The energy market in New England is a shared system, delicately negotiated across state lines.
Environmental policies in the region — less so.
As most of the New England states pursue aggressive goals to reduce greenhouse gas emissions and transition to clean energy sources, some of their methods are irking New Hampshire officials, who foresee Granite Staters picking up the tab for those policies in the form of higher power bills.
The latest cause for disagreement is a 10-year clean energy contract Connecticut awarded to its only nuclear power plant, which was struggling to compete against natural gas-fired generators and might have been forced to close without the special deal.
In a March 15 letter filled with opaque language, the six New England governors committed to finding “market-based mechanisms” that “value the contribution” of nuclear plants while simultaneously ensuring the residents of one state don’t pay for another state’s policies.
It’s unclear what those mechanisms might be, though, and officials from all six states and ISO New England, the nonprofit that manages the region’s wholesale energy market, declined to elaborate.
Massachusetts’ and Vermont’s top energy officials refused to talk about the agreement at all, while those in Maine and Connecticut never responded to requests for comment. Officials in some of the states did discuss the regional discord on background but refused to go on the record.
Gov. Chris Sununu, meanwhile, is adamant that New Hampshire won’t pay for other states to subsidize clean energy.
“While we have agreed to evaluate this issue, I remain steadfast in my support for the ratepayers of our state, especially those on fixed incomes,” he said in a statement accompanying the March 15 letter. “New Hampshire citizens will not voluntarily fund the expensive public policy mandates of another state.”
But how New Hampshire could prevent other states from pursuing policies that could lead to higher regional energy rates — and experts disagree about whether costs will increase — is also unclear.
NH’s energy goals lower
The Granite State is somewhat of an outlier in the region when it comes to renewable energy goals.
Massachusetts, Rhode Island and Vermont have all set targets of reducing their greenhouse gas emissions to at least 80 percent below 1990 levels by 2050. Connecticut aims to reduce its emissions to 80 percent below 2001 levels by 2050.
On the renewable energy side, the aspirations are equally ambitions.
Massachusetts and Connecticut want 40 percent of their energy coming from renewable or clean sources, like nuclear, by 2030. Rhode Island wants to get there by 2035, while Vermont is striving for 90 percent renewable energy and Maine for 100 percent by 2050.
New Hampshire’s stated goal, as outlined last year in Sununu’s 10-year energy plan, is to have 25 percent of its power coming from renewables by 2025.
“I think some of the states have gotten quite a bit more aggressive in funding the development of renewable energy in the last couple of years,” said David Patton, president of Potomac Economics, which provides economic analysis for ISO New England.
“The costs for a variety of renewable technologies has been falling, so we could be moving toward a point where they could be economic without state support,” he added. “But that has not generally been the case to date.”
Disrupting the market?
Last year, Massachusetts awarded a contract to a Danish company to build an 800-megawatt offshore wind farm — what will be the largest in the country — off the coast of Martha’s Vineyard.
Rhode Island announced a contract for a 400-megawatt wind farm off its coast at the same time. Both projects are benefiting from federal tax credits and state laws that prioritize the development of wind power. The companies also are forecasting prices that could undercut competitors.
And in December, Connecticut awarded a round of special zero-carbon power contracts equivalent to 45 percent of the state’s energy needs. The biggest recipient was the Millstone Power Station, which is owned by Dominion Energy.
Without the contract, Dominion convinced state regulators, the 2,100-megawatt plant was at risk of closing by 2023. That closure could have increased the entire region’s greenhouse gas emissions by 25 percent, according to Connecticut’s Department of Energy and Environmental Protection, because fossil-fuel plants would have assumed most of the burden.
Until the state changed its rules in fall 2018, Millstone had been shut out from bidding against solar and wind generators for Connecticut’s zero-carbon contracts. And in the open energy market, it was struggling to compete against cheaper natural gas-fired plants.
Other power generators and groups opposed to nuclear power plants quickly panned the new rule as a handout to Dominion.
And New Hampshire officials see it as the latest example of states interfering with the energy market to pick winners and losers.
“When states intervene and disrupt the market, as Connecticut has done here, it places the vast majority of cost-competitive resources at a disadvantage, drives up the cost of electricity and leaves taxpayers on the hook to foot the bill,” said Jared Chicoine, director of the Office of Strategic Initiatives, which oversees New Hampshire’s energy policies.
“Instead, the entire region would be better suited to continue allowing the electricity market to select the best set of resources at the lowest cost while maintaining a reliable and resilient electric grid,” he said.
Connecticut officials did not respond to multiple requests for comment.
Not always best
If done properly, subsidizing renewable energy can both reduce emissions and costs, experts say, but there are also examples of those policies backfiring.
Germany, for example, has invested heavily in solar and wind generation. By 2014, it had reduced its greenhouse gas emissions to 27 percent below 1990 levels, according to a paper written by energy policy expert Richard Martin in the MIT Technology Review.
But in 2015, the country’s greenhouse gas emissions actually rose, in large part because coal- and gas-fired power plants had to keep running to ensure a steady power supply when the sun wasn’t shining and the wind wasn’t blowing.
As a result, Germany was producing more energy than it needed, Martin wrote.
That’s not the case in New England, but it’s something to be wary of as states try to meet their emissions goals, said Ashley Brown, executive director of the Harvard Electricity Policy Group.
“It’s not just a question of whether New Hampshire is subsidizing Massachusetts’ or Rhode Island’s environmental goals; it’s a question of whether they’re doing it in an inefficient way or for certain resources that aren’t economically viable,” he said.
One solution popular among experts is carbon pricing, whereby a fee is added to energy from generators that emit more greenhouse gases, thereby creating a market incentive for clean energy.
Gordon van Welie, the president and CEO of ISO New England, recently called it an “elegant and simpler way to achieve clean-energy goals through the markets without distorting competition.”
But the New England states haven’t indicated any interest in instituting carbon pricing, according to ISO New England spokesman Marcia Blomberg, and the nonprofit isn’t sure it has the jurisdiction to implement the system on its own.
The states say they’ll be engaging in discussions about “market-based mechanisms” to settle their disagreements in the coming months, but none of the officials contacted for this story offered a specific example of what that might entail.
In the meantime, New Hampshire’s neighbors aren’t waiting around.
“There is a cost of inaction in addressing the very real effects of climate change,” said Robert Beadle, a spokesman for Rhode Island’s Office of Energy Resources.