Last year Massachusetts enacted a law requiring the state’s electric utilities to enter into long-term contracts for the purchase of wind, hydro and solar power, and a few months ago the Commonwealth and its utilities issued a Request for Proposals (“RFP”).
This well-intentioned law has the goal of increasing the use of renewable energy in Massachusetts and achieving reductions in carbon emissions. However, the statute built serious conflicts into the selection process.
A basic principle of government procurement is that the decision makers need to be impartial and fair. However, under the Massachusetts law, companies can be both part of the team evaluating bids and bidders as well!
Eversource Massachusetts – a subsidiary of Eversource Energy – is one of the utilities that will judge the proposals submitted in response to the RFP. Meanwhile, Northern Pass Transmission, which is wholly-owned by another subsidiary of Eversource Energy, is planning on submitting a bid. While employees of Eversource Massachusetts are prohibited from directly discussing the RFP with employees of Northern Pass, it’s impossible to erase from the judges’ minds the fact that a sister subsidiary is bidding on the RFP. Notably, in a quarterly earnings call in February, Lee Olivier, executive vice-president of Eversource Energy, stated, “We will bid Northern Pass into a clean energy RFP that Massachusetts will be running in the spring” and “Northern Pass is very well-positioned for this RFP.” It’s all one company, folks. If you have any doubt of that, read the transcript of the Eversource Energy quarterly earnings call.
What makes a bidder “very well-positioned for this RFP”?
Another hydro transmission project, the New England Clean Power Link, which will be fully buried in Vermont, is also expected to bid into the Massachusetts RFP. Its estimated cost of $1.2 billion is $400 million less than the estimated cost of Northern Pass. It has all of its federal and state permits, which Northern Pass does not. On the surface, you’d expect its bid to score higher than a bid made by Northern Pass. Significantly less expensive, fully permitted, same type of power – it would seem to be a much better deal for the Massachusetts ratepayers who will bear the cost of any procurement contracts. But, TDI, the owner of the New England Clean Power Link may be missing that intangible advantage - it doesn’t own an electric utility in Massachusetts, which may mean it isn’t “very well-positioned for this RFP.”
Earlier this year Eversource New Hampshire unsuccessfully attempted to get the Public Utilities Commission to approve a no-bid contract to buy power from its sister subsidiary, Northern Pass. This type of self-dealing no doubt benefits the shareholders of Eversource Energy, but it doesn’t serve the interests of ratepayers. It’s time to put an end to it.