Legacies of electric restructuring for a new electric transition: Neoliberal paths for Canadian hydropower?

Abstract:

The current transition in our electric systems away from fossil fuels is shaped by a previous electric system transition, electric restructuring. Can the neoliberal tools we built some two decades ago—and the regulatory remnants and responses—achieve the deep environmental and social change we now seek? This paper summarizes the institutional, political‐economic, and geographical effects and legacies of electric restructuring, focusing on Massachusetts and New England.

It shows how the legacies of these changes shape Massachusetts’s approach to importing Hydro‐Québec power. Today’s main market tools in the electric sector are inadequate to fund long‐distance transmission in the United States, as investors cannot tolerate the high financial risk.

Massachusetts’s approach to importing Québec hydropower unfolded in four steps: 1) the 2016 Energy Diversity Act; (2) a Request for Proposals to fund a transmission line through northern New England; (3) the selection of a winning proposal, and 4) the addition of clean energy credits to the state renewable portfolio standard. These put the cost of a new line onto Massachusetts’s electric customers, guaranteed profits to the transmission owner and the state’s still‐regulated utilities, and offered multiple income streams to Hydro‐Québec. The proposal competition favored projects  that externalized costs onto other people and places, and into the future—leading to political opposition, escalating costs, and implementation delay. This history helps reveal key legacies and limits of electric restructuring and its role in decarbonization. 

Keywords: hydropower, Canada, New England, restructuring

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