E-13: Commissioner Christie’s Concurrence in NSTAR Electric Company and Park City Wind LLC

Docket No. ER22-1247-000

I do not disagree with Commissioner Danly’s characterization of the Settlement Transmission Support Agreement (Settlement TSA) as a “potential regionalization” of the interconnection costs of a transmission project implementing the public policies of the State of Connecticut.[1]  Certainly, it appears that the parties, NSTAR and Park City Wind (PCW), intend to ask ISO-NE for such regional cost allocation.  I concur in today’s order, however, for the following reasons:  (1) the order makes explicitly clear that the Commission’s approval of the Settlement TSA does not constitute, require, or suggest approval of any request to regionalize the interconnection costs by PCW and/or NSTAR of ISO-NE;[2] (2) there apparently is nothing to prevent the parties from approaching the ISO concerning regional cost allocation regardless of this order, but the order states it is up to the ISO in the first instance to determine whether any such request is approved or denied; (3) as described more fully below, my statement presents an opportunity to emphasize that, if NSTAR and PCW seek regional cost allocation for any portion of the interconnection costs, ISO-NE should ensure that adequate notice and opportunity to be heard is provided to all affected third parties, including the other states in ISO-NE, before making any decision on a request to regionalize such costs, a principle that should apply to any such effort to regionalize the costs of one or more state’s public-policy driven projects in any RTO/ISO.[3]  Further, imposing the costs of a project driven by one state’s public policies onto another state that has not consented to such cost allocation would, in my view, presumably result in unjust and unreasonable rates.

The Mid-Cape Reliability Project, described further below, was approved by ISO-NE as the preferred solution to an identified reliability need.  As a Reliability Project, it was properly eligible for regional cost allocation under ISO-NE’s existing tariff and such eligibility is not a matter in dispute here.  This matter is before us because the developer of an offshore wind generation project (PCW), a project implementing the public policies of the State of Connecticut, seeks to interconnect using the original Mid-Cape Reliability Project and has now entered into an agreement with the entity which proposed construction of the Mid-Cape Reliability Project – NSTAR – to, among other things, seek approval from ISO-NE to spread some of the costs of the interconnection to consumers throughout New England through regional cost allocation.

The Mid-Cape Reliability Project is an approximately 12.5-mile, 115 kV overhead line between the West Barnstable Substation and the Bourne Substation proposed by NSTAR.[4]  “The purpose of the Mid-Cape Reliability Project is to resolve potential thermal overloads and low voltage conditions that could result in the loss of electric service to the Cape Cod area and the islands of Martha’s Vineyard and Nantucket.”[5]  ISO-NE selected the Mid-Cape Reliability Project “as the preferred solution to address these reliability needs in the Southeast Massachusetts/Rhode Island (SEMA/RI) Solutions Study and is part of the ISO-NE Regional System Plan.”[6]

However, PCW now seeks to interconnect its large – approximately 800 MW – offshore wind-generation project to NSTAR’s transmission system.  With respect to the Mid-Cape Reliability Project, NSTAR and PCW seek to convert the 115 kV line to a 345 kV line and then want to regionalize the incremental costs of that conversion by requesting regionalization from ISO-NE.

The State of Connecticut’s Department of Energy and Environmental Protection (DEEP) selected the PCW offshore wind project through a competitive solicitation and PCW subsequently entered into power purchase agreements (PPAs) with Connecticut’s two electric distribution companies, Eversource Energy and United Illuminating.[7]  The PPAs were approved by the Connecticut Public Utility Regulatory Authority in August 2020.[8]  The purpose of selecting the PCW project is to promote the State of Connecticut’s public policies, as the Connecticut DEEP itself has made clear, specifically stating:  “. . . [PCW’s project] . . . represents a major step toward Governor Lamont’s goal of a 100% zero-carbon electricity supply by 2040. . . .” and “[t]he project also includes an estimated $890 million in direct economic development in Connecticut . . . .”[9]

As both NSTAR and PCW recognize in their Settlement TSA, the upgrade costs at issue in both Phase I and Phase II of this project are the sole obligation of PCW.[10]  But, by combining the Phase I Upgrades with the Mid-Cape Reliability Project, “NSTAR is able to lower the overall cost to interconnect the PCW Project to its transmission system by approximately $40 million.”[11]  And, still, even if it combines the Phase I Upgrades with the Mid-Cape Reliability Project, the parties state those incremental costs to PCW would be approximately $13.7 million.[12]  And it is this approximately $13.7 million which PCW seeks to regionalize with respect to Phase 1 Upgrades and thus shift those costs to consumers throughout New England. 

PCW currently, as it recognizes in the Settlement TSA, has the obligation to pay those costs.  Whether it could seek recovery of all interconnection costs through its PPAs or through some other method by which the costs would be limited to Connecticut is not indicated in the record before us.  Other states are pursuing offshore wind projects that implement their own public policies and there is no regional allocation of construction or interconnection costs:  for example, as the State of New Jersey is doing with its policy-driven offshore wind development[13] and as the Commonwealth of Virginia contemplates doing with its policy-driven offshore wind development being proposed by Virginia’s largest utility, Dominion.[14]

I am concurring here because, by approving this Settlement TSA, the Commission is not in any way endorsing regional cost allocation for any interconnection costs associated with the PCW project, nor suggesting that PCW and/or NSTAR should be granted such regional cost allocation for these costs under the ISO-NE Tariff.[15]  The filing before us provides no details beyond a high-level statement as to “operational flexibility”[16] related to the alleged benefits to ratepayers in other states who would be asked to pay for the Phase I Upgrades (as well as potentially the Phase II Upgrades, it seems) if PCW gets its wish, nor does it provide information concerning whether the project specifically meets any Tariff standards for regionalization.  In short, I vote for this order because we are not approving any regional cost allocation arrangement for any of the developer’s interconnection costs nor are we asking ISO-NE to approve any such arrangement.[17]

To state the obvious, the costs of the network upgrades required to interconnect the offshore wind project to the Mid-Cape Reliability Project are undeniably driven by the public policies of Connecticut.  The other five states in ISO-NE – at least on this record – were neither consulted nor have they agreed to any regional cost allocation.[18]  There will no doubt be an effort to claim that the costs are appropriately allocated to consumers in the other five states in ISO-NE, even without their consent, because of the purported “benefits” they will receive[19] – “benefits” sometimes being an almost infinitely elastic term when used to justify cost-shifting to others.  What is clear is that the additional costs of the offshore wind interconnection are not needed to solve a specific reliability need; as the filing here recognizes, the original Mid-Cape Reliability Project was already selected as the preferred solution to that specific reliability need.  

If requested by the parties, it will be up to ISO-NE initially to make the determination whether it believes it is appropriate to allocate the interconnection costs of this public policy-driven project to consumers in the other states.   If asked, ISO-NE should not make any decision regarding whether to approve the interconnection costs of this project for regional cost allocation without providing prior notice and opportunity to be heard to the appropriate state officials and consumer representatives in all of the ISO-NE states, as well as to other affected stakeholders.  To reiterate, imposing the costs of a project driven by one state’s public policies onto another state that has not consented to such cost allocation would, in my view, presumably result in unjust and unreasonable rates.

For these reasons, I respectfully concur.