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Malloy Defends Esty, Canadian Hydro

by Christine Stuart | Apr 29, 2013 1:21pm
(0) | Commenting has expired
Posted to: Energy, Environment

Hugh McQuaid photo

Gov. Dannel P. Malloy

Gov. Dannel P. Malloy said he probably would have advised his energy commissioner not to participate in a call with investors last week regarding the state’s energy strategy, but he didn’t ask.

At an unrelated press conference Monday, Malloy said he read the transcript of Department of Energy and Environmental Protection Commissioner Daniel C. Esty’s call with UBS investors and saw nothing wrong with what he said.

“I read the entirety of the transcript,” Malloy said. “Everything he said there he’s said elsewhere. Almost everything he said I’ve said publicly time and time and time again.”

The conference call included 153 individuals from Wall Street investment firms and energy industry insiders. It prompted outcry from the environmental community and delayed a Senate vote on the renewable portfolio standards bill.

By Friday, two good government groups sent a Freedom of Information Act request to Esty’s office seeking documents related to the creation of the “Comprehensive Energy Strategy” and the renewable portfolio standards legislation. The request from the Connecticut Citizens Action Group and Common Cause also asked for any internal communications with agents or lobbyists from a long list of companies including Northeast Utilities and Hydro Quebec.

UBS investors upgraded Northeast Utilities from a “neutral” position to a “buy” on April 17 before speaking with Esty. But it’s not lost on the two groups that Northeast Utilities could reap financial rewards if the Northern Pass transmission line is ever built from Canada down through New Hampshire and Vermont. The power from Hydro-Quebec would be delivered on that transmission line or other lines in the planning stages.

Dennis Schain, a spokesman for DEEP, said they have begun reviewing the FOIA request and assembling the requested materials — an effort that is expected to take “some period of time.”

However, he warned that “it should come as a surprise to no one that the records will show ongoing contacts and conversations with a wide range of people across the entire energy arena. This agency is charged with developing and implementing energy policies — and the only way to do that effectively is to be talking constantly with all stakeholders.”

Malloy pushed back against criticism that using Canadian hydropower to cover any Class I renewable shortfall was bad public policy. He also reminded reporters that there’s more on the horizon than the Northern Pass transmission line.

“If you follow international politics, or if you follow me, by the way, I spoke about this in Nova Scotia in 2011,” Malloy said. “I don’t really care what the route is and I don’t really care whose power it is, as long as it substantially cleaner, cheaper, more reliable.”

Malloy hopes that by putting “nearly everyone” into competition with each other, prices will drop even more in the renewable market.

That means there are some interested parties who are left out of the proposal, which could come up for a vote as early as this week.

Hydropower generates about 3,316 megawatts annually in New England, but that supply is excluded from the proposed legislation. The exclusion has some left New England hydropower generators to scratch their heads and wonder about why Canadian hydro would get preference in a bill when there’s an opportunity for homegrown hydro to enter the market.

Jessie Stratton, director of policy development for DEEP, said that run-of-the-river hydro facilities generating less than 30 megawatts will qualify as a Class I renewable energy source under the new draft of the bill.

To be eligible under current law, a facility can have a capacity of up to 5 megawatts and may not cause an appreciable change in the river flow. The bill increases this limit to 30 megawatts and allows it to be counted as a Class I resource, if the increase in megawatts occurred on or after July 1, 2003.

But that proposal leaves out several hydropower facilities in New England and New York, which some say flies in the face of using competition to drive down prices.

TransCanada Power Marketing, which owns 13 of these hydroelectric stations on the Connecticut and Deerfield Rivers, told the DEEP that the restriction would enable Hydro Quebec to charge more.

“There are no barriers preventing Hydro Quebec or any Canadian generator from independently exporting power into New England. It makes little sense to disqualify existing hydropower in New England from competing in the procurement,” the company said on March 19. “Second, Hydro Quebec’s sole shareholder is the Quebec government. To the extent that the ‘contracted tier’ results in paying above market subsidies for imports, exporting Connecticut ratepayer dollars to subsidize a Canadian provincial government on a long term contract basis while ignoring New England generators is poor policy.”

Environmentalists have argued that the Canadian government already finances the Hydro-Quebec power plants so there’s nothing new to support there, but the legislation seems to favor it.

Environmentalists remain unhappy that Canadian hydroelectric power could be used to offset any of the state’s renewable goal.

“It doesn’t make it less bad,” Chris Phelps of Environment Connecticut said last week.

Phelps said the proposal still puts large-scale Canadian hydro, which doesn’t need any incentives, on the same scale as other emerging technologies like wind and solar.

But the Malloy administration isn’t backing down.

“Large-scale hydropower resources, such as those found in Quebec and the Eastern Canadian provinces, offer a source of low-carbon power at very competitive costs that has the potential to increase the diversity and reliability of electricity generation in a state that is dominated by nuclear and natural gas generation, and to provide a cleaner alternative to natural gas that can ‘balance’ intermittent resources like solar and wind,” the final DEEP report on the renewable portfolio standards concludes.

North America is about to be energy independent, Malloy said.

“I want to contract for my state the cleanest, cheapest, more reliable energy sources that we could,” he said.

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