Avangrid had just learned that a federal permitting quagmire would delay its offshore Vineyard Wind project by a year or so.
But during an earnings call on Wednesday, analysts seemed far more interested in another significant piece of infrastructure: the company’s controversial New England Clean Energy Connect power line, to bring hydroelectricity from Canada to Massachusetts through western Maine.
The reason? The fate of this $950 million project will probably be up to Maine voters now. This month, opponents to the 145-mile power line submitted more than 75,000 signatures to the Maine secretary of state’s office to put the issue to a referendum in November. The Avangrid subsidiary Central Maine Power has spent more than $2.3 million so far on a political action committee to fight back. But other power plant owners, trying to fend off the competition this line would bring, are investing heavily in the referendum campaign.
Both big projects — the wind farm and the power line — are key components of the Baker administration’s efforts to shift Massachusetts to greener sources of electricity. Both have turned into far more convoluted sagas than the administration initially expected.
At the start of the earnings call, Avangrid’s chief executive, Jim Torgerson, said the company now plans to start construction on the Maine power line in the third quarter — that is, somewhere between July 1 and the end of September — to get it operational by the end of 2022.
The company had been talking about a second-quarter start date as recently as three weeks ago. But here’s the big question: What happens to Avangrid’s investment if it starts construction, only to watch the project get rejected by the voters?
Torgerson and deputy CEO Bob Kump didn’t provide a definitive answer, despite being asked three different ways.
Kump tried to offer up some optimism, along with a dig or two at his opponents. First, he noted that the company-funded political action committee is trying to correct “a lot of the misinformation” spread by “fossil fuel interests.” He pointed to the signature-review process by the secretary of state, saying that foes of the power line need at least 63,000 certified signatures to advance. Once the state review ends next week, Avangrid will have 10 days to conduct its own review.
Kump then hinted that the company might not move forward when Q3 rolls around, after all. He said it will assess the situation once it has all its permits, and then decide whether to proceed.
Avangrid has a good read on the voter sentiment already, thanks to monthly polling since December. One analyst asked the natural question: How does it look for you? Kump wouldn’t say. That’s “confidential.”
Another question: So do you feel pretty confident the ballot question would prevail? “That’s our goal,” was Kump’s response. He then wrapped up the line of questioning by promising more information during an upcoming “investor day” event in May.
Meanwhile, Avangrid executives didn’t need to fend off questions about delays to the Vineyard Wind project, which is being developed through a joint venture with Copenhagen Infrastructure Partners. The nearly $3 billion endeavor to build a wind farm south of Martha’s Vineyard would eventually provide enough power for more than 400,000 homes.
Last summer, Avangrid was still expecting Vineyard Wind to generate electricity by the end of 2021. Now, the best the company can offer is “no earlier than 2023.” The official timeline shifted earlier this month, due to a longer-than-expected review at the Department of the Interior. No worries: Torgerson even highlighted a side benefit from the delay. The project construction, he said, could sync up nicely with a newer offshore wind proposal to serve Connecticut.
A lucrative federal tax credit had been at risk for Vineyard Wind. But Congress threw the industry a lifeline in December with an extension of the tax credit. Avangrid had once banked on a 24 percent credit for the first half of the project and an 18 percent credit for the second. Thanks to that extension, Vineyard Wind has until the end of 2024 to get the windmills spinning and plugged in to take advantage of the 18 percent credit.
Avangrid’s stock took a hit Wednesday, falling some 8 percent to close at $51.85 a share. Most of that drop happened before the call, a predictable result after the company’s earnings fell short of expectations.
But Avangrid could face another rocky day in the market if it ends up spending big bucks on this power line, only to watch those dreams get short-circuited by the voters in Maine.