Dive Brief:
- NextEra Energy Resources, in its bid to build a new high-voltage transmission project in New England, is accusing rival developer Eversource Energy (formerly Northeast Utilities) of intentionally undervaluing its bids. The two utilities have bids in to the New England Independent System Operator (ISO NE) to build a new high-voltage transmission project to serve Boston and Southern New Hampshire.
- The Eversource-National Grid consortium’s AC Plan, estimated to cost $510 million, would build overhead lines in existing rights-of-way through Massachusetts and Southern New Hampshire, as well as new underground cables through several Massachusetts communities, including Boston.
- The NextEra Energy Resources subsidiary New Hampshire Transmission (NHT) SeaLink Plan, would build 68 miles of cable, mostly on the ocean floor from Seabrook Station to the Mystic substation, and is estimated to cost $770 million. NextEra charged that Eversource bids are historically unreliable, implying unfair competition.
Dive Insight:
The winning bidder is guaranteed a 10% return on its investment through rate basing. That means the infrastructure cost and the allowed profit will be paid for through charges on New England electricity customers’ bills.
NextEra provided a 2004-to-2012 history of 11 Eversource/National Grid bids and cost-overruns. The cumulative cost estimates of $2.2 billion ended up being $3.9 billion, a 79% underbid, according to the company.
NextEra is implying that its competitor intentionally underbids to win the contract and the guaranteed profit, and then goes to regulators to obtain returns for the higher costs.
An Eversource spokesperson said the underbids were the product of unforeseen and unpredictable circumstances and often were paid for by the developer rather than ratepayers. The spokesperson also cited the Seabrook substation project built by NHT that came in at $58 million, almost twice the $30 million estimate.
NHT guaranteed its Greater Boston project bid and promised to pay any overrun.
