OPG probes ex-chair's missing expense receipts

By The Toronto Star


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Ontario Power Generation Inc. has hired a forensic accounting firm to probe 18 months of missing receipts for expenses rung up by the company's former $250,000-a-year chair, William Farlinger.

"The board of OPG has brought in a forensic accounting firm, Kroll, to investigate the situation," Energy Minister Dwight Duncan said in an interview. "I'm monitoring the situation very closely."

OPG released 1,400 pages of Farlinger's expense records recently in response to freedom of information requests. The new Liberal government made OPG subject to freedom of information rules in December, after the Tories had exempted the provincially owned firm.

Good food, good wine and good company were all in the mix when Farlinger entertained, charging the expenses to the account of taxpayer-owned OPG, according to the records.

For example, Nov. 20, 2000, was not a good night for the Toronto Raptors, as they were pasted 100 to 64 by the Charlotte Hornets.

But the stinker of a game was easier to take for blue-chip occupants of the Ontario Power Generation box that night at the Air Canada Centre. The guest list as recorded included then-premier Mike Harris and companion Sharon Dunn as they sipped an $80-a-bottle Cabernet Sauvignon.

Farlinger, wife Esther and their eight guests ran up a tab of $1,501.53, more than one-third of which — $582 — was for wine.

Three of the bottles cost $80 a pop; the others upward of $57. Other names listed on the records for that night were Andy Brandt, former Tory cabinet minister turned chief executive of the Liquor Control Board of Ontario; Senator Trevor Eyton, a director of Brascan Corp., which, like OPG, is in the electricity generation business; and Mississauga Mayor Hazel McCallion.

In the light of OPG's financial performance over the last couple of years, "I don't like it," Duncan said of the company's continuing lease on the ACC box, which he and the board have directed should be dispensed with.

"These people don't seem to understand the value of a dollar." "This stuff all works its way back onto the taxpayer. By July of this year, we're going to be virtually out of cash. This kind of thing is utter nonsense."

Here's a sample of events where Farlinger played host to provincial politicians and other powerful people within months of the Hornets-Raptors blowout:

April 4, 2000: Farlinger hosts 10 at a Raptors game at the ACC. Guests include Harris, his chief of staff David Lindsay, cabinet minister Jim Wilson and financier Steve Hudson of Newcourt Capital. OPG's tab for food and drink: $1,340.84.

Aug. 31, 2000: Farlinger and his wife host four other couples at an unspecified "Shaw Festival Event" at the Queen's Landing Resort in Niagara-on-the-Lake. Their guests, according to the records, include Eyton and his wife, and John Mayberry, then chief executive of Dofasco Inc., and his wife. Tab for the event: $3,545.91. The record doesn't say whether the bill included hotel rooms or not.

Sept. 19, 2000: Farlinger hosts a party of 13 in a SkyDome box. The guest list names Tory cabinet ministers Jim Wilson and Norm Sterling. Food and drink tab: $2,132.20.

Sept. 24, 2000: The Farlingers take eight guests to see Tina Turner at the Air Canada Centre. They include Steve Hudson and his wife, and Michael Sopko, chief executive of Inco Ltd. Food and drink tab for eight: $1,691.42.

Farlinger was a close associate of Harris, serving as co-chair of the transition team that installed the Conservatives in office after their 1995 election victory. He was formerly chair of the accounting giant Ernst and Young.

Farlinger, whom the Star could not reach for comment last night, wrote a report for the province in July, 1995, calling for privatizing Ontario Hydro's generating assets. That November, Harris named him Ontario's Hydro's chairman.

In 1997, Farlinger made headlines by criticizing the performance of his own company, saying Hydro's poorly performing nuclear stations were being run by "some sort of nuclear cult."

When the province broke up Ontario Hydro, splitting its generating assets from its transmission wire operations, Farlinger became chairman of Ontario Power Generation Inc. at a salary of $250,000 a year. He held the post until last month, when Duncan, the incoming Liberal minister, fired him and other key executives.

Expense records for the events show some patterns other than the guest list of Tory cabinet ministers (who included Norm Sterling, Elizabeth Witmer, Ernie Eves and life partner Isabel Bassett).

On April 18, 2001, for example, when Farlinger's party of 10 took in a Leafs game, the bill was $1,088.78. One guest had caribou at $45 a plate; another had a "platinum" hot dog at $4.25.

Chocolate strawberries show up frequently, at $50 a platter. SkyDome's $264 oyster cart is mentioned once, when the Blue Jays played the Yankees on Sept. 4, 2001. The Jays won a 14-0 laugher.

As for the future of the ACC box, Duncan said, "They're having trouble getting out of the lease. I've indicated any tickets are to go to charitable organizations and kids that otherwise wouldn't get a chance to go to a hockey game."

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Electricity Regulation With Equity & Justice For All

Energy equity in utility regulation prioritizes fair rates, clean energy access, and DERs, addressing fixed charges and energy burdens on low-income households through stakeholder engagement and public utility commission reforms.

 

Key Points

Fairly allocates clean energy benefits and rate burdens, ensuring access and protections for low-income households.

✅ Reduces fixed charges that burden low-income households

✅ Funds community participation in utility proceedings

✅ Prioritizes DERs, energy efficiency, and solar in impacted areas

 

By Kiran Julin

Pouring over the line items on your monthly electricity bill may not sound like an enticing way to spend an afternoon, but the way electricity bills are structured has a significant impact on equitable energy access and distribution. For example, fixed fees can have a disproportionate impact on low-income households. And combined with other factors, low-income households and households of color are far more likely to report losing home heating service, with evidence from pandemic power shut-offs highlighting these disparities, according to recent federal data.

Advancing Equity in Utility Regulation, a new report published by the U.S. Department of Energy’s (DOE’s) Lawrence Berkeley National Laboratory (Berkeley Lab), makes a unifying case that utilities, regulators, and stakeholders need to prioritize energy equity in the deployment of clean energy technologies and resources, aligning with a people-and-planet electricity future envisioned by advocacy groups. Equity in this context is the fair distribution of the benefits and burdens of energy production and consumption. The report outlines systemic changes needed to advance equity in electric utility regulation by providing perspectives from four organizations — Portland General Electric, a utility company; the National Consumer Law Center, a consumer advocacy organization; and the Partnership for Southern Equity and the Center for Biological Diversity, social justice and environmental organizations.
 
“While government and ratepayer-funded energy efficiency programs have made strides towards equity by enabling low-income households to access energy-efficiency measures, that has not yet extended in a major way to other clean-energy technologies,” said Lisa Schwartz, a manager and strategic advisor at Berkeley Lab and technical editor of the report. “States and utilities can take the lead to make sure the clean-energy transition does not leave behind low-income households and communities of color. Decarbonization and energy equity goals are not mutually exclusive, and in fact, they need to go hand-in-hand.”

