A pyrrhic victory for Hydro-Québec in Maine?

Hydro-Québec won an epic court battle in energy policy terms this week. Yet, the legal victory may prove hollow if northeastern states and provinces do not meaningfully address the extremely adversarial, siloed and fractious way that power transmission lines are developed in our shared region. The way we now plan our grid across provincial and state borders leads to zero-sum politics, incents backroom alliances between fossil fuel interests and fringe environmental groups, and runs counter to the interests of ratepayers and the environment.

Some contemporary history: in November 2021, Maine referendum voters rejected the New England Clean Energy Connect (NECEC) project co-sponsored by Central Maine Power — a subsidiary of Spanish energy giant Avangrid — and Hydro-Québec.

The NECEC project is designed to move hydropower resources from Québec through Maine on a new power line, then onto the existing regional grid and down into Massachusetts. Massachusetts ratepayers are set to pay for the construction and operation of the line through a public policy and procurement process meant to competitively reduce the greenhouse gas footprint of the state’s power grid.

Critics of the referendum process pointed out that voter participation just under 38 per cent was low, but this was actually the highest turnout for a non-election year ballot issue in Maine’s history. The referendum was the apex of a bitterly contentious, back-and-forth, multi-year advocacy campaign between the two sides, racking up US$100 million in legal, lobbying and public relations expenses.

In the run-up to the referendum, Mainers were subjected to ceaseless online, TV and radio spots. Lawn signs for or against the project dotted the Maine landscape. The referendum process pitted neighbours and communities against each other, and then the saga spilled into the courts. This is not the final decision on the project, as other legal issues remain, but the victory is significant for Hydro-Quebec.

At the heart of the legal matter was the constitutionality of whether a transmission line that had its environmental and technical interconnection permits, presidential authorization, and commercial agreements in place, could be struck down retroactively by a state referendum.

On Aug. 30, the court unanimously decided that Hydro-Québec and Avangrid had “engaged in substantial construction of the project in good-faith reliance” on permits issued by the State of Maine. The court found that any revocation of the project’s permits based on the referendum abrogated the due process clause of the Maine Constitution.

Now some ancient history: in 279 BC, a general named Pyrrhus defeated the Romans at Asculum in Apulia. The victory came at great cost, and while his depleted armies marched forward, their fortunes dwindled and faded. A myth recounts that Pyrrhus was later killed when a disgruntled peasant threw a roof tile at his head.

Hydro-Québec may have won this pivotal battle, but society may lose the decarbonization war if provinces and states don’t refresh their infrastructure planning and procurement processes. If transmission projects keep going like this, investors will flee the region, citizens will continue to push back against developments, and ratepayer costs will continue to balloon. So, what are policymakers in Canada to do?

Best practices seen elsewhere call for an interregional planning process, whereby everyday citizens, civic leaders, sub-regional planners, First Nations, industry, private developers, regulators, utilities and investors come together to nominate corridors of interest for power transmission.

Searching for ways to avoid conflict

Communities and landowners affected by the developments, as well as utilities that must make upgrades to enable the projects, can then take part in a cost allocation process to equitably share in the benefits of any new infrastructure. Having such a co-ordinated cost allocation system operated under the principles of equity — such as in the U.S. Southwest Power Pool — prevents crass politics, gouging by special interest groups, and higher costs for ratepayers.

We have seen such robust consultation and network planning efforts like this take place in the United Kingdom for offshore wind. The European Union also offers financial support to interregional transmission initiatives that meet guidelines under its Projects of Common Interest framework. Australia, which has a very similar constitution to Canada, is set to launch a forward-looking, 20-year transmission planning process to accelerate decarbonization across its states. A similar multiparty process has also kicked off in New Zealand.

We need not even look too far to find more examples of these better practices. Our American neighbours are already engaged in a joint federal-state process to revamp the planning, development, and procurement of interregional transmission. Regional transmission organizations (RTOs) have started conducting collaborative “seams studies” to see how joint planning can unlock renewable energy potential, create jobs, improve environmental outcomes and generate cost savings for consumers.

New proposed Federal Energy Regulatory Commission regulations will encourage such interregional planning and development, further paving the way for the financing and construction of these much-needed assets. Also, the recently passed Inflation Reduction Act earmarks US$100 million for inclusive interregional transmission planning processes. This all creates a huge incentive for Canadians to lead on interregional planning, if not just to catch up with our American neighbours.

Lest it gets struck on the head like Pyrrhus, Hydro-Québec and other utilities would be wise to take a step back after this court case and call for a wider province-and-state-driven process to better plan our future grid. Simply put, we need this trade in clean energy to create the products and services of the 21st century in our shared region and remain competitive on a global stage. The utilities simply cannot do this work on their own. Our collective security and the well-being of the planet depend on us getting transmission right.

Philip Martin Duguay is an infrastructure developer and public policy analyst with over a decade of experience working across Canada and the United States. Prior to originating a $2-billion transmission project in partnership with a Canadian institutional investor and an Indigenous government, Duguay held strategic advisory roles for the governments of Quebec and the Northwest Territories. He also worked on international development initiatives in Senegal, Ethiopia and Indonesia, as well as for a wind energy trade association in South Africa. A proud dual citizen of Canada and the United States, he holds a dual LL.B.-B.C.L. law degree from McGill University and BA in history and the French language from Dalhousie University.