Joint development agreement to reduce debt, cost of improvements
Posted May 21, 2013
Belmont, Mass. — Belmont Light has concluded that construction of a 115kV single-loop transmission line, along with a new substation, is the most efficient and least costly solution to Belmont’s long-term power needs. Additionally, Belmont Light has entered into a Joint Development Agreement with NSTAR that will save Belmont ratepayers money and will reduce the Town’s eventual borrowing for the project by over $30 million. This decision has been made in extensive consultation with the Belmont Light Board, the Municipal Light Advisory Board, and NSTAR.
The capacity of Belmont’s current electric delivery system is maxed out. Further, the current system suffers from significant power quality issues, and its distribution infrastructure is antiquated and needs a technological and physical upgrade. To address these critical issues, in February 2012, Town Meeting approved borrowing up to $53.7 million for construction of a new sub-station and transmission line into Belmont. At the same time, the Board of Selectmen was assigned the responsibility of thoroughly investigating and analyzing all feasible options for future transmission needs before settling on the best solution.
Working closely with NSTAR, Belmont Light and its project team analyzed and compared the technical merits and ownership options of a 115kV single-loop transmission line, 115 kV double-loop and radial options, and a 13.8 kV line. In the end, Belmont Light’s project team, the Municipal Light Advisory Board and the Belmont Light Board decided, and NSTAR agreed, that the least costly and most efficient alternative is a 115 kV single-loop transmission line.
Additionally, Belmont Light and NSTAR have signed a Joint Development Agreement (JDA) that describes ownership issues within the new project. Under this agreement, Belmont will finance the construction of the 115kV line and then sell it to NSTAR at a cost of approximately $30 million. While this agreement allows NSTAR to own the transmission line in their transmission territory, the benefits of this ownership agreement for Belmont are substantial. Under this agreement NSTAR will own the transmission assets, but the Independent System Operator – New England (ISO-NE) will operate the line. Thus, for the first time in its history, Belmont ratepayers will be fully integrated onto the New England Grid without having to pay an intermediary for connections. Belmont Light will continue to be responsible for distribution, will build a new, state-of-the-art, substation to serve the town, and will retire the present substations. Upon selling the transmission line back to NSTAR, Belmont’s debt for the project will be cut from $53.7 million to approximately $23 million. Rate increases to Belmont ratepayers of 14% anticipated in February 2012 to meet the cost of this important project will now be closer to 7%.
Under this Joint Development Agreement, Belmont Light will own the substation, and NSTAR will own the transmission line, and grid operations will be handled by ISO-NE.
Mark Paolillo, chair of the Belmont Light Board, praised the intensive effort that has gone into this important decision. “It is important to the people of Belmont to know that every feasible solution was considered, researched and analyzed before a final determination of the exact details of this important project was made. The project team at Belmont Light has worked closely with NSTAR to understand all potential scenarios and voltage options and we are now ready to move forward through the next phases of the project.”
While the decision to go with a 115 kV single-loop transmission line has been made in consultation with NSTAR, technical approval from ISO-New England is still necessary before permitting and construction can begin. FERC will need to approve the JDA.
“While we still have final details to work out, the 115 kV single-loop option, along with the ownership agreement that has been negotiated, is, without question, the most efficient and least expensive solution to our problems. We have employed a vigorous and thorough process of analysis as well as some tough negotiation to get to where we are, but the process has served the people of Belmont well, and will continue to do so for many years to come” said Ashley Brown, Chair of the Belmont Light Advisory Board.
Belmont Light General Manager, Jim Palmer, expressed appreciation for the assistance of so many with Belmont’s best interests at heart. “While in many ways our work is just beginning on this critical project, the work that has been done over the past year should give us all confidence that Belmont is getting the best possible solution to address our power needs for decades to come. I am extremely grateful for the confidence and guidance of the Belmont Light Board and the Belmont Municipal Light Advisory Board, as well as the sincere cooperation and assistance of NSTAR throughout this initial, yet critical, project determination phase. I am also particularly grateful to the Town Meeting for giving us the authority to move ahead on this project.”
While working over the past year toward this final voltage determination and project configuration, Belmont Light has been busy on other phases of the project as well. Belmont Light finalized its purchase of 20 Flanders Road, the site of the new sub-station, in December, 2012. Additionally, Belmont Light negotiated and signed an easement agreement with the MBTA for access to the transmission line route and all soil and environmental testing along the route have been completed. The project team has also developed a highly detailed schedule model for each phase of the project as well as the overall anticipated timelines and associated budget.
The next steps in the project include passage of Warrant Article #16 at next week’s Town Meeting, which addresses minor technical issues with the clearing up of the deed to 20 Flanders Road, the site of the new substation, as well as the transfer of some easement rights to NSTAR for their pieces of the project. The Belmont Light project team expects the new line to go into service at the end of 2016 or the beginning of 2017, and the present substations, including 450 Concord Avenue, to be retired and transferred to the Town by 2023.