Energy bills and electricity rates are governed by state laws and utility regulators, whose mission is to ensure that utility services are reliable, safe, and fairly priced. Public utility commissions also are increasingly recognizing equity as an important goal, tool, and metric, and some customers face major changes to electric bills as reforms advance. While states can use existing authorities to advance equity in their decision-making, several, including Illinois, Maine, Oregon, and Washington, have enacted legislation over the last couple of years to more explicitly require utility regulators to consider equity.

“The infrastructure investments that utility companies make today, and regulator decisions about what goes into electricity bills, including new rate design steps that shape customer costs, will have significant impacts for decades to come,” Schwartz said.

Solutions recommended in the report include considering energy justice goals when determining the “public interest” in regulatory decisions, allocating funding for energy justice organizations to participate in utility proceedings, supporting utility programs that increase deployment of energy efficiency and solar for low-income households, and accounting for energy inequities and access in designing electricity rates, while examining future utility revenue models as technologies evolve.

The report is part of the Future of Electric Utility Regulation series that started in 2015, led by Berkeley Lab and funded by DOE, to encourage informed discussion and debate on utility trends and tackling the toughest issues related to state electric utility regulation. An advisory group of utilities, public utility commissioners, consumer advocates, environmental and social justice organizations, and other experts provides guidance.

 

Taking stock of past and current energy inequities

One focus of the report is electricity bills. In addition to charges based on usage, electricity bills usually also have a fixed basic customer charge, which is the minimum amount a household has to pay every month to access electricity. The fixed charge varies widely, from $5 to more than $20. In recent years, utility companies have sought sizable increases in this charge to cover more costs, amid rising electricity prices in some markets.

This fixed charge means that no matter what a household does to use energy more efficiently or to conserve energy, there is always a minimum cost. Moreover, low-income households often live in older, poorly insulated housing. Current levels of public and utility funding for energy-efficiency programs fall far short of the need. The combined result is that the energy burden – or percent of income needed to keep the lights on and their homes at a healthy temperature – is far greater for lower-income households.

“While all households require basic lighting, heating, cooling, and refrigeration, low-income households must devote a greater proportion of income to maintain basic service,” explained John Howat and Jenifer Bosco from the National Consumer Law Center and co-authors of Berkeley Lab’s report. Their analysis of data from the most recent U.S. Energy Information Administration’s Residential Energy Consumption Survey shows households with income less than $20,000 reported losing home heating service at a pace more than five times higher than households with income over $80,000. Households of color were far more likely than those with a white householder to report loss of heating service. In addition, low-income households and households of color are more likely to have to choose between paying their energy bill or paying for other necessities, such as healthcare or food.

Based on the most recent data (2015) from the U.S. Energy Information Administration (EIA), households with income less than $20,000 reported losing home heating service at a rate more than five times higher than households with income over $80,000. Households of color were far more likely than those with a white householder to report loss of heating service. Click on chart for larger view. (Credit: John Howat/National Consumer Law Center, using EIA data)

Moreover, while many of the infrastructure investment decisions that utilities make, such as whether and where to build a new power plant, often have long-term environmental and health consequences, impacted communities often are not at the table. “Despite bearing an inequitable proportion of the negative impacts of environmental injustices related to fossil fuel-based energy production and climate change, marginalized communities remain virtually unrepresented in the energy planning and decision-making processes that drive energy production, distribution, and regulation,” wrote Chandra Farley, CEO of ReSolve and a co-author of the report.


Engaging impacted communities
Each of the perspectives in the report identify a need for meaningful engagement of underrepresented and disadvantaged communities in energy planning and utility decision-making. “Connecting the dots between energy, racial injustice, economic disinvestment, health disparities, and other associated equity challenges becomes a clarion call for communities that are being completely left out of the clean energy economy,” wrote Farley, who previously served as the Just Energy Director at Partnership for Southern Equity. “We must prioritize the voices and lived experiences of residents if we are to have more equity in utility regulation and equitably transform the energy sector.”

In another essay in the report, Nidhi Thaker and Jake Wise from Portland General Electric identify the importance of collaborating directly with the communities they serve. In 2021, the Oregon Legislature passed Oregon HB 2475, which allows the Oregon Public Utility Commission to allocate ratepayer funding for organizations representing people most affected by a high energy burden, enabling them to participate in utility regulatory processes.

The report explains why energy equity requires correcting inequities resulting from past and present failures as well as rethinking how we achieve future energy and decarbonization goals. “Equity in energy requires adopting an expansive definition of the ‘public interest’ that encompasses energy, climate, and environmental justice. Energy equity also means prioritizing the deployment of distributed energy resources and clean energy technologies in areas that have been hit first and worst by the existing fossil fuel economy,” wrote Jean Su, energy justice director and senior attorney at the Center for Biological Diversity.

This report was supported by DOE’s Grid Modernization Laboratory Consortium, with funding from the Office of Energy Efficiency and Renewable Energy and the Office of Electricity.

 

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Trump Tariff Threat Delays Quebec's Green Energy Bill

Quebec Energy Bill Tariff Delay disrupts Canada-U.S. trade, renewable energy investment, hydroelectric expansion, and clean technology projects, as Trump tariffs on aluminum and steel raise costs, threatening climate targets and green infrastructure timelines.

 

Key Points

A policy pause in Quebec from U.S. tariff threats, disrupting clean investment, hydro expansion, and climate targets.

✅ Tariff risk inflates aluminum and steel project costs.

✅ Quebec delays clean energy legislation amid trade uncertainty.

✅ Hydroelectric reliance complicates emissions reduction timelines.

 

The Trump administration's tariff threat has had a significant impact on Quebec's energy sector, with tariff threats boosting support for projects even as the uncertainty resulted in the delay of a critical energy bill. Originally introduced to streamline energy development and tackle climate change, the bill was meant to help transition Quebec towards greener alternatives while fostering economic growth. However, the U.S. threat to impose tariffs on Canadian goods, including energy products, introduced a wave of uncertainty that led to a pause in the bill's legislative process.

Quebec’s energy bill had ambitious goals of transitioning to renewable sources like wind, solar, and hydroelectric power. It sought to support investments in clean technologies and the expansion of the province's clean energy infrastructure, as the U.S. demand for Canadian green power continues to grow across the border. Moreover, it emphasized the reduction of carbon emissions, an important step towards meeting Quebec's climate targets. At its core, the bill aimed to position the province as a leader in green energy development in Canada and globally.

The interruption caused by President Donald Trump's tariff rhetoric has, however, cast a shadow over the legislation. Tariffs, if enacted, would disproportionately affect Canada's energy exports, with electricity exports at risk under growing tensions, particularly in sectors like aluminum and steel, which are integral to energy infrastructure development. These tariffs could increase the cost of energy-related projects, thereby hindering Quebec's ability to achieve its renewable energy goals and reduce carbon emissions in a timely manner.

The tariff threat was seen as a part of the broader trade tensions between the U.S. and Canada, a continuation of the trade war that had escalated under Trump’s presidency. In this context, the Quebec government was forced to reconsider its legislative priorities, with policymakers citing concerns over the potential long-term consequences on the energy industry, as leaders elsewhere threatened to cut U.S.-bound electricity to exert leverage. With the uncertainty around tariffs and trade relations, the government opted to delay the bill until the geopolitical situation stabilized.

