Allco asks FERC to void Hydro-Québec, Avangrid power contracts with Massachusetts utilities

Dive Brief:

Power purchase agreements between Massachusetts utilities — Eversource Energy, National Grid and Unitil — and Hydro-Québec and Avangrid for hydro power from Canada should be invalidated for violating the Public Utility Regulatory Policies Act, according to a complaint filed Monday at the Federal Energy Regulatory Commission by Allco Finance.
The solication that led to the contracts included a 20-MW minimum size limit that effectively barred most PURPA projects from participating, which is not allowed under tat law and the Supremacy Clause of the U.S. Constitution, Allco said.
If FERC doesn’t bring an enforcement action against the Massachusetts Department of Energy Resources and the Massachusetts Department of Public Utilities within 60 days, Allco can sue them in federal court, the renewable energy developer said.

Dive Insight:

The Allco complaint is the latest challenge for the 320-kV New England Clean Energy Connect transmission project, a planned 145-mile power line in Maine that is designed to deliver 9.45 million MWh a year from Hydro-Québec to Massachusetts utilities.

In April, a Maine jury cleared the way for the project to move ahead, but construction hasn’t restarted on the power line. Avangrid expects the project will cost $1.4 billion, according to a June investor presentation. The company had previously said the line would cost about $1 billion.

NECEC Transmission, an Avangrid subsidiary, started construction on the project in January 2021, but it has been on hold since November 2021, the company said in the presentation. The Maine Department of Environmental Protection lifted its suspension of the project’s permit in May and Avangrid is evaluating its construction schedule, the company said.

The Massachusetts DPU in 2019 approved the PPAs, which will provide the state’s investor-owned utilities with power starting at $51.51/MWh for energy and $9.16 per kW-month for transmission service. The PPAs would supply about 8% of New England’s current load, according to Avangrid.

The dispute comes as the Massachusetts Legislature is debating a spending bill that allows the state’s utilities to renegotiate the power supply contracts to raise their price to reflect increased costs for the New England Clean Energy Connect power line.

Hydro-Québec is reviewing the measure, according to Lynn St-Laurent, a utility spokesperson. “Overall, this is a positive development for the completion of the NECEC and the region's clean energy transition,” St-Laurent said, noting the utility is reviewing the Allco complaint.

Allco, which has filed at least five complaints challenging state implementation of PURPA, contends that the law requires that qualifying facilities, typically small-scale renewable energy projects, must be allowed to supply the Massachusetts investor-owned utilities with energy and capacity if they need it.

Besides challenging the solicitation’s minimum size limit, Allco contends that states’ only authority to regulate wholesale electricity sales comes from PURPA, so any state rule that conflicts with that law is preempted.

Initiating an enforcement action against the Massachusetts agencies would increase the chances they will engage in a solicitation for PURPA resources, Allco said.

Allco owns 37 operating solar projects, including a 4-MW project in Spencer, Massachusetts, and 18 small-scale projects in Connecticut, according to the company's website.

The Massachusetts DOER doesn’t comment on FERC complaints, a spokesperson said. Avangrid didn’t return a request for comment.