Hess NEC outlines interconnection agreements related to gas project

Hess NEC LLC told the Federal Energy Regulatory Commission on Nov. 27 that its gas-fired Newark Energy Center power project in New Jersey holds several advantages for the region.

In the Nov. 27 filing, Hess NEC moved to intervene and submitted comments in support of PSEG Fossil LLC’s Nov. 20 filing of a Capacity Interconnect Rights Purchase Agreement (CIR Agreement) between PSEG Fossil and Hess NEC. PSEG Fossil is a unit of Public Service Enterprise Group (NYSE: PEG). 

Hess NEC is developing and will own and operate the Newark Energy Center, which is a 755-MW natural gas-fired combined-cycle facility in Newark. The CIR Agreement provides for the transfer of existing capacity interconnection rights (CIRs) from PSEG Fossil to Hess NEC under a process that is established and set forth in Section 230.1 of the PJM Open Access Transmission Tariff (the PJM Tariff). The ability to transfer CIRs has long been a part of the PJM Tariff, Hess NEC noted.

“Hess NEC and PSEG Fossil are not affiliated, and the CIR Agreement was negotiated and entered into at arm’s length between the parties, accounting for the multiple and various costs and benefits realized by the parties,” the power developer added. “Additionally, the parties consulted and coordinated with PJM Interconnection, LLC (‘PJM’) at length during the development of the CIR Agreement to help ensure compliance with the PJM Tariff.”

The CIR Agreement enables Hess NEC to obtain and utilize existing CIRs and existing system capability for use in the development of the Newark Energy Center. The CIR Agreement provides many benefits which are uniquely available to Hess NEC and to the system, including but not limited to avoidance of some previously assigned upgrades and the benefit of enhanced scheduling certainty, the company said.

“Furthermore, the recent unfortunate events of Hurricane Sandy and the resultant damage to the system in the very area of New Jersey where both Hess NEC and PSEG Fossil are headquartered, and where Hess NEC is to be built and connect to the system, confirm the significance of proper transmission grid management and the need to prioritize the use of existing transmission system resources in the best and most efficient manner possible,” it added. “Hess NEC is of the opinion that the CIR Agreement furthers these goals.”

Hess NEC is a party to an Interconnection Service Agreement (ISA) and an Interconnection Construction Service Agreement (ICSA) with PJM and Public Service Electric and Gas Co. (PSE&G) for the interconnection of the Newark Energy Center. Both the ISA and the ICSA are on file with the commission. Under these agreements, Hess NEC is required to build interconnection facilities, including network upgrades, in order to ensure the reliability of the grid is maintained once the Hess NEC project is operational.

The existing CIRs are currently held by PSEG Fossil in relation to the interconnection of its existing Essex 12 generating facility, which interconnects to the system at the same PJM substation that Hess NEC will use. The PJM system includes capacity sufficient to maintain the CIRs required for the interconnection of Essex 12, however PSEG Fossil has determined that it will phase out operation of Essex 12, Hess NEC noted. It has submitted a notice to PJM to initiate the deactivation procedure to shut down Essex 12 by 2015. The time of deactivation for Essex 12 coincides with the beginning of operation for the Newark Energy Center.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.