This delay underscores the vulnerability of Quebec’s energy agenda to external pressures. While the provincial government had set its sights on an ambitious green energy future, it now faces significant challenges in ensuring that its projects remain economically viable under the cloud of potential tariffs, even as experts warn against curbing Quebec's exports during the dispute. The delay in the energy bill also reflects broader challenges faced by the Canadian energy sector, which is highly integrated with the U.S. market.

The situation is further complicated by the province's reliance on hydroelectric power, a cornerstone of its energy strategy that supplies markets like New York, where tariffs could spike New York energy prices if cross-border flows are disrupted. While hydroelectric power is a clean and renewable source of energy, there are concerns about the environmental impact of large-scale dams, and these concerns have been growing in recent years. The tariff threat may prompt a reevaluation of Quebec’s energy mix and force the government to balance its environmental goals with economic realities.

The potential imposition of tariffs also raises questions about the future of North American energy cooperation. Historically, Canada and the U.S. have enjoyed a symbiotic energy relationship, with significant energy trade flowing across the border. The energy bill in Quebec was designed with the understanding that cross-border energy trade would continue to thrive. The Trump administration's tariff threat, however, casts doubt on this stability, forcing Quebec lawmakers to reconsider how they proceed with energy policy in a more uncertain trade environment.

Looking forward, Quebec's energy sector will likely need to adjust its strategies to account for the possibility of tariffs, while still pushing for a sustainable energy future, especially if Biden outlook for Canada's energy proves more favorable for the sector in the medium term. It may also open the door for deeper discussions about diversification, both in terms of energy sources and trade partnerships, as Quebec seeks to mitigate the impact of external threats. The delay in the energy bill, though unfortunate, may serve as a wake-up call for Canadian lawmakers to rethink how they balance environmental goals with global trade realities.

Ultimately, the Trump tariff threat highlights the delicate balance between regional energy ambitions and international trade dynamics. For Quebec, the delay in the energy bill could prove to be a pivotal moment in shaping the future of its energy policy.

 

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Growing pot sucks up electricity and pumps out an astounding amount of carbon dioxide — it doesn't have to

Sustainable Cannabis Cultivation leverages greenhouse design, renewable energy, automation, and water recapture to cut electricity use, emissions, and pesticides, delivering premium yields with natural light, smart sensors, and efficient HVAC and irrigation control.

 

Key Points

A data-driven, low-impact method that cuts energy, water, and chemicals while preserving premium yields.

✅ 70-90% less electricity vs. conventional indoor grows

✅ Natural light, solar, and rainwater recapture reduce footprint

✅ Automation, sensors, and HVAC stabilize microclimates

 

In the seven months since the Trudeau government legalized recreational marijuana use, licensed producers across the country have been locked in a frenetic race to grow mass quantities of cannabis for the new market.

But amid the rush for scale, questions of sustainability have often taken a back seat, and in Canada, solar adoption has lagged in key sectors.

According to EQ Research LLC, a U.S.-based clean-energy consulting firm, cannabis facilities can need up to 150 kilowatt-hours of electricity per year per square foot. Such input is on par with data centres, which are themselves 50 to 200 times more energy-intensive than a typical office building, and achieving zero-emission electricity by 2035 would help mitigate the associated footprint.

At the Lawrence Berkley National Laboratory in California, a senior scientist estimated that one per cent of U.S. electricity use came from grow ops. The same research — published in 2012 — also found that the procedures for refining a kilogram of weed emit around 4,600 kilograms of carbon dioxide to the atmosphere, equivalent to operating three million cars for a year, though a shift to zero-emissions electricity by 2035 could substantially cut those emissions.

“All factors considered, a very large expenditure of energy and consequent ‘environmental imprint’ is associated with the indoor cultivation of marijuana,” wrote Ernie Small, a principal research scientist for Agriculture and Agri-Food Canada, in the 2018 edition of the Biodiversity Journal.

Those issues have left some turning to technology to try to reduce the industry’s footprint — and the economic costs that come with it — even as more energy sources make better projects for forward-looking developers.

“The core drawback of most greenhouse environments is that you’re just getting large rooms, which are harder to control,” says Dan Sutton, the chief executive officer of Tantalus Labs., a B.C.-based cannabis producer. “What we did was build a system specifically for cannabis.”

Sutton is referring to SunLab, the culmination of four years of construction, and at present the main site where his company nurtures rows of the flowering plant. The 120,000-square foot structure was engineered for one purpose: to prove the merits of a sustainable approach.

“We’re actually taking time-series data on 30 different environmental parameters — really simple ones like temperature and humidity — all the way down to pH of the soil and water flow,” says Sutton. “So if the temperature gets a little too cold, the system recognizes that and kicks on heaters, and if the system senses that the environment is too hot in the summertime, then it automatically vents.”

A lot is achieved without requiring much human intervention, he adds. Unlike conventional indoor operations, SunLab demands up to 90 per cent less electricity, avoids using pesticides, and draws from natural light and recaptured rainwater to feed its crops.

The liquid passes through a triple-filtration process before it is pumped into drip irrigation tubing. “That allows us to deliver a purity of water input that is cleaner than bottled water,” says Sutton.

As transpiration occurs, a state-of-the-art, high-capacity airflow suspended below the ceiling cycles air at seven-minute intervals, repeatedly cooling the air and preventing outbreaks of mould, while genetically modified “guardian” insects swoop in to eliminate predatory pests.

“When we first started, people never believed we would cultivate premium quality cannabis or cannabis that belongs on the top shelf, shoulder to shoulder with the best in the world and the best of indoor,” says Sutton.

Challenges still exist, but they pale in comparison to the obstacles that American companies with an interest in adopting greener solutions persistently face, and in provinces like Alberta, an Alberta renewable energy surge is reshaping the opportunity set.

Although cannabis is legal in a number of states, it remains illegal federally, which means access to capital and regulatory clarity south of the border can be difficult to come by.

“Right now getting a new project built is expensive to do because you can’t get traditional bank loans,” says Canndescent CEO Adrian Sedlin, speaking by phone from California.

In retrofitting the company’s farm to accommodate a sizeable solar field, he struggled to secure investors, even as a solar-powered cannabis facility in Edmonton showcased similar potential.

“We spent over a year and a half trying to get it financed,” says Sedlin. “Finding someone was the hard part.”

Decriminalizing the drug would ultimately increase the supply of capital and lower the costs for innovative designs, something Sedlin says would help incentivize producers to switch to more effective and ecologically sound techniques.

Some analysts argue that selling renewable energy in Alberta could become a major growth avenue that benefits energy-intensive industries like cannabis cultivation.

Canndescent, however, is already there.

“We’re now harnessing the sun to reduce our reliance on fossil fuels and going to sustainable, or replenishable, energy sources, while leveraging the best and most efficient water practices,” says Sedlin. “It’s the right thing to do.”

