New England states lock horns over hydropower

New Hampshire officials thought they had a good idea when they stopped "exporting" some of the state's hydroelectric power to the regionwide New England Power Pool (Nepool).

They argued that keeping the economic benefits from the relatively inexpensive power source at home would help reduce the state's expenditures on high-cost oil, which now meets 54 percent of its energy needs.

But New Hampshire's frugality is seen by other members of the power pool as an attempt to hoard economic benefits that up to now had been shared by the entire region. The Granite State's move in effect boosts the cost of electricity for the other states in the pool.

The result has been a legal war that has found the United States Supreme Court its final battleground.

At the heart of the controversy are New England Power's hydroelectric generating stations on the Connecticut River. These plants produce 420 megawatts of electricity. Rhode Island and Massachusetts use between 85 and 90 percent of this, according to New England Power officials. More than 30 other operating hydroelectric stations in the state produce only 50 megawatts combined.

In 1979, the New Hampshire Public Utilities Commission (PUC) ordered hearings and decided to halt export of New England Power Company's hydroelectricity. This was upheld by the New Hampshire Supreme Court in 1980.

Paul Ambrosino of the New Hampshire Governor's Council on Energy says the state wants the full benefit of those 420 megawatts.

Most of New Hampshire's energy comes from oil (54 percent), while hydroelectricity accounts for about 5 percent.

But New England Power argues that the PUC order violated Congress's power to regulate interstate commerce.

The New England Council Inc. and the New England Legal Foundation have filed "friend of the court" briefs with the US Supreme Court on behalf of New England Power.

Joseph Alviani, a foundation lawyer, says the commission's action favors New Hampshire consumers by forcing Massachusetts and Rhode Island consumers to pay $ 25 million for more expensive energy sources, "which essentially subsidizes New Hampshire consumers." He contends that in effect the PUC is setting interstate rates for electricity, which, he continues, is a violation of the US Constitution. This clause gives Congress the power to regulate interstate commerce "to avoid the petty rivalries between states," Mr. Alviani says.

The New England Power Pool generates 98 percent of the region's electricity. The cooperative coordinates 76 public utilities to provide power inexpensively.New England Power is part of Nepool.

John Sherman, a lawyer with New England Power, says the PUC order actually keeps the hydroelectric transmission ties open; the PUC's action is "basically just a difference in the billing procedure and an attempt to allocate economic benefits."

But New Hampshire state officials disagree.

"Basically we see the issue like this," says Peter Scott, the state attorney general: "The legislature specifically approved New Hampshire's law to allow the PUC to direct a public utility to hold energy within the state. Was that the intent? We say yes. It's a law that New Hampshire has decided to invoke. New Hampshire is trying to save money."

The PUC order is based on a provision of the 1935 Federal Power Act which allowed certain states to continue to regulate rates and exportation of hydroelectricity.

Mr. Sherman, however, argues that New Hampshire is wrong in its approach, because Congress never intended to allow states to regulate interstate commerce. He adds that, in a narrow legal sense, the New Hampshire statute will not automatically authorize similar action by other states, but a ruling in New Hampshire's favor would give states encouragement and affect future planning and allocation of energy.

"Should the court approve of New Hampshire being a protected market? The ultimate policy question that the Supreme Court has to face, if the court upholds the decision, is whether the states are going to want to hoard their own energy for their own purposes. It will be a clear signal to the states that the court is going to let the states fight it out for themselves," Sherman says.

Donald Stern, assistant Massachusetts attorney general, echoes these concerns.

"First, the cost to Massachusetts consumers goes up, and anything that costs more you're not pleased with," Mr. Stern says. "Second, this action is symptomatic of a growing trend to husband energy, rather than treat it as a national problem. It's difficult to expect states to participate in a pool where one partner takes the good stuff and continues to be part." Scott maintains that a decision in New Hampshire's favor shouldn't upset regional energy plans.