In December 2013, the New England Governors issued a statement setting forth their collective belief that New England ratepayers can benefit if the states collaborate on energy infrastructure issues to advance the states’ common goals. The Governors committed to continue to work together, in coordination with ISO-NE and through NESCOE, to advance a regional energy infrastructure initiative that diversifies New England’s energy supply portfolio while ensuring that the benefits and costs of transmission and pipeline investments are shared appropriately among the New England states. The Governors directed their appropriate staff to work together with NESCOE to ensure that the states are taking all necessary steps to meet their common needs and goals.
In furtherance of the Governors’ statement, in January 2014, NESCOE issued a letter to ISO-NE requesting its technical support and related assistance in connection with two objectives. First, the New England states indicated that they have agreed that one or more requests for proposals will be issued to advance the development of transmission infrastructure that would enable delivery of at least 1,200 MW and as much as 3,600 MW of clean energy into the New England electric system from no and/or low carbon emissions resources. The states also agreed that the costs of transmission infrastructure would be recovered through a mechanism that ensures that the benefits and costs of transmission investments are shared appropriately among the New England states.
Second, the states requested ISO-NE’s assistance in obtaining FERC approval of a tariff-based cost recovery for natural gas pipeline capacity, in a manner that is effective to achieve the construction of new, or expansion of existing, pipeline, to enable firm delivery into New England of 1,000 mmcf/day above 2013 levels or, 600 mmcf/day beyond what has already been announced for the several current expansion projects. The New England states also indicated preliminary agreement that recovery of the net cost of any such procurement of firm pipeline capacity be collected through the Regional Network Service electric transmission rate shared appropriately among the New England states.
In 2013, NESCOE concluded its Gas-Electric Study through its consultant Black & Veatch. The purpose of the NESCOE Gas-Electric Study was to analyze the current and future natural gas fuel supply and infrastructure in New England and to assist policymakers’ understanding of the future implications for natural gas-fired power generation in New England, power system reliability and consumer costs over the long-term. The Gas-Electric Focus Group was the primary forum through which NESCOE shared information with interested stakeholders in connection with the three-phase Gas-Electric Study.
Primary study observations included the following:
- In the absence of infrastructure and demand reduction/energy efficiency/non- natural gas powered distributed generation solutions, New England will experience pipeline capacity constraints that will result in high natural gas and electric prices. Alternatively, in a Low Demand Scenario, no long-term infrastructure solutions are necessary.
- Gas-supply requirements driven by episodes of extremely cold weather can be very costly and create significant reliability risks – they aggravate infrastructure deficiencies.
- Short-term solutions (able to be implemented in the 2014-2016 timeframe) like LNG imports, dual-fuel and demand response resources, provide net economic benefits to New England customers.
- In the absence of greater demand reduction/energy efficiency/non-natural gas powered distributed generation solutions, a hypothetical Cross-Regional Natural Gas Pipeline solution presents higher net economic benefits to New England consumers than do alternative long-term solutions studied (able to be implemented in the 2017-2029 timeframe).
- For most or all prospective solutions, the majority of the benefits would accrue to New England electric customers.
In 2013, New England policymakers considered the range of options to address the region’s natural gas challenges as they relate to reliable power system operations and consumers costs over the long-term as well as options to increase the extent to which low- and no-carbon power resources serve the region’s energy needs. To inform policymakers’ deliberations, NESCOE produced the Incremental Hydropower Imports Whitepaper (the Whitepaper). In sum, the Whitepaper provided context for policymakers in the form of a comprehensive overview of New England’s competitive energy markets; New England and eastern Canadian Provinces’ generation resource mixes; power system synergies between eastern Canadian Provinces and New England; discussion of the potential benefits and risks associated with increasing hydropower imports, including the need for resource tracking systems if any New England state is to satisfy carbon-reduction requirements by increasing imports; and options for increasing hydro imports and their implications.
NESCOE also produced analysis, through its consultant Black & Veatch, which provided policymakers with a high level view of the economic and environmental impacts of incremental hydro imports (the Hydro Analysis). The Hydro Analysis considered the addition of three new hypothetical transmission lines from different points in Canada into different areas in New England, and two different hydro power supply outlooks. Given the uncertainty associated with the cost of incremental imported Canadian hydropower, the analysis did not include cost estimates associated with the different illustrative supply and transmission configurations.
Coordinated Competitive Renewable Power Procurement to Serve Customers at the Lowest All-In Delivered Cost
On July 30, 2012, the six New England Governors adopted a Resolution Directing NESCOE to Implement a Work Plan for the Competitive Coordinated Procurement of Regional Renewable Power. The Governors identified the goal of issuing a solicitation for procurement by the end of December 2013.
That Resolution followed a series of New England Governors’ resolutions from 2009-2011 expressing interest in exploring joint or separate but coordinated, competitive procurement as a means to identify those renewable resources located in or proximate to the region that could help meet the region’s clean energy goals at the lowest “all-in” cost (generation and transmission combined).
In response, NESCOE finalized and began executing a Work Plan, formed a Procurement Team (PT) comprised of NESCOE staff, state agency personnel, and representatives of New England electric distribution companies identified by the states. NESCOE also formed a Legal Subteam comprised of NESCOE staff and staff from New England state agencies with expertise in that state’s legal requirements. The PT and Legal Subteam developed a draft Request for Proposal (RFP), evaluation criteria, and a model Power Purchase Agreement (PPA).
In February 2013, to give states and the market certainty, NESCOE halted further work on coordinated renewable power procurement in light of several states’ interest in moving forward with single-state RFPs expeditiously in order to capture for their ratepayers the benefits of federal tax credits that were set to expire in the near-term.