 

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As Maine debates 145-mile electric line, energy giant with billions at stake is absent

Hydro-Quebec NECEC Transmission Line faces Maine PUC scrutiny over clean energy claims, greenhouse gas emissions, spillage capacity, resource shuffling, and Massachusetts contracts, amid opposition from natural gas generators and environmental groups debating public need.

 

Key Points

A $1B Maine corridor for Quebec hydropower to Massachusetts, debated over emissions, spillage, and public need.

✅ Maine PUC weighing public need and ratepayer benefits

✅ Emissions impact disputed: resource shuffling vs new supply

✅ Hydro-Quebec spillage claims questioned without data

 

As Maine regulators are deciding whether to approve construction of a $1 billion electricity corridor across much of western Maine, the Canadian hydroelectric utility poised to make billions of dollars from the project has been absent from the process.

This has left both opponents and supporters of the line arguing about how much available energy the utility has to send through a completed line, and whether that energy will help fulfill the mission of the project: fighting climate change.

And while the utility has avoided making its case before regulators, which requires submitting to cross-examination and discovery, it has engaged in a public relations campaign to try and win support from the region's newspapers.

Government-owned Hydro-Quebec controls dams and reservoirs generating hydroelectricity throughout its namesake province. It recently signed agreements to sell electricity across the proposed line, named the New England Clean Energy Connect, to Massachusetts as part of the state's effort to reduce its dependence on fossil fuels, including natural gas.

At the Maine Public Utilities Commission, attorneys for Central Maine Power Co., which would build and maintain the line, have been sparring with the opposition over the line's potential impact on Maine and its electricity consumers. Leading the opposition is a coalition of natural gas electricity generators that stand to lose business should the line be built, as well as the Natural Resources Council of Maine, an environmental group.

That unusual alliance of environmental and business groups wants Hydro-Quebec to answer questions about its hydroelectric system, which they argue can't deliver the amount of electricity promised to Massachusetts without diverting energy from other regions.

In that scenario, critics say the line would not produce the reduction in greenhouse gas emissions that CMP and Hydro-Quebec have made a central part of their pitch for the project. Instead, other markets currently buying energy from Hydro-Quebec, such as New York, Ontario and New Brunswick, would see hydroelectricity imports decrease and have to rely on other sources of energy, including coal or oil, to make up the difference. If that happened, the total amount of clean energy in the world would remain the same.

Opponents call this possibility "greenwashing." Massachusetts regulators have described these circumstances as "resource shuffling."

But CMP spokesperson John Carroll said that if hydropower was diverted from nearby markets to power Massachusetts, those markets would not turn to fossil fuels. Rather they would seek to develop other forms of renewable energy "leading to further reductions in greenhouse gas emissions in the region."

Hydro-Quebec said it has plenty of capacity to increase its electricity exports to Massachusetts without diverting energy from other places.

However, Hydro-Quebec is not required to participate -- and has not voluntarily participated -- in regulatory hearings where it would be subject to cross examinations and have to testify under oath. Some participants wish it would.

At a January hearing at the Maine Public Utilities Commission, hearing examiner Mitchell Tannenbaum had to warn experts giving testimony to "refrain from commentary regarding whether Hydro-Quebec is here or not" after they complained about its absence when trying to predict potential ramifications of the line.

"I would have hoped they would have been visible and available to answer legitimate questions in all of these states through which their power is going to be flowing," said Dot Kelly, a member of the executive committee at the Maine Chapter of the Sierra Club who has participated in the line's regulatory proceedings as an individual. "If you're going to have a full and fair process, they have to be there."

[What you need to know about the CMP transmission line proposed for Maine]

While Hydro-Quebec has not presented data on its system directly to Maine regulators, it has brought its case to the press. Central to that case is the fact that it's "spilling" water from its reservoirs because it is limited by how much electricity it can export. It said that it could send more water through its turbines and lower reservoir levels, eliminating spillage and creating more energy, if only it had a way to get that energy to market. Hydro-Quebec said the line would make that possible, and, in doing so, help lower emissions and fight climate change.

"We have that excess potential that we need to use. Essentially, it's a good problem to have so long as you can find an export market," Hydro-Quebec spokesperson Serge Abergel told the Bangor Daily News.

Hydro-Quebec made its "spillage" case to the editorial boards of The Boston Globe, The Portland Press Herald and the BDN, winning qualified endorsements from the Globe and Press Herald. (The BDN editorial board has not weighed in on the project).

Opponents have questioned why Hydro-Quebec is willing to present their case to the press but not regulators.

"We need a better answer than 'just trust us,'" Natural Resources Council of Maine attorney Sue Ely said. "What's clear is that CMP and HQ are engaging in a full-court publicity tour peddling false transparency in an attempt to sell their claims of greenhouse gas benefits."

Energy generators aren't typically parties to public utility commission proceedings involving the building of transmission lines, but Maine regulators don't typically evaluate projects that will help customers in another state buy energy generated in a foreign country.

"It's a unique case," said Maine Public Advocate and former Democratic Senate Minority Leader Barry Hobbins, who has neither endorsed nor opposed the project. Hobbins noted the project was not proposed to improve reliability for Maine electricity customers, which is typically the point of new transmission line proposals evaluated by the commission. Instead, the project "is a straight shot to Massachusetts," Hobbins said.

Maine Public Utilities Commission spokesperson Harry Lanphear agreed. "The Commission has never considered this type of project before," he said in an email.

In order to proceed with the project, CMP must convince the Maine Public Utilities Commission that the proposed line would fill a "public need" and benefit Mainers. Among other benefits, CMP said it will help lower electricity costs and create jobs in Maine. A decision is expected in the spring.

Given the uniqueness of the case, even the commission seems unsure about how to apply the vague "public need" standard. On Jan. 14, commission staff asked case participants to weigh in on how it should apply Maine law when evaluating the project, including whether the hydroelectricity that would travel over the line should be considered "renewable" and whether Maine's own carbon reduction goals are relevant to the case.

James Speyer, an energy consultant whose firm was hired by natural gas company and project opponent Calpine to analyze the market impacts of the line, said he has testified before roughly 20 state public utility commissions and has never seen a proceeding like this one.

"I've never been in a case where one of the major beneficiaries of the PUC decision is not in the case, never has filed a report, has never had to provide any data to support its assertions, and never has been subject to cross examination," Speyer said. "Hydro-Quebec is like a black box."

Hydro-Quebec would gladly appear before the Maine Public Utilities Commission, but it has not been invited, said spokesperson Abergel.

"The PUC is doing its own process," Abergel said. "If the PUC were to invite us, we'd gladly intervene. We're very willing to collaborate in that sense."

But that's not how the commission process works. Individuals and organizations can intervene in cases, but the commission does not invite them to the proceedings, commission spokesperson Lanphear said.

CMP spokesperson Carroll dismissed concerns over emissions, noting that Hydro-Quebec is near the end of completing a more than 15-year effort to develop its clean energy resources. "They will have capacity to satisfy the contract with Massachusetts in their reservoirs," Carroll said.

