May 26, 2009 Energizing Connections

Volume 12 | Issue 3

Bangor Hydro Electric Company is an electric transmission and distribution utility based in Eastern Maine that is wholly owned by Emera Inc.

Bangor Hydro Electric Company is the second largest utility in Maine, employing 275 people serving about 118,000 residential, commercial, and industrial customers in a 5,275-square-mile area encompassing portions of eastern and east coastal Maine with an overall population of 192,000. While the name wasn’t formally incorporated until the 1920s, Bangor Hydro has been providing power to homes and businesses in the Northeast tip of the country prior to 1900. That was back in the day of monopoly service and cheap and seemingly endless energy supplies.

Needless to say, the situation here at the start of the 21st century is decidedly different.

“In the late 1990s, California and the Northeast were the first areas of the country to establish deregulated retail markets for electricity, the idea being that introducing competition among power suppliers independent of the local utility providing transmission and distribution services would promote lower prices as well as improve efficiencies in energy production and distribution,” explains Gerry Chassé, vice president of transmission and distribution. “At least in Maine, it didn’t quite work out as expected. Today, more than 99 percent of all our residential customers receive their electricity from the standard offer supply administered by the Maine Public Utilities Commission. However, while the idea of end-users being able to choose their energy supplier based on cost and/or corporate ideals such as adherence to “green” principles hasn’t taken hold, the structure of the utility business did change.”

As you might guess from its name, the company is headquartered in Bangor. While the full name would also seem to imply that the company is an energy producer, Chassé notes, “It’s a legacy name that we retained from the days of the company’s founding when nearly 100 percent of its customers’ supply came from hydroelectric generation. Even just prior to deregulation about 20 percent of its customers’ supply still came from company-owned hydroelectric assets. However, while we are a wholly owned subsidiary of a diversified energy company, Emera, Inc., that is involved in power generation, today Bangor Hydro is strictly a transmission and distribution company, which, unlike energy generation supply, remains a regulated business.”

Bangor Hydro owns and operates approximately 1,100 kilometers of transmission facilities and 7,000 kilometers of distribution facilities. According to Chassé, “While we do the billing and end-users receive an unbundled bill that breaks out costs for generation, most customers don’t fully understand the difference between the power delivery and the power supply. For all intents and purposes, they see us as ‘the electric utility company.’ We are the customer interface that people have always known and that’s why we’ve kept the brand name everyone is familiar with.”

However, while Bangor Hydro has remained a traditional utility in the sense of being a regulated service provider, it is at the forefront in seeking to make non-traditional energy sources available to its customers and, according to company spokesperson Susan Faloon, is active in promoting “community discussion about renewable energy sources and actively promoting projects that are not only helpful to the environment but, ultimately, consumer pocketbooks.”

The utility is not just about talk, but also taking action. “In this area of the northeastern United States and Canadian Atlantic provinces, and in Maine in particular, we’re fortunate to have a robust renewable energy market, in particular for wind. Government, on both the state and federal levels, is encouraging energy development based on reliable, diversified supply sources in which renewable, non-fossil fueled generation such as wind is going to be an increasing factor. Here in Maine, we expect that 40 percent of our electricity supply will eventually come from renewable energy sources, says Chassé. Additionally, the state has an aggressive goal of siting 3,000 megawatts of land-based renewable energy such as wind, water, solar, and trash-to-energy within the next few years, some of which will move to states in southern New England to help meet their renewable portfolio requirements.”

MEETING RENEWABLE CHALLENGES
It’s not a simple matter, however, of turning on a switch and letting the winds blow in. “There are a number of challenges to incorporating more renewables,” Chassé points out. “One is that the transmission system is old and lacks the capacity to put substantial new generation sources online. Another challenge is evolving policies, some written before deregulation, that must support both system reliability and energy markets. Currently, with the price of fossil fuels being relatively inexpensive, at around $50 a barrel for oil and $4 per million Btu for natural gas, the economic incentives to compel the necessary network upgrades aren’t there.”

Even without the expectation of a return to higher oil and gas prices, environmental concerns coupled with government objectives to reduce dependence of foreign oil will result in the increased reliance on renewable energy sources. Bangor Hydro is taking a proactive approach to get the transmission network ready today to accommodate tomorrow’s needs.

