The Massachusetts Department of Public Utilities has approved a settlement agreement for the New England Clean Energy Connect (NECEC) transmission line, authorizing a significant cost increase to account for regulatory delays to the project.
The Jan. 27 agreement comes after political and regulatory obstacles caused an approximately two-year pause in the line’s construction. Massachusetts ratepayers now will be on the hook for a price increase estimated to total $521 million in 2017 dollars, which equates to about $670 million (24-160).
When in service, the 1,200-MW NECEC project will facilitate power flow from Quebec to New England. The project was selected by Massachusetts in a 2018 clean energy solicitation and is being developed by a subsidiary of Avangrid.
While the project now is fully permitted and under construction, opposition to the line in Maine brought together an unlikely pairing of fossil fuel generators and environmental nonprofits, including the Sierra Club and the Natural Resources Council of Maine.
This coalition succeeded in getting a ballot referendum passed in 2021 to stop the project, but it eventually was struck down by the Maine Supreme Judicial Court. Construction on the project resumed in August 2023.
While NECEC initially was projected to come online in late 2022, it now is on track to be in service by the end of this year, according to a January progress report. The developer wrote that the HVDC line is fully cleared, with 919 pole bases set, 756 poles erected and wires installed on 554 poles.
Negotiations on the settlement agreement included the utilities, the developer, the Massachusetts Attorney General’s Office and the state’s Department of Energy Resources. The utilities filed the agreement in October 2024.
The DPU ruled that “the distribution companies and the other settling parties provided testimony and significant evidence” that the cost increases were caused by delays stemming from the Maine referendum.
“The incremental cost increase negotiated by the settling parties is less than the costs NECEC claims to have incurred due to the Maine initiative,” the department noted. It highlighted the utilities’ findings that the project still would provide about $3.38 billion in net benefits, calculated in 2017 dollars.
The DPU wrote that it expects the project to save customers an average of $18 to $20 per year and cut emissions by about $2 million tons annually for the length of the contract.
The settlement agreement will increase the monthly transmission charges to the distribution companies for the first year of the contract from $9.29 to $13.61/kW-month. These charges will grow to $19.82/kW-month by the final year of the contract.
“NECEC is essential to our shared clean energy goals,” DPU Chair James Van Nostrand said in a statement. “The project will not only provide renewable energy year-round, but most importantly, it will stabilize electric rates throughout the state, saving ratepayers money over time.”
ISO-NE studies have shown the project would bring significant reliability benefits to New England. In a 2024 study, the RTO found the line would cut the energy shortfall by 31 to 36% in a worst-case 21-day winter scenario, preventing about 80,000 MWh of shortfall.
Avangrid also has an ongoing lawsuit against NextEra Energy, alleging it broke state and federal antitrust laws in its efforts to stop the project and caused damages of at least $350 million. NextEra owns several generators in the region that likely would be affected by the lower energy prices enabled by NECEC (3:24-cv-30141). (See Avangrid Sues NextEra over ‘Scorched-earth Scheme’ to Stop NECEC.)