While Maine regulators are evaluating the transmission line, Massachusetts' Department of Public Utilities is deciding whether to approve 20-year contracts between Hydro-Quebec and that state's electric utilities. Those contracts, which Hydro-Quebec has estimated could be worth close to $8 billion, govern how the utility sells electricity over the line.

Dean Murphy, a consultant hired by the Massachusetts Attorney General's office to review the contracts, testified before Massachusetts regulators that the agreements do not require a reduction in global greenhouse gas emissions. Murphy also warned the contracts don't actually require Hydro-Quebec to increase the total amount of energy it sends to New England, as energy could be shuffled from established lines to the proposed CMP line to satisfy the contracts.

Parties in the Massachusetts proceeding are also trying to get more information from Hydro-Quebec. Energy giant NextEra is currently trying to convince Massachusetts regulators to issue a subpoena to force Hydro-Quebec to answer questions about how its exports might change with the construction of the transmission line. Hydro-Quebec and CMP have opposed the motion.

Hydro-Quebec has a reputation for guarding its privacy, according to Hobbins.

"It would have been easier to not have to play Sherlock Holmes and try to guess or try to calculate without having a direct 'yes' or 'no' response from the entity itself," Hobbins said.

Ultimately, the burden of proving that Maine needs the line falls on CMP, which is also responsible for making sure regulators have all the information they need to make a decision on the project, said former Maine Public Utilities Commission Chairman Kurt Adams.

"Central Maine Power should provide the PUC with all the info that it needs," Adams said. "If CMP can't, then one might argue that they haven't met their burden."

'They treat HQ with nothing but distrust'

If completed, the line would bring 9.45 terawatt hours of electricity from Quebec to Massachusetts annually, or about a sixth of the total amount of electricity Massachusetts currently uses every year (and roughly 80 percent of Maine's annual load). CMP's parent company Avangrid would make an estimated $60 million a year from the line, according to financial analysts.

As part of its legally mandated efforts to reduce carbon emissions and fight climate change, Massachusetts would pay the $950 million cost of constructing the line. The state currently relies on natural gas, a fossil fuel, for nearly 70 percent of its electricity, a figure that helps explain natural gas companies' opposition to the project.

A panel of experts recently warned that humanity has 12 years to keep global temperatures from rising above 1.5 degrees Celsius and prevent the worst effects of climate change, which include floods, droughts and extreme heat.

The line could lower New England's annual carbon emissions by as much as 3 million metric tons, an amount roughly equal to Washington D.C.'s annual emissions. Opponents worry that reduction could be mostly offset by increases in other markets.

But while both sides have claimed they are fighting for the environment, much of the debate features giant corporations with headquarters outside of New England fighting over the future of the region's electricity market, echoing customer backlash seen in other utility takeovers.

Hydro-Quebec is owned by the people of Quebec, and CMP is owned by Avangrid, which is in turn owned by Spanish energy giant Iberdrola. Leading the charge against the line are several energy companies in the Fortune 500, including Houston-based Calpine and Florida-based NextEra Energy.

However, only one side of the debate counts environmental groups as part of its coalition, and, curiously enough, that's the side with fossil fuel companies.

Some environmental groups, including the Natural Resources Council of Maine and Environment Maine, have come out against the line, while others, including the Acadia Center and the Conservation Law Foundation, are still deciding whether to support or oppose the project. So far, none have endorsed the line.

"It is discouraging that some of the environmental groups are so opposed, but it seems the best is the enemy of the good," said CMP's Carroll in an email. "They seem to have no sense of urgency; and they treat HQ with nothing but distrust."

Much of the environmentally minded opposition to the project focuses on the impact the line would have on local wildlife and tourism.

Sandi Howard administers the Say NO To NECEC Facebook page and lives in Caratunk, one of the communities along the proposed path of the line. She said opposition to the line might change if it was proven to reduce emissions.

"If it were going to truly reduce global CO2 emissions, I think it would be be a different conversation," Howard said.

 

Not the first choice

Before Maine, New Hampshire had its own debate over whether it should serve as a conduit between Quebec and Massachusetts. The proposed Northern Pass transmission line would have run the length of the state. It was Massachusetts' first choice to bring Quebec hydropower to its residents.

But New Hampshire's Site Evaluation Committee unanimously voted to reject the Northern Pass project in February 2018 on the grounds that the project's sponsor, Eversource, had failed to prove the project would not interfere with local business and tourism. Though it was the source of the electricity that would have traveled over the line, Hydro-Quebec was not a party to the proceedings.

In its decision, the committee noted the project would not reduce emissions if it was not coupled with a "new source of hydropower" and the power delivered across the line was "diverted from Ontario and New York." The committee added that it was unclear if the power would be new or diverted.

The next month, Massachusetts replaced Northern Pass by selecting CMP's proposed line. As the project came before Maine regulators, questions about Hydro-Quebec and emissions persisted. Two different analyses of CMP's proposed line, including one by the Maine Public Utility Commission's independent consultant, found the line would greatly reduce New England's emissions.

But neither of those studies took into account the line's impact on emissions outside of New England. A study by Calpine's consultant, Energyzt, found New England's emissions reduction could be mostly offset by increased emissions in other areas, including New Brunswick and New York, that would see hydroelectricity imports shrink as energy was redirected to fulfill the contract with Massachusetts.

'They failed in any way to back up those spillage claims'

Hydro-Quebec seemed content to let CMP fight for the project alone before regulators for much of 2018. But at the end of the year, the utility took a more proactive approach, meeting with editorial boards and providing a two-page letter detailing its "spillage" issues to CMP, which entered it into the record at the Maine Public Utilities Commission.

The letter provided figures on the amount of water the utility spilled that could have been converted into sellable energy, if only Hydro-Quebec had a way to get it to market. Instead, by "spilling" the water, the company essentially wasted it.

Instead of sending water through turbines or storing it in reservoirs, hydroelectric operators sometimes discharge water held behind dams down spillways. This can be done for environmental reasons. Other times it is done because the operator has so much water it cannot convert it into electricity or store it, which is usually a seasonal issue: Reservoirs often contain the most water in the spring as temperatures warm and ice melts.

Hydro-Quebec said that, in 2017, it spilled water that could have produced 4.5 terawatt hours of electricity, or slightly more than half the energy needed to fulfill the Massachusetts contracts. In 2018, the letter continued, Hydro-Quebec spilled water that could have been converted into 10.4 terawatts worth of energy. The company said it didn't spill at all due to transmission constraints prior to 2017.

 

The contracts Hydro-Quebec signed with the Massachusetts utilities are for 9.45 terawatt hours annually for 20 years. In its letter, the utility essentially showed it had only one year of data to show it could cover the terms of the contract with "spilled" energy.

"Reservoir levels have been increasing in the last 15 years. Having reached their maximum levels, spillage maneuvers became necessary in 2017 and 2018," said Hydro-Quebec spokesperson Lynn St. Laurent.

By providing the letter through CMP, Hydro-Quebec did not have to subject its spillage figures to cross examination.

Dr. Shaleen Jain, a civil and environmental engineering professor at the University of Maine, said that, while spilled water could be converted into power generation in some circumstances, spills happen for many different reasons. Knowing whether spillage can be translated into energy requires a great deal of analysis.

