Loring Holdings Issues 3Q16 Report to the LDA
Per terms of the New Facilities Payment Agreement, Loring Holdings, LLC ("LH") has issued its quarterly report (3Q16) to the Loring Development Authority regarding progress being made on the Maine Power Express ("MPX") transmission line project. Click here to view the report.
In brief, the MPX is being developed along 2 paths simultaneously. 1) Merchant and 2) Rate-Based. Significant progress has been made in both paths during 3Q16:
1) Merchant: A Merchant Transmission line is like a private toll road. It is a private transmission line that charges a tariff to generation providers underserved by the existing utility grid, typically ring power from a lower-cost area to a higher cost area. Merchant projects must apply to FERC (Federal Energy Regulatory Commission) for the Authority to negotiate transmission rates with generation providers. MPX applied to FERC in May and received the Order granting authority on July 1st. This is the first step necessary to issue an “Open Solicitation” to generation providers to assess interest and negotiate contracts for the MPX project. Some examples of Merchant projects include the Cross Sound Cable, Chinook Power Transmission and the New England Clean Power Link. MPX would issue an Open Solicitation if the Mass RFP (see below) fails and/or after securing certain permits and financial investments.
2) Rate-based: A Rate-based transmission line is paid for by all beneficiaries of the power the transmission line carries, that is to say, all rate-payers (albeit slight over-simplified). The significant progress made in this development path is the signing into law of “An Act to promote energy diversity” by Massachusetts Governor Charlie Baker. This act requires a coordinated Request for Proposals (RFP) to be issued not later than April 1, 2017, for up to 1200MWs of Clean Energy (mainly Wind and/or Hydro) and the transmission needed to bring it to market. (This is in addition to 1500MWs of off-shore wind, as a separate RFP). This is the main commercial opportunity MPX is pursuing. In a merchant line, generators pay a fixed transmission tariff and sell their energy at fluctuating, day-ahead markets rates. Under this RFP, generators will have their transmission costs covered by rate-payers and receive a fixed, known price for their energy under a Power Purchase Agreement (PPA). This is very enticing for generators like EDPR, NRG, Hydro Quebec and others.
These two 3Q16 events (FERC approval and the Mass RFP), among many others, are significant milestones in the development of the MPX.
LH is committed to the redevelopment of the Loring Commerce Centre for energy and economic development. The MPX represents an opportunity to utilize the existing Searsport-Loring Corridor for the installation of an underground transmission line that will bring Wind resources from southern Aroostook County and Hydro resources from Canada to Boston, MA, and the New England energy market. To learn more about the MPX, visit: www.mainepx.com.