Flurry of power plant proposals offers hope

After years of warning that New England's electric grid was on the brink of having to impose Third World-style rolling blackouts, top power officials now cautiously predict the region may have enough power for the near future.

Since February, thanks to recent policy changes, proposals for 21 new power plants that could deliver enough electricity for about 3 million homes have come before regional power grid administrators. Those include a $1.5 billion NRG Energy Inc. plan for multiple new generators in Connecticut and a single generator that would burn methane gas from a dump in Westminster, near Fitchburg.

The Holyoke -based organization that runs the six-state power grid and wholesale markets, Independent System Operator New England, plans to discuss the projects in a two-day Boston conference starting today .

Gordon van Welie, the chief executive of ISO, said in an interview that he is well aware that many of those plants will face long and potentially hopeless fights to get regulatory approval. But the overall ``pipeline" of power plant proposals is big enough, van Welie said, that he is considerably more confident that electric supplies will be sufficient to cover demand in the period between 2008 and 2010, and potentially beyond.

``The situation definitely has improved," van Welie said. ``Not all of the projects will be built. But some subset will be built -- and we don't need all of them to be built" to ensure the lights stay on.

But some industry leaders think even van Welie's guarded optimism is premature.

``The new numbers may be encouraging, but I think these projects the ISO is talking about face significant challenges before the electricity is flowing," said James T. Brett , president of The New England Council, a non profit alliance that promotes economic growth. Noting that plants can require 40 federal, state, and local permits, Brett said: ``We need to see the steel in the ground."

Joyce McMahon , a spokeswoman for the Massachusetts Affordable Reliable Energy Alliance , a group that includes both big electric users and companies that generate electricity, said that ``without courageous and proactive decision-making by regulators and elected officials, we will continue to face the reality of power shortages in the very near future."

ISO has warned of rolling blackouts as soon as 2008.

After the 1990s energy boom turned to bust, virtually no new power plants have gone into service in New England since 2002.

But now the ISO counts 38 projects representing 5,700 megawatts of new electrical capacity -- equal to 20 percent of the region's current peak summer demand -- that are either proposed, approved, or under construction. A thousand megawatts can meet the demand of about 750,000 homes.

Of the 38 projects, 21 have been proposed to ISO since February. They include a 700-megawatt plant in Montville, Conn., that would burn coal that has been converted to a gas to sharply reduce pollution. The plant, the first of its kind in New England, would not open before 2012. Other plans include natural-gas-powered units in Billerica, Braintree, Lowell, and Ludlow. There are also several proposals whose details the ISO is agreeing to keep confidential for now . One project on the ISO's list is Cape Wind, the controversy-mired proposal for 130 windmills in Nantucket Sound. However, the ISO says it is one of nine wind projects from Maine to Connecticut that could be built.

The key change that has uncorked a flurry of new power-plant proposals, ISO officials say, is resolution of a long policy battle over creating new wholesale power-market incentives promoting generating stations. The Federal Energy Regulatory Commission in June approved a new system called a ``forward capacity auction," to start in 2008.

It gives power plant owners -- in addition to what they earn for producing and selling electricity -- extra payments for keeping their plants operable. The system is analogous to encouraging bakeries to produce bread by paying them a monthly bonus for having working ovens, in addition to what they earn for each loaf they sell.

``Investor confidence has returned, because we now have regulatory certainty," van Welie said.

But Caroline Allen , a spokeswoman for NStar, which serves 1 million homes and businesses in Boston and 80 communities in Eastern Massachusetts, said the utility remains alarmed over part of the plan, which provides an estimated $5 billion in special ``transition payments" to power plant owners before the auction starts.

Those payments will increase customer bills by 5 to 8 percent, Allen said, and ``we've got a long way to go" before it is clear whether the new plan actually gets plants built.