"Not all of it can be repurposed or used for hydropower," Jain said.

In December, one of the Maine Public Utility Commission's independent consultants, Gabrielle Roumy, told the commission that there's "no way" to "predict how much water would be spilled each and every year." Roumy, who previously worked for Hydro-Quebec, added that even after seeing the utility's spillage figures, he believed it would need to divert energy from other markets to fulfill its commitment to Massachusetts.

"I think at this point we're still comfortable with our assumptions that, you know, energy would generally be redirected from other markets to NECEC if it were built," Roumy said.

In January, Tanya Bodell, the founder and executive director of consultant Energyzt, testified before the commission on behalf of Calpine that it was impossible to know why Hydro-Quebec was spilling without more data.

"There's a lot of details you'd have to look at in order to properly assess what the reason for the spillage is," Bodell said. "And you have to go into an hourly level because the flows vary across the year, within the month, the week, the days. ...And, frankly, it would have been nice if Hydro-Quebec was here and brought their model and allowed us to see how this could help them to sell more."

Even though CMP and Hydro-Quebec's path to securing approval of the project does not go through the Legislature, and despite a Maine court ruling that energized Hydro-Quebec's export bid, lawmakers have taken notice of Hydro-Quebec's absence. Rep. Seth Berry, D-Bowdoinham, the House chairman of the Joint Committee On Energy Utilities and Technology and a frequent critic of CMP, said he would like to see Hydro-Quebec "show up and subject their proposal to examination and full analysis and public examination by the regulators and the people of Maine."

"They're trying to sell an incredibly lucrative proposal, and they failed in any way to back up those spillage claims with defensible numbers and defensible analysis," Berry said.

Berry was part of a bipartisan group of Maine lawmakers that wrote a letter to Massachusetts regulators last year expressing concerns about the project, which included doubts about whether the line would actually reduce global gas emissions. On Monday, he announced legislation that would direct the state to create an independent entity to buy out CMP from its foreign investors.

 

'No benefit to remaining quiet'

Hydro-Quebec would like to provide answers, but "there is always a commercially sensitive information concern when we do these things," said spokesperson Abergel.

"There might be stuff we can do, having an independent study that looks at all of this. I'm not worried about the conclusion," Abergel said. "I'm worried about how long it takes."

Instead of asking Hydro-Quebec questions directly, participants in both Maine and Massachusetts regulatory proceedings have had to direct questions for Hydro-Quebec to CMP. That arrangement may be part of Hydro-Quebec's strategy to control its information, said former Maine Public Utilities Commissioner David Littell.

"From a tactical point of view, it may be more beneficial for the evidence to be put through Avangrid and CMP, which actually doesn't have that back-up info, so can't provide it," Littell said.

Getting information about the line from CMP, and its parent company Avangrid, has at times been difficult, opponents say.

In August 2018, the commission's staff warned CMP in a legal filing that it was concerned "about what appears to be a lack of completeness and timeliness by CMP/Avangrid in responding to data requests in this proceeding."

The trouble in getting information from Hydro-Quebec and CMP only creates more questions for Hydro-Quebec, said Jeremy Payne, executive director of the Maine Renewable Energy Association, which opposes the line in favor of Maine-based renewables.

"There's a few questions that should have relatively simple answers. But not answering a couple of those questions creates more questions," Payne said. "Why didn't you intervene in the docket? Why are you not a party to the case? Why won't you respond to these concerns? Why wouldn't you open yourself up to discovery?"

"I don't understand why they won't put it to bed," Payne said. "If you've got the proof to back it up, then there's no benefit to remaining quiet."

 

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Trump's Vision of U.S. Energy Dominance Faces Real-World Constraints

U.S. Energy Dominance envisions deregulation, oil and gas growth, LNG exports, pipelines, and geopolitical leverage, while facing OPEC pricing power, infrastructure bottlenecks, climate policy pressures, and accelerating renewables in global markets.

 

Key Points

U.S. policy to grow fossil fuel output and exports via deregulation, bolstering energy security, geopolitical influence.

✅ Deregulation to expand drilling, pipelines, and export capacity

✅ Exposed to OPEC pricing, global shocks, and cost competitiveness

✅ Faces infrastructure, ESG finance, and renewables transition risks

 

Former President Donald Trump has consistently advocated for “energy dominance” as a cornerstone of his energy policy. In his vision, the United States would leverage its abundant natural resources to achieve energy self-sufficiency, flood global markets with cheap energy, and undercut competitors like Russia and OPEC nations. However, while the rhetoric resonates with many Americans, particularly those in energy-producing states, the pursuit of energy dominance faces significant real-world challenges that could limit its feasibility and impact.

The Energy Dominance Vision

Trump’s energy dominance strategy revolves around deregulation, increased domestic production of oil and gas, and the rollback of climate-oriented restrictions. During his presidency, he emphasized opening federal lands to drilling, accelerating the approval of pipelines, and, through an executive order, boosting uranium and nuclear energy initiatives, as well as withdrawing from international agreements like the Paris Climate Accord. The goal was not only to meet domestic energy demands but also to establish the U.S. as a major exporter of fossil fuels, thereby reducing reliance on foreign energy sources.

This approach gained traction during Trump’s first term, with the U.S. achieving record levels of oil and natural gas production. Energy exports surged, making the U.S. a net energy exporter for the first time in decades. Yet, critics argue that this policy prioritizes short-term economic gains over long-term sustainability, while supporters believe it provides a roadmap for energy security and geopolitical leverage.

Market Realities

The energy market is complex, influenced by factors beyond the control of any single administration, with energy crisis impacts often cascading across sectors. While the U.S. has significant reserves of oil and gas, the global market sets prices. Even if the U.S. ramps up production, it cannot insulate itself entirely from price shocks caused by geopolitical instability, OPEC production cuts, or natural disasters.

For instance, despite record production in the late 2010s, American consumers faced volatile gasoline prices during an energy crisis driven by $5 gas and external factors like tensions in the Middle East and fluctuating global demand. Additionally, the cost of production in the U.S. is often higher than in countries with more easily accessible reserves, such as Saudi Arabia. This limits the competitive advantage of U.S. energy producers in global markets.

Infrastructure and Environmental Concerns

A major obstacle to achieving energy dominance is infrastructure. Expanding oil and gas production requires investments in pipelines, export terminals, and refineries. However, these projects often face delays due to regulatory hurdles, legal challenges, and public opposition. High-profile pipeline projects like Keystone XL and Dakota Access have become battlegrounds between industry proponents and environmental activists, and cross-border dynamics such as support for Canadian energy projects amid tariff threats further complicate permitting, highlighting the difficulty of reconciling energy expansion with environmental and community concerns.

Moreover, the transition to cleaner energy sources is accelerating globally, with many countries committing to net-zero emissions targets. This trend could reduce the demand for fossil fuels in the long run, potentially leaving U.S. producers with stranded assets if global markets shift more quickly than anticipated.

