TDI, Con Edison reach agreement on cost issue of proposed Champlain Hudson Power Express project

Transmission Developers Inc. (TDI) said June 5 that it has reached an agreement regarding its Champlain Hudson Power Express project with Consolidated Edison Company of New York (Con Edison), which had expressed concern over the project’s associated costs.

Con Edison was concerned that its customers were not sufficiently protected from such costs and had sought clarification of the project’s merchant status.

TDI also said it worked with Con Edison to achieve clarity on the issue, which was the subject of a June 4 filing with New York state regulators. TDI said the new language will “fully protect Con Edison’s customers,” who will not be responsible for any of the project’s costs.

The filing also noted that TDI is committed to securing long-term contracts for at least 750 MW of electricity, with creditworthy counterparties, to be shipped on the line for at least 25 years, before starting construction. The line is expected to have up to 1,000 MW of capacity.

Among other things, the June 4 filing made with the state Public Service Commission (PSC) noted that Con Edison would no longer contend or file testimony alleging that the $11bn investment in the facility and related upgrades in Canada may be imposed on its ratepayers as this concern is addressed by the provisions of the changes to proposed “Certificate Condition 15” agreed to in the filing. The revised condition will fully protect Con Edison’s customers.

Con Edison said separately on June 5, “While we’re pleased the developers have taken steps to protect ratepayers from the costs of the proposed project, we still have concerns about reliability issues we raised in our filing and the proposed connection point.”

TDI President and CEO Donald Jessome said in his company’s statement: “Since we began developing this project in 2008, TDI has been crystal clear that the CHPE project is a merchant project and that all the development risk falls on the shoulders of its financial backers. Nevertheless, we were glad to join in this filing, and we are particularly pleased to note that Con Edison now agrees that the CHPE project is truly a merchant transmission line and that, if financial losses were to occur, no ratepayers will be responsible.”

When FERC authorized the project’s proposal to establish negotiated rates for transmission services in July 2010, it found that the project “meets the definition of a merchant transmission owner because it assumes all market risk associated with its project and has no captive customers.”

FERC also found that the project “has no ability to pass on any costs to captive ratepayers” and “has agreed to bear the risk that the Champlain project will succeed or fail based on whether a market exists for its services.”

TDI also said that in the context of a PSC settlement announced on Feb. 24, a proposed condition was agreed to in efforts to reinforce at the state level what FERC had mandated. While TDI believed this provision was clear, it sought other parties’ views and concluded that removal of any doubt in this regard was desirable. As a result, TDI added, the provision now will prohibit the project from recovering its costs under cost-based rates or through a contract between the project and either a state or local government entity or a utility subject to cost-based regulation, including for this purpose the New York ISO.

The project is a 333-mile HVDC transmission line that will be installed underground and underwater, starting at the U.S.-Canadian border and running the length of Lake Champlain and through parts of the Hudson River.

TDI also noted that the joint proposal settlement, which was signed by 13 parties on Feb. 24, supports the project, which, according to a London Economics study, will reduce energy prices for New York families and businesses by $650m every year once the line is complete. The PSC’s study estimates that the savings could be as high as $720m in 2018, anticipated to be the first full year of operation, TDI said.

Still, not all are on board with the project, as noted by Al Samuels, president of the Rockland Business Association in Rockland County, N.Y., who told TransmissionHub in April that the state should develop its own energy resources rather than “turn to another country.”

He noted that New York Gov. Andrew Cuomo’s New York Energy Highway Task Force, which is co-chaired by New York Power Authority President and CEO Gil Quiniones and New York State Department of Environmental Conservation Commissioner Joseph Martens, issued a request for information (RFI) in April, seeking information on various aspects of potential electric generation and transmission projects.

A NYPA spokesperson told TransmissionHub June 5 that about 82 responses to the RFI were submitted and that summaries of those will be posted on the Energy Highway’s website on June 15.

Con Edison is a subsidiary of Consolidated Edison (NYSE:ED).

About Corina Rivera-Linares 3155 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.