An update to the economic analysis of the hydroelectric energy transmitted by Northern Pass shows that the project will reduce wholesale energy costs in New England by more than $600 million annually, and eliminate more than 3 million tons of carbon emissions in the region each year.
The wholesale energy price reductions will ultimately flow to customers as retail energy cost savings. The significant reduction in emissions will help New England states achieve clean air goals.
“…LEI’s modeling update demonstrates that Northern Pass will deliver significant benefits to ratepayers in the form of lower electricity costs, carbon emissions reduction, and a more efficient system…”
(London Economics International Updated Analysis, February 2017)
The study, done by London Economics International (LEI) and filed today with the NH Site Evaluation Committee as part of the project’s ongoing state permitting process, provides an update to a 2015 LEI study that showed similar CO2 emission reductions and average regional economic savings of about $800 million annually.
According to LEI, the change in the estimated annual energy savings since 2015 is due to several factors, including updated projected natural gas prices, lower forecasted customer energy demand, and a modest net increase in supply during the study period from 2020 – 2030. It also reflects changes to rules governing the Forward Capacity Market (FCM), which is administered by ISO-New England, the region’s electric system operator. The FCM provides incentive payments to energy generators through a competitive process under guidelines set annually by ISO-New England. These payments are funded by electricity consumers. Although the size of Northern Pass’ impact in terms of megawatts has not changed since 2015, the total amount paid for capacity will be smaller because of ISO-New England’s 2016 FCM rules. As a result, LEI’s updated study now calculates $600 million in annual savings—a number that fluctuates based on annual FCM parameters.
“…this Updated Analysis shows that even in the face of shifting market conditions due to changes in underlying drivers and evolving market rules, a project like Northern Pass will create substantial wholesale electricity market benefits in the form of lower electricity costs, benefiting consumers across New England. In addition, the Updated Analysis suggests that Northern Pass still produces significant reductions in emissions of CO2 within the New England footprint, supporting many states’ legislated greenhouse gas emissions reduction goals and overall societal initiatives to tackle the global Climate Change problem.”
(Testimony of Julia Frayer, Managing Director, London Economics International, February 2017)