Geopolitical Implications

Trump’s energy dominance strategy also hinges on the belief that U.S. energy exports can weaken adversaries like Russia and Iran. While increased American exports of liquefied natural gas (LNG) to Europe have reduced the continent’s reliance on Russian gas, achieving total energy independence for allies is a monumental task. Europe’s energy infrastructure, designed for pipeline imports from Russia, cannot be overhauled overnight to accommodate LNG shipments.

Additionally, the influence of major producers like Saudi Arabia and the OPEC+ alliance remains significant, even as shifts in U.S. policy affect neighbors; in Canada, some viewed Biden as better for the energy sector than alternatives. These countries can adjust production levels to influence prices, sometimes undercutting U.S. efforts to expand its market share.

The Renewable Energy Challenge

The growing focus on renewable energy adds another layer of complexity. Solar, wind, and battery storage technologies are becoming increasingly cost-competitive with fossil fuels. Many U.S. states and private companies are investing heavily in clean energy to align with consumer preferences and global trends, amid arguments that stepping away from fossil fuels can bolster national security. This shift could dampen the domestic demand for oil and gas, challenging the long-term viability of Trump’s energy dominance agenda.

Moreover, international pressure to address climate change could limit the expansion of fossil fuel infrastructure. Financial institutions and investors are increasingly reluctant to fund projects perceived as environmentally harmful, further constraining growth in the sector.

While Trump’s call for U.S. energy dominance taps into a desire for economic growth and energy security, it faces numerous challenges. Global market dynamics, infrastructure bottlenecks, environmental concerns, and the transition to renewable energy all pose significant barriers to achieving the ambitious vision.

For the U.S. to navigate these challenges effectively, a balanced approach that incorporates both traditional energy sources and investments in clean energy is likely needed. Striking this balance will require careful policymaking that considers not just immediate economic gains but also long-term sustainability and global competitiveness.

 

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5 ways Texas can improve electricity reliability and save our economy

Texas Power Grid Reliability faces ERCOT blackouts and winter storm risks; solutions span weatherization, natural gas coordination, PUC-ERCOT reform, capacity market signals, demand response, grid batteries, and geothermal to maintain resilient electricity supply.

 

Key Points

Texas Power Grid Reliability is ERCOT's ability to keep electricity flowing during extreme weather and demand spikes.

✅ Weatherize power plants and gas supply to prevent freeze-offs

✅ Merge PUC and Railroad Commission for end-to-end oversight

✅ Pay for firm capacity, demand response, and grid storage

 

The blackouts in February shined a light on the fragile infrastructure that supports modern life. More and more, every task in life requires electricity, and no one is in charge of making sure Texans have enough.

Of the 4.5 million Texans who lost power last winter, many of them also lost heat and at least 100 froze to death. Wi-Fi stopped working and phones soon lost their charges, making it harder for people to get help, find someplace warm to go or to check in on loved ones.

In some places pipes froze, and people couldn’t get water to drink or flush after power and water failures disrupted systems, and low water pressure left some health care facilities unable to properly care for patients. Many folks looking for gasoline were out of luck; pumps run on electricity.

But rather than scouting for ways to use less electricity, we keep plugging in more things. Automatic faucets and toilets, security systems and locks. Now we want to plug in our cars, so that if the grid goes down, we have to hope our Teslas have enough juice to get to Oklahoma.

The February freeze illuminated two problems with electricity sufficiency. First, power plants had mechanical failures, triggering outages for days. But also, Texans demanded a lot more electricity than usual as heaters kicked on because of the cold. The ugly truth is, the Texas power grid probably couldn’t have generated enough electricity to meet demand, even if the plants kept whirring. And that is what should chill us now.

The stories of the people who died because the electricity went out during the freeze are difficult to read. A paletero and cotton-candy vendor well known in Old East Dallas, Leobardo Torres Sánchez, was found dead in his armchair, bundled in quilts beside two heaters that had no power.

Arnulfo Escalante Lopez, 41, and Jose Anguiano Torres, 28, died from carbon monoxide poisoning after using a gas-powered generator to heat their apartment in Garland.

Pramod Bhattarai, 23, a college student from Nepal, died from carbon monoxide after using a charcoal grill to heat his home in Houston, according to news reports. And Loan Le, 75; Olivia Nguyen, 11; Edison Nguyen, 8; and Colette Nguyen, 5, died in Sugar Land after losing control of a fire they started in the fireplace to keep warm.

A 65-year-old San Antonio man with esophageal cancer died after power outages cut off supply from his oxygen machine. And local Abilene media reported that a man died in a local hospital when a loss of water pressure prevented staff from treating him.

Gloria Jones of Hillsboro, 87, was living by herself, healthy and social. According to the Houston Chronicle, as the cold weather descended, she told her friends and family she was fine. But when her children checked on her after she didn’t answer her phone, they found her on the floor beside her bed. Hospital workers tried to warm her, but they soon pronounced her dead.

Officials said in July that 210 people died because of the freezing weather, including those who died in car crashes and other weather-related causes, but that figure will be updated. The Department of State Health Services said most of those deaths were due to hypothermia.


Policy recommendation: Weatherize power plants and fuel suppliers

Texas could have avoided those deaths if power plants had worked properly. It’s mechanically possible to generate electricity in freezing temperatures; the Swedes and Finns have electricity in winter. But preparing equipment for the winter costs money, and now that the Public Utility Commission set new requirements for plant owners to weatherize equipment, we expect better reliability.

The PUC officials certainly expect better performance. Chairman Peter Lake earlier this month promised: “We go into this winter knowing that because of all these efforts the lights will stay on.”

Yet, there’s no matching requirement to weatherize key fuel supplies for natural gas-fired power plants. While the PUC and the Electric Reliability Council of Texas were busy this year coming up with standards and enforcement processes, the Texas Railroad Commission, which regulates oil and gas production, was not.

The Railroad Commission is working to ensure that natural gas producers who supply power plants have filed the proper paperwork so that they do not lose electricity in a blackout, rendering them unable to provide vital fuel. But weatherization regulations will not happen for some months, not in time for this winter.


Policy recommendation: Combine the state’s Public Utility Commission and Railroad Commission into one energy agency

Electricity and natural gas regulators came to realize the importance of natural gas suppliers communicating their electricity needs with the PUC to avoid getting cut off when the fuel is needed the most. Not last year; they realized this ten years ago, when the same thing happened and triggered a day of rolling outages.

Why did it take a decade for the companies regulated by one agency to get their paperwork in order with a separate agency? It makes more sense for a single agency to regulate the entire energy process, from wellhead to lightbulb. (Or well-to-wheel, as cars increasingly need electricity, too.)

Over the years, various legislative sunset commissions have recommended combining the agencies, with different governance suggestions, none of which passed the Legislature. We urge lawmakers in 2023 to take up the idea in earnest, hammer out the governance details, and make sure the resulting agency has the heft and resources to regulate energy in a way that keeps the industry healthy and holds it accountable.


