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Northern Pass: 25 percent less in energy cost savings

New Hampshire Union Leader

June 08. 2017 11:57PM

CONCORD — A projected 25 percent drop in expected energy cost savings will reduce earlier projected benefits of Northern Pass during its first 11 years of operation, a project witness said Thursday.

Northern Pass was predicted in a 2015 project report to create an average of 1,148 new jobs annually from 2019 through 2029, while adding $162 million in additional spending to the state’s gross domestic product.

But one of the report’s authors, Julia Frayer, testified before the state Site Evaluation Committee that the jobs and spending would be reduced “a little bit less than 25 percent.”

A drop in wholesale energy prices means consumers would benefit less from Northern Pass than if prices were higher.

According to her report, “Households (residential consumers) would be able to spend the money they save from lower retail costs of electricity on other goods and services, which will stimulate the economy and lead to an expansion of GDP and employment.”

The proposed $1.6 billion project needs several state and federal approvals before it can start operating in late 2019 or early 2020. Project officials hope to garner all necessary approvals by the end of this year. The route runs from Pittsburg to Deerfield and includes 60 miles of buried lines.

For the project’s planning and construction between 2016 and 2019, New Hampshire should see 582 new direct jobs out of 1,006 projected for all of New England, according to the report.

Meanwhile, Frayer, managing director with London Economics, specializing in economic analysis and market design issues related to energy infrastructure, testified that she was confident that Northern Pass would be able to secure forward capacity payments, which would provide Northern Pass a guaranteed payment in exchange for a promise to provide a certain amount of energy if requested.

Thomas Pappas, an attorney for the counsel for the public, questioned Frayer about the need for these capacity payments for Northern Pass.

“Do you think this project will go forward without them?” Pappas said.

“I can’t speak for the project management,” she said.

Frayer said the “capacity revenues are an important part of the project based on my projections. But there might be other commercial arrangements that I’m not aware of.”

She said she didn’t evaluate the project without the capacity market revenues.

Frayer was confident Northern Pass would succeed in the forward capacity market and if, so “the project, on my numbers, looks very economical.”


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