Massachusetts utilities are set to incur higher costs for the transmission of hydropower under a newly approved settlement aimed at advancing the New England Clean Energy Connect (NECEC) project, which is pivotal for the state’s carbon reduction targets.
On January 27, 2025, the Massachusetts Department of Public Utilities (DPU) granted its approval to a settlement involving utility companies, regulators, and project developers, seeking to connect hydropower produced from Quebec to the New England power grid. The NECEC project, envisioned as a 145-mile transmission line, will transport 1,200 megawatts of hydropower from the Canadian border to Lewiston, Maine.
This deal is viewed as a step forward for Massachusetts’ clean energy initiatives, promising to save ratepayers money over time since the imported hydropower is anticipated to be cheaper than many existing electricity sources. Nevertheless, this settlement implies increased upfront costs for consumers, which diminishes the overall savings initially expected.
Senator Michael Barrett, who co-chaired the Legislature’s Telecommunications, Utilities, and Energy Committee, acknowledged, "This is a good deal, but it’s not the deal it was going to be." He urged the need for any savings where possible as consumers face rising utility bills.
The NECEC project was first approved by regulators back in 2019 but faced significant delays following Maine voters' passage of a ballot initiative, retroactively banning high-impact electric transmission lines, stalling construction. This legislative hurdle led to prolonged legal disputes, which were finally resolved by a jury ruling permitting work to continue.
According to developers, these delays have resulted in over $521 million added to the project's costs, primarily due to inflation of materials and labor rates. The DPU's settlement stipulates utilities—including Eversource, National Grid, and Unitil—will cover these increased costs. Specifically, they will pay $13.61 per kilowatt-month for the first year of the contract, marking a 46 percent rise from previous agreements. This rate is poised to gradually escalate, reaching $19.82 per kilowatt-month by year 20.
Despite the heightened costs, the collaboration's backers maintain the hydropower connection will offer long-term savings for customers. Consumers may expect to pay $1.52 less per month for Eversource and National Grid residential services, and $1.63 for Unitil customers. Officials project this initiative will yield about $3.38 billion in net benefits for electric consumers, albeit down from earlier estimates of nearly $4 billion before delays complicated negotiations.
"With this order, the NECEC project can move forward, getting us one step closer to achieving our climate goals..." stated DPU Commissioner Cecile Fraser, reflecting the governmental commitment to renewable energy sources.
The significance of Quebec hydropower has been emphasized across various gubernatorial administrations, seen as integral to enhancing clean energy resources for Massachusetts. The NECEC project’s importance is underscored by the challenges faced by the offshore wind sector, which has encountered setbacks and legal uncertainties—drawing attention to the urgency of reliable renewable energy implementation.
Currently, Massachusetts has around 800 megawatts of offshore wind power contracted through the Vineyard Wind project, falling short of the estimated potential output the NECEC project could deliver. The Healey administration continues to explore ways to expand clean energy procurement to bridge the gap left by construction delays, though prospects remain uncertain.
Barrett stressed on salvaging this agreement, arguing, "We should realize we’re unlikely to see anything of its kind consummated again." With the future of clean energy reliance heavily depending on agreements such as the NECEC project, Massachusetts is poised to move closer to its ambitious climate goals, fostering sustainable energy development amid significant changes across energy markets.