The Energy Landscape in New England
There is much pondering happening these days about what a Donald Trump presidency will mean for national and regional energy policy, particularly now that former Governor Rick Perry has been named as Secretary of Energy. One thing is clear, however. Certain New England states cannot be sanguine in thinking that they will be able to pursue unfettered their renewable energy and climate strategies to the extent they impact the regional wholesale competitive market. This is most starkly apparent with respect to the recent Massachusetts energy bill calling for large-scale procurement by its electric utilities of hydroelectric power bolstered by other renewables and offshore wind. Without getting into the weeds of the intricacies of the market rules that govern the competitive market, once in place, these contracts will run head-on into these rules—rules that are overseen by the Federal Energy Regulatory Commission (FERC), who has a long, well-established predilection for competitive markets. That’s one thing that’s not likely to change under a Trump presidency. The composition of FERC will be changing in the very near future with Trump appointments that aren’t likely to see the world differently, at least with respect to climate-driven energy policy.
The question is whether the Republican mantra of states’ rights has the potential to override this commitment to competitive markets, and further, whether the new Administration will hold true to states’ rights as they apply to energy and climate polices the Administration may not support. A U.S. Supreme Court decision issued last April, Talen v. Hughes, shot down a Maryland law that mandated utility long-term contracts for a gas-fueled power plant because it distorted market prices in that regional power pool. The same can be said about the Massachusetts legislation. The Court left open, however, the possibility of a different outcome for such contracts that implement state clean energy polices. So, the New England energy landscape could be directly affected by President-Elect Trump’s Supreme Court nominee as well.
Even before the election, the leadership of the New England Power Pool (NEPOOL) initiated a dialogue among all of the stakeholders in the region to discuss how to integrate state energy polices into the competitive market. The process has been referred to as the IMAPP process (Integrating Public Policy and Markets in New England). The discussions have been very productive in eliciting many perspectives, options and ideas. The states have provided high level goals and objectives but clearly are not anywhere near consensus on what an acceptable outcome might look like. Until they do, resolving the conflict between state policies and market rules will be heading to FERC for resolution. That’s a risky proposition for everyone but mostly for Massachusetts, who has the most at stake. Massachusetts has touted its leadership in passing the legislation. It’s time to show leadership in making sure that it can be implemented in a way that does not result in protracted litigation and regional disharmony.
New England has a long history of regional cooperation on large-scale energy strategies. The creation of the Power Pool after the 1965 blackout, the first of its kind in the country, was the beginning of that collaboration. The current Hydro-Quebec interconnections were constructed with a regional approach supported by all six states. We can do it again. Given what we’re up against in Washington, we have no choice. The states should not be trying to one-up one another, but rather harmonize their views, respect their differences and find a solution to allow each state’s efforts to proceed.