research.
Recognizing the long timelines, the parties agreed to periodically review the plan and make changes as needed. If the project isn’t approved at the Massachusetts DPU by Jan. 25, 2020, or if it fails to go forward for another reason, the agreement will be terminated, according to the memo.
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