Wind victory comes at just the right time for Eversource
Ever have one of those weeks when it feels like you win some, and you lose some?
The executives at Eversource Energy sure know the feeling.
Maybe last Thursday they were popping champagne bottles in their Pru tower offices. The company had just won a massive contract for an offshore wind farm, as part of a joint venture with Danish energy giant Orsted.
But the festive mood took a turn on Friday: The New Hampshire Supreme Court ruled against Northern Pass, the controversial 192-mile power line that Eversource wants to build across the Granite State, to bring hydropower from Canada to Massachusetts. The $1.6 billion project suddenly seemed dead, at least in its current form. Could a decade’s worth of work end up all for naught?
This had to be a tough one for Eversource, which has blown through $310 million of shareholder money on land acquisition, legal fees, engineering, and other development costs. Northern Pass was seminal in Eversource’s formation, by bringing together the top executives of predecessor utilities NStar and Northeast Utilities. Eventually, they went from project partners to merger partners.
Northern Pass was once considered the power line to beat, even though it faced antagonists among the towns along the route and environmental groups. In January 2018, Eversource had won contracts with Massachusetts utilities (including with itself, as Eversource was also on the other side of the deal) to deliver 1,090 megawatts of hydroelectricity here via Northern Pass.
But the New Hampshire Site Evaluation Committee rejected the project a week later, pointing to the potential for harm to the “orderly development” of the state. A third of the line would go underground, through the White Mountains. That concession wasn’t enough for committee members, who fretted about the possible impact on tourism and property values.
The Baker administration turned to Plan B, a transmission line that Avangrid plans to build through Western Maine, as a result.
Eversource didn’t give up. It asked the state panel to reconsider. That didn’t work. Then the utility took the issue to the state Supreme Court. Among the arguments: the state siting panel failed to properly weigh the benefits, and acted in an arbitrary manner without enough facts to support its ruling. The high court categorically rejected those arguments on Friday.
Even with this knockout punch, Eversource wouldn’t concede. Instead, the company said it will closely review the court’s decision and “evaluate all potential options for moving forward.”
The only obvious way forward would be to revive Northern Pass in a different form, adjusted to account for some of the criticisms. But when an ardent supporter like Governor Chris Sununu says it’s time to move on, Eversource might want to take the hint.
Good thing for Eversource that it is looking elsewhere for earnings growth — most notably, offshore wind. In late 2016, Eversource agreed to team up with Orsted to develop the proposed Bay State Wind project. By the end of last year, Eversource had invested nearly $235 million in the joint venture.
And then, in February, the big bet: Eversource committed another $225 million to the Orsted venture, to develop more wind projects south of Massachusetts and Rhode Island.
The Eversource-Orsted venture just won in Albany, big time. New York officials on Thursday picked its “Sunrise Wind” project for an 880-megawatt procurement, enough power for a half-million homes. The wind farm would go up in the Atlantic some 30 miles east of Montauk, N.Y. (Equinor was the other winning bidder in New York, and will build a slightly smaller wind farm south of New York City.)
On May 2, during Eversource’s most recent earnings cal l , chief financial officer Phil Lembo talked about how the wind projects already under contract will be a “very significant” source of net income and cash flow growth. The company’s offshore wind success now becomes more likely with the New York victory.
Lembo continued to sound optimistic on that call in May about the prospects of Northern Pass before the Supreme Court. So much for that hope.
Eversource executives will need to face Wall Street when quarterly earnings time rolls around again. At least they’ll have a good story to tell about their bold offshore wind ambitions. You win some, you lose some.