Policy recommendation: Incentivize building more power plants

Regardless, if energy companies in February had operated their equipment exactly right, the lights likely would have still gone out. Perhaps for a shorter period, perhaps in a more shared way, allowing people to keep homes above freezing and phones charged between rolling blackouts. But Texas was heading for trouble.

Before the winter freeze, ERCOT anticipated Texas would have 74,000 MW of power generation capacity for the winter of 2021. That’s less than the usual summer fleet as some plants go down for maintenance in the winter, but sufficient to meet their wildest predictions of winter electricity demand. The power generation on hand for the winter would have met the historic record winter demand, at 65,918 MW. Even in ERCOT’s planning scenario with extreme generator failures, the grid had enough capacity.

But during the second week of February, as weather forecasts became more dire, grid operators began rapidly hiking their estimates of electricity demand. On Valentine’s Day, ERCOT estimated demand would rise to 75,573 MW in the coming week.

Clearly that is more demand than all of Texas’ winter power generation fleet of 74,000 MW could handle. Demand never reached that level because ERCOT turned off service to millions of customers when power plants failed.

This raises questions about whether the Texas grid has enough power plants to remain resilient as climate change brings more frequent bouts of extreme weather and blackout risks across the U.S. Or if we have enough power to grow, as more people and companies, more homes and businesses and manufacturing plants, move to Texas.

What a shame if the Texas Miracle, our robust and growing economy, died because we ran out of electricity.

This is no exaggeration. In November, ERCOT released its seasonal assessment of whether Texas will have enough electricity resources for the coming winter. If weather is normal, yes, Texas will be in good shape. But if extreme weather again pushes Texas to use an inordinate amount of electricity for heat, and if wind and solar output are low, there won’t be enough. In that scenario, even if power plants mostly continue to operate properly, we should brace for outages.

Further, there are few investors planning to build more power plants in Texas, other than solar and wind. Renewable plants have many good qualities, but reliability isn’t one of them. Some investors are building grid-scale batteries, a technology that promises to add reliability to the grid.

How come power plant developers aren’t building more generators, especially with flat electricity demand in many markets today?


Policy recommendation: Incentivize reliability

The Texas electrical grid, independent of the rest of the U.S., operates as a competitive market. No regulator plans a power plant; investors choose to build plants based on expectations of profit.

How it works is, power generators offer their electricity into the market at the price of their choosing. ERCOT accepts the lowest bids first, working up to higher bids as demand for power increases in the course of a day.

The idea is that Texans always get the lowest possible price, and if prices rise high, investors will build more power plants. Basic supply and demand. When the market was first set up, this worked pretty well, because the big, reliable baseload generators, the coal and nuclear industries, were the cheapest to operate and bid their power at prices that kept them online all the time. The more agile natural gas-fired plants ramped up and down to meet demand minute-by-minute, at higher prices.

Renewable energy disrupts the market in ways that are great, generating cheap, clean power that has forced some high-polluting coal plants to mothball. But the disruption also undermines reliability. Wind and solar plants are the cheapest and quickest power generation to build and they have the lowest operating cost, allowing them to bid very low prices into the power market. Wind tends to blow hardest in West Texas at night, so the abundance of wind turbines has pushed many of those old baseload plants out of the market.

That’s how markets work, and we’re not crying for coal plant operators. But ERCOT has to figure out how to operate the market differently to keep the lights on.

The PUC announced a slew of electricity market reforms last week to address this very problem, including new to market pricing and an emergency reliability service for ERCOT to contract for more back-up power. These changes cost money, but failing to make any changes could cost more lives.

Texas became the No. 1 wind state thanks in part to a smart renewable energy credit system that created financial incentives to erect wind turbines. But those credits mean that sometimes at night, wind generators bid electricity into the market at negative prices, because they will make money off of the renewable energy credits.

It’s time for the Legislature to review the credit program to determine if it’s still needed, of a similar program could be added to incentivize reliability. The market-based program worked better than anyone could have expected to produce clean energy. Why not use this approach to create what we need now: clean and reliable energy?

We were pleased that PUC commissioners discussed last week an idea that would create a market for reliable power generation capacity by adding requirements that power market participants meet a standard of reliability guarantees.

A market for reliable electricity capacity will cost more, and we hope regulators keep the requirements as modest as possible. Renewable requirements were modest, but turned out to be powerful in a competitive market.

We expect a reliability program to be flexible enough that entrepreneurs can participate with new technology, such as batteries or geothermal energy or something that hasn’t been invented yet, rather than just old reliable fossil fuels.

We also welcome the PUC’s review of pricing rules for the market. Commissioners intend for a new pricing formula to offer early price signals of pending scarcity, to allow time for industrial customers to reduce consumption or suppliers to ramp up. This is intriguing, but we hope the final implementation keeps market interventions at a minimum.

We witnessed in February a scenario in which extremely high prices on the power market did nothing to attract more electricity into the market. Power plants broke down; there was no way to generate more power, no matter how high market prices went. So the PUC was silly to intervene in the market and keep prices artificially high; the outcome was billions of dollars of debt and a proposed electricity market bailout that electricity customers will end up paying.

Nor did this PUC pricing intervention prompt power generation developers to say: “I tell you what, let’s build more plants in Texas.” In the next few years, ERCOT can expect more solar power generation to come online, but little else.

Natural gas plant operators have told the PUC that market price signals show that a new plant wouldn’t be profitable. Natural gas plants are cheaper and faster to build than nuclear reactors; if those developers cannot figure out how to make money, then the prospect of a new nuclear reactor in Texas is a fantasy, even setting aside the environmental and political opposition.


Policy proposal: Use less energy

Politicians like to imagine that technology will solve our energy problem. But the quickest, cheapest, cleanest solution to all of our energy problems is to use less. Investing some federal infrastructure money to make homes more energy efficient would cut energy use, and could help homes retain heat in an emergency.

The PUC’s plan to offer more incentives for major power users to reduce demand in a grid emergency is a good idea. Bravo – next let’s take this benefit to the masses.

Upgrading building codes to require efficiency for office buildings and apartments can help, and might have prevented the frozen pipes in so many multifamily housing units that left people without water.

When North Texas power-line utility Oncor invested in smart grid technology in past decades, part of the promise was to help users reduce demand when electricity prices rise or in emergencies. A review and upgrade of the smart technology could allow more customers to benefit from discounts in exchange for turning things off when electricity supply is tight.

Problem is, we seem to be going in the opposite direction as consumers. Forget turning off the TV and unplugging the coffee machine as we leave the house each morning; now everything is always-on and always connected to Wi-Fi. Our appliances, electronics and the services that operate them can text us when anything interesting happens, like the laundry finishes or somebody opens the patio door or the first season of Murder She Wrote is available for streaming.

As Texans plug in electric vehicles, we will need even more power generation capacity. Researchers at the University of Texas at Austin estimated that if every Texan switched to an electric vehicle, demand for electricity would rise about 30%.

Texans will need to think realistically and rationally about where that electricity is going to come from. Before we march toward a utopian vision of an all-electric world, we need to make sure we have enough electricity.

Getting this right is a matter of life and death for each of one us and for Texas.

 

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