Power Plant of the Week - Mount Tom

The Mount Tom coal fired power plant, located on the edge of Holyoke, MA is one of the few remaining members of a dying species here in New England. The plant has a capacity of approximately 146 MW, receives Northern Appalachian coal via rail, and draws water from the Connecticut River for both make-up water for the boiler and cooling water for the plant. You can see the plant very clearly on Google Maps and this author has gotten decent views of the plant from I-91 North in the wintertime when the leaves are off the trees. Most coal power plants in the U.S. receive their coal via rail and Mount Tom has fantastic rail access. There are several good websites maintained by New England railway buffs who track the movement of freight trains through the region and a little Googling will turn up many photos of loaded coal trains bound for Mount Tom.

This plant has a fairly interesting history. It was developed in the late 1950s by the Holyoke Water Power Company whose roots date back to late eighteenth century. It came online in 1960 and was converted to oil in 1970. Given subsequent historical events, the conversion to oil was not a good choice and the plant was converted back to coal in the early 1980s. The plant has retained modest dual fuel capabilities (coal & oil), although oil constitutes a small minority of the plant's annual fuel supply. Holyoke Water Power Company was acquired by Northeast Utilities (NYSE: NU) in 1967 and they operated the plant until 2006 when it was sold to First Light Power Resources. In 2008, global energy conglomerate GDF Suez purchased First Light and now they currently have the privilege of owning the Mount Tom plant.

Photo is from the  Action for a Healthy Holyoke  website

Photo is from the Action for a Healthy Holyoke website

The rapid changes in Northeast power markets associated with the discovery of shale gas and its extraction via fracking have not been kind to the Mount Tom plant. As recently as 2008, this plant was over 80% utilized and profitable. In the last three years, low cost natural gas has made the plant uneconomic the majority of the time and this is clearly shown in the graph below. Luckily for Mount Tom, the price of delivered spot natural gas to New England spikes during cold spells in winter and Mount Tom was called into service for a significant part of January and February 2013 and the same can be expected this winter. Mount Tom also sees occasional run hours during high priced periods in the summertime and any day where spot prices of natural gas exceeds about $8/MMBTU and ISO-NE demand is sufficient to warrant its dispatch.

Mount Tom Generation.png

As with all the other New England coal plants, Mount Tom has its share of vocal haters. Some of them, like the Conservation Law Foundation, have legitimate grievances such as repeated violations of the Clean Air Act. Others, just really hate coal a lot. Ironically, fracking has accomplished what activists have struggled to achieve for years as Mount Tom's days appears to be numbered due to economics. They submitted a delist bid for the ISO-NE 2016/2017 Forward Capacity Auction, but that doesn't mean the plant will be retired. It just won't receive capacity revenues and could still participate in the energy market on days when power prices are sufficiently high for it to be dispatched. GDF Suez installed new emissions control equipment in approximately 2010, but its unclear if these controls will satisfy MATs compliance after 2015. If not, then a shut down is a certainty, but otherwise Mount Tom could conceivably stick around as a predominantly wintertime generator for a few years after 2016. 

The State of Massachusetts has been proactive in working withe communities that will be affected by the impending closure of power plants including Holyoke. Mount Tom currently contributes approximately $600,000 annually to Holyoke via property taxes and supports about thirty high wage jobs. In a community like Holyoke, struggling to adapt to a post-industrial economy, a loss in property tax revenue of this magnitude is significant. 

Only time will tell when this plant shuts down, but Mount Tom is full of memories and within the decade this plant will join many other Mount Tom institutions that only exist in memories and historical archives. Many New England skiers may remember the Mount Tom ski area and associated summer water park which closed in late 1990s. Before that, there was the Mount Tom railway, which connected to the Holyoke streetcar system, and ascended Mount Tom to a grand house at the summit. This was a significant draw for tourism and was easily accessible to Northeastern city dwellers thanks to Holyoke's rail access. The Summit House(s) all burned down and today Mount Tom is divided into a publicly accessible State managed reservation area and various private property owners. 

Northeast Utilities - Using the CT Legislature to Subsidize the Northern Pass

Here at Energy Tariff Experts (ETE), we are generally very supportive of energy deregulation. It allows for innovators, entrepreneurs, and non-utility companies to compete to build infrastructure and it shifts the economic risk for new generating and high voltage transmission infrastructure onto investors, where it belongs, and away from consumers.  When the Northern Pass was first proposed, we were very excited as it represented a major merchant transmission project in the ISO-NE grid.

Northern Pass Route Map posted on project website www.northernpass.us

Northern Pass Route Map posted on project website www.northernpass.us

First, a little background on transmission development. After deregulation took hold, a unique group of developers focused on privately funded transmission infrastructure evolved. These developers build what are known as merchant transmission projects. At a high level, there are two types of high voltage transmission projects: those that are reliability based; and those that are developed speculatively as merchant projects to alleviate inefficiencies in the grid. Reliability based projects can use eminent domain to secure a Right of Way (RoW) since they are needed for the public good (e.g., reliable power supply) whereas merchant projects do not have the option to use eminent domain and must come to commercial terms with each property owner in the RoW in order to secure easements to build or traverse.  The Northeast has seen numerous successful merchant transmission projects in the last decade including the following: The Cross Sound Cable; The Neptune Cable; the Linden VFT; and the Hudson Project. Note that all of these are mostly built underwater.

At ETE, we are supportive of merchant projects and do not have a position on any of the controversies around the siting issues associated with the Northern Pass.  What ETE does care about is that the rules of free and fair competition crucial to the functioning of a competitive deregulated market be adhered to. Currently, Northeast Utilities (NU) is attempting to use the Connecticut Legislature to mandate, via legislation (CT Senate Bill 1138), that CT consumers purchase the power from the Northern Pass under a long term contract. This is blatantly unfair to consumers and the investors and asset operators in ISO-NE who have played by the rules. NU is using its lobbying power and immense size to ensure that captive ratepayers in CT are used to subsidize this project via a long term contract at above market rates since the proposed legislation will re-classify conventional large hydro as "renewable" in the CT Renewable Portfolio Standard.

ETE firmly believes that if the Northern Pass is currently uneconomic, then it shouldn't get built until the economics of the power market justify it. In addition, it most certainly shouldn't get a subsidy as renewable energy since Hydro-Quebec does not need a subsidy for power they'd be delighted to sell us without a subsidy. In addition, claiming that Hydro-Quebec's conventional large hydro facilities should be given the same renewable energy subsidies offered to small scale wind, solar, etc. is absurd. While Hydro-Quebec's infrastructure represents major engineering accomplishments, many of their dams obliterated preexisting ecosystems and required the removal and resettlement of First Nations peoples.

Currently, the latest amendments to CT Senate Bill 1138 redefine large hydroelectric projects as Class I - eligible renewable resources. The specific language in the bill regarding large hydro is focused in Section 7 and Section 9d for those who care to read it. After a thorough read, its obvious that this language was written by NU lobbyists to enable the construction of the Northern Pass despite challenging economics. Lets hope that CT Legislators stand up for consumers and for the integrity of the ISO-NE power market and prevent this bill from becoming law. If NU wants to build the Northern Pass, they can do it with their own money.