Bangor Hydro is a member of a Regional Transmission Organization (RTO) called the Independent System Operator of New England (ISO-New England) and is interconnected with other New England utilities to the south and with New Brunswick Power Corporation to the north. ISO-New England operates the transmission grid for the six New England states as well as administering the energy, capacity and other markets for the region. Another important relationship is with Nova Scotia Power, which provides 97 percent of the generation, distribution, and transmission in that Canadian province. Both Bangor Hydro and Nova Scotia Power are owned by Emera, Inc. of Halifax, Nova Scotia.

PROMOTING RELIABILITY
In New England the tariff, or the rules, sets standards to allow renewable energy providers to directly connect to the grid. “It is basically a technical exercise to determine if connecting a new generator in a specific location will adversely affect the power system. In conducting the study, we back down existing generators enough to create space for the new generator and test to determine what impacts that new generator has on the power system,” Chassé says. “However, the study doesn’t guarantee that the new generator, the wind farm, or whatever the new source is, can begin supplying power whenever it wants. The study only determines whether the system can handle the interconnection of the new generator and, if not, what system upgrades may be necessary. The ability of the generator to deliver its product to the market is determined by the market rules and not the ability of the generator be interconnected to the system.”

It’s the classic chicken and egg dilemma. But Bangor Hydro is working to make sure that solutions for connecting renewable energy are realized and that market rules do not become impediments to the economic growth and environmental benefits that renewable development promises to bring to the region.

”We are actively developing reliability projects within the footprint of our service territory to ensure our system will provide expected levels of reliability and capacity for load growth. The additional benefit of these projects is that they also provide capacity for the connection of renewable energy that otherwise could not include the cost of those upgrades within their project costs,” says Chasse.

BUILDING INFRASTRUCTURE
That’s one reason why Bangor Hydro is building new infrastructure in a system that hasn’t seen new construction since the 1970s and is the only utility in the state to invest in new transmission line projects in recent years. In 2002, it constructed a 115 kV (kilovolts) line capable of carrying greater than 200 megawatts that connected to the Great Lakes Hydro America power system that delivers renewable energy to the regional market. In 2007, after more than five years in development, it completed a regional reliability project known as the Northeast Reliability Interconnect (NRI). With an investment of $141 million, Bangor Hydro completed the 85-mile, 345 kV power line that connects Maine to New Brunswick. In 2008 Bangor Hydro completed a 14-mile, 115 kV reliability project in Hancock County, Maine in order to improve reliability and provide necessary capacity to the area. Within its service territory, by 2012, Bangor Hydro expects to complete a 345 kV substation in Keene, a 45-mile rebuild of an existing 115 kV line that was originally constructed in 1967, and a 36-mile, 115 kV loop to serve Washington County, which now relies on a single line that was originally built in 1956.

Chassé notes that the NRI line offers advantageous synergies between the New England and the New Brunswick markets. “Here in Maine, about 80 percent of heating is provided through oil and natural gas. New England as a whole is very much a summer peaking region primarily due to air conditioning load. So, during the winter heating season, there isn’t the peak demand for electricity as there is in the Maritimes and Quebec, which are much more heavily dependent on electricity for heating. The NRI connection provides opportunities for energy trading that offer economic, environmental, and efficiency benefits to the region. Needless to say, the better we can manage our electric power pool, the better it is for consumers as we can pass on the cost efficiencies we achieve to end-users.”

Better utilization also includes greater use of renewable energy. According to Chassé, “About 40 percent of the Northeast relies on natural gas for electricity generation. Currently, natural gas is relatively inexpensive, but for the long-term, we need to develop an energy portfolio that can easily shift to more stable and less expensive supply sources. Maine is an ideal area for wind farms, on or off shore, as well as tidal generation, and there is immense opportunity for growth. However, that growth potential is only going to be realized if we, as a transmission and distribution company, are capable of delivering it.”

Ultimately, this is all part of what Chassé characterizes as the utility’s social obligation to be an “energy solutions provider” in addition to its core function to “keep the lights on.” He points out that “given the prospects of government caps on carbon emissions coupled with general economic conditions and the likely growth of renewable energy in Maine and the larger region, we are positioning ourselves to have as much as 10,000 megawatts of non-carbon emitting renewable power sources as part of our energy supply portfolio. That’s going to be good for the environment, it’s going to good for local businesses that are developing renewable energy, and, ultimately, it’s good for our customers.”

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