Friday, April 25, 2014
Central Maine Power Co.'s $1.4 billion transmission system upgrade isn't designed to handle the power that can be made available at times from new and existing alternative energy plants in northern and eastern Maine, federal utility regulators and the region's grid operator have determined.
AT A GLANCE
A determination that Central Maine Power Co.'s new transmission line can't handle additional, scheduled power at its Orrington connection has kept nine renewable power projects in eastern and northern Maine from seeking valuable capacity payments from the region's grid operator. These payments can determine whether existing projects are profitable, or whether new ones get built.
The nine identified by the Maine Public Utilities Commission are: Verso Paper's Bucksport biomass boiler; Black Bear Hydro Partners' dams in Stillwater and Orono; three of First Wind's proposed wind farm projects -- Bowers Mountain, Oakfield and Bull Hill; two existing First Wind projects -- Rollins and Stetson; and Quantum Utility Generation's proposed Passadumkeag Wind Park.
The shortcoming has financial impacts that could discourage future investments in alternative energy in Maine.
In the worst-case scenario, adding these new plants to the system as it's currently built could create unstable power flows in the grid that could lead to widespread blackouts across New England.
How to solve the problem and what that might cost have yet to be determined.
Considered the largest transmission investment ever in New England, the Maine Power Reliability Project is meant to modernize CMP's 40-year-old bulk power lines to serve customers for decades to come. The work began in 2010 and is expected to be done in 2015. The cost is being shared among ratepayers across New England.
An important side benefit, CMP has said for years, is that the system would provide the infrastructure to send more power from the state's growing renewable energy industry to southern New England.
But for projects in northern and eastern Maine, that benefit is now in question, as is perhaps millions of dollars in investment in an area targeted for major wind projects, according to documents reviewed by the Maine Sunday Telegram and interviews with key players in the energy industry.
"It has to cause every developer of a renewable project in Maine to sharpen their pencils," said Andrew Landry, a Portland lawyer who represents some developers.
The new calculations come after the regional grid operator, ISO-New England, came to a preliminary conclusion that CMP's interconnection in Orrington has too little capacity to transfer large amounts of power south without risking "stability" problems. That instability could lead to regional blackouts.
In a March order, the Federal Energy Regulatory Commission agreed with ISO-New England, saying that some renewable energy developers in Maine misunderstood the benefits of CMP's project.
The initial fallout from this determination is that nine renewable power projects in Maine -- existing and planned -- weren't able to participate in an annual auction last month for future capacity payments. Generators that qualify for these special payments earn extra money for making power available if it's needed to meet demand.
Even without these capacity payments, the existing generators are producing power and being paid for it. But capacity payments can be worth millions of dollars, and can make or break a project. They are especially important now, when the renewable energy industry is competing against record-low natural gas prices and facing the potential loss of a coveted federal tax credit in Congress.
It's not clear yet why the new transmission system can't do what some Maine power generators and state officials expected, what solutions might be possible, what they might cost and who would pay for them.
The Maine Public Utilities Commission, which approved the transmission project in 2010 after extensive review, is pressing ISO-New England to finish a complex, computer-modeling study meant to explain its stability concerns. The PUC also has asked if there are any "low-cost fixes" that would increase the transfer limits at Orrington.
The problem has caught some renewable energy producers by surprise, according to Jeremy Payne, executive director of the Maine Renewable Energy Association. They were well aware of pre-existing stability issues at Orrington and the need for full testing, but expected that the new system would improve access for their projects. Payne echoed Landry's view that some new projects may be in jeopardy.
"Any time you take away a revenue stream, it creates concerns," he said. "It introduces greater uncertainty for all projects."
(Continued on page 2)