Thank you for your thoughtful post. I am glad to hear that the HQ partnership has had renegotiation room and HQ has been a good partner in renegotiations. Thank you for the information.
On the other hand, I believe that using 2009 or 2010 as the example years for electricity prices is a bit misleading. These have been the lowest-price years for at least a decade. (There's been this recession happening.) Your forward prices are more interesting. Apparently, the market doesn't think we are going to get over the recession very quickly, or perhaps it thinks there will be abundant natural gas. If I had money to speculate, I would bet against this estimation and bet for rising electricity prices. However, I do not mean to dismiss the forward numbers. They may be right. I will say, however, that they are not certain. Also, as you correctly noted, those are prices for the entire year, day and night, not the hours that HQ will supply power. HQ will mostly be supplying power in the high-demand, high price hours.
Also in terms of pricing, I encourage you to look at the electricity price graph in this blog post
You will see that prices have spent a significant portion of the past ten years above 6 cents. The graph comes from ISO-NE.
I believe you have missed my point about the variable market and the profits. I have no problem with companies making profits by selling electricity. I don't even have a problem with variable pricing,
However. Some context here. The Memorandum of Understanding (MOU) for Vermont power purchases after 2012 with Entergy was signed in 2002. It said that for ten years after 2012:
- Entergy will sell at the market AND
- if the market goes above 6.1 cents, Entergy will split the extra money with the utilities.
This was a Revenue Sharing Agreement. If the market was below 6.1 cents, Entergy would just sell at the low market price. If electricity prices went up, there were estimates from the DPS (Department of Public Service) of Entergy returning tens to hundreds of millions of dollars to the utilities over the length of the contract. This money could have improved transmission lines, implemented the smart grid, or been returned to ratepayers in the form of lower prices.
The Senators and Representatives in Montpelier said this was totally unacceptable. That lousy Entergy wasn't giving them a fixed price! Those Entergy scumbuckets! What they try to get away with!
Actually, this MOU was a great deal for Vermont, because if the price was electricity was low, that is the price Vermont utilities would pay Entergy. If the price went up, Vermont got partially re-imbursed. And you should have heard the legislators screaming about this, endlessly. "You have to give us a fixed price!" So, now they have a fixed price, and they don't like that, either. From what I know, and I am NOT an Entergy insider by any means, Entergy would be quite happy to stay with the Memorandum of Understanding, but the legislators objected to it.
Instead, the legislators of Vermont are willing to take market-price power from HQ, support HQ profits, and support HQ jobs while letting Vermont people hit the unemployment lines. These are Vermont people whose company offered a better deal for Vermont than HQ did. The Memorandum of Understanding (MOU) is a much better deal for Vermont than the HQ contract. The MOU is public, it includes revenue sharing, it's transparent, it's cheaper power, if only because of transmission costs at the same ISO price. End of story. It's a better deal for Vermont.
This answer is getting really long! Sorry. One more point. About big and small hydro. My point in the blog wasn't that big hydro was evil and small hydro was good. My point was that people in Vermont were willing to lay down and allow HQ to print their boots all over us, even getting our legislature to vote special names for HQ's power. Oh, we are so eager to please HQ! After all, they gave us a worse deal than Entergy was giving, so of course we are grateful. (sarcasm alert.)
By the way, I notice that you don't mention nuclear as part of carbon-light energy mix. An oversight, perhaps? Your comments are well-researched and thoughtful, and I hope they are not simply justification for Vermont accepting a lousy power contract--- because--- at least it isn't nuclear?