TDI New England (TDI-NE) on Jan. 8 filed an application with FERC seeking authorization to sell transmission rights on the proposed New England Clean Power Link transmission project at negotiated market rates.
Specifically, as noted in the application, Champlain VT, LLC d/b/a TDI New England requested authority to sell the rights on the approximately 150-mile high voltage direct current (HVDC) 1,000 MW transmission project, which will begin at a converter station in Quebec, Canada, and consists of two submarine or underground cable systems that will end at a new converter station near or in Ludlow, Vt.
The converter station will connect with Vermont Electric Power Company’s (VELCO) transmission system at a 345-kV substation owned by VELCO.
TDI-NE also requested that FERC grant certain waivers of its regulations and reporting requirements; approve TDI-NE’s framework for conducting an open solicitation process; and approve the application by March 10 to allow TDI-NE to meet its schedule for the permitting of, and the open solicitation process for, the project.
The company further noted that the project will directly interconnect markets in Quebec and ISO New England (ISO-NE). Upon completion of the line, TDI-NE will turn over operational control of the project to ISO-NE, which will operate the line under its Open Access Transmission Tariff.
TDI-NE anticipates that the project will be operational in 2019.
TDI-NE also said that its proposal satisfies all four factors of FERC’s analysis to evaluate merchant transmission owners’ requests for negotiated rate authority.
For instance, to approve negotiated rates for a merchant transmission project, FERC must find that the rates are just and reasonable, TDI-NE noted, adding that it will assume all markets risks for the project and will not seek recovery of the project’s costs from ratepayers in New England under the ISO-NE tariff. Also, since there will be no captive customers, no entity will be required to buy transmission service from TDI-NE, nor will TDI-NE be able to pass on any of the costs associated with the project to captive customers.
Furthermore, TDI-NE turning over operational control of the line to ISO-NE, which will operate the line under its OATT, will prevent TDI-NE from acquiring market power or controlling barriers to entry in the ISO-NE market. Also, the anchor customers likely to subscribe to the project are “sophisticated utilities” that would only secure transmission service at competitive rates.
In discussing the factor related to undue discrimination, TDI-NE again noted that it commits to turn over operational control of the project to ISO-NE and to conduct an open solicitation process consistent with certain requirements. To ensure that its open solicitation process is “not unduly discriminatory or preferential,” TDI-NE will retain a third-party independent adviser, experienced in overseeing open seasons for merchant transmission capacity, to facilitate broad notice of the project and the selection and ranking of prospective customers.
Once customer agreements have been executed, TDI-NE will post on its website the winning bidder’s name, quantity, the expiration date of the transmission rights awarded and the contact information of the bidder for purposes of potential resale of the transmission rights. TDI-NE will then seek FERC approval of its open solicitation process.
With regard to undue preference and affiliate concerns, TDI-NE noted that none of its affiliates owns or operates electric facilities in ISO-NE or Hydro-Quebec TransEnergie and the project will not interconnect with any existing facilities owned by an affiliate of TDI-NE. The company also said that it does not anticipate that any transmission customer initially allocated transmission rights through the open solicitation process will be affiliated with TDI-NE. Among other things, the company said it will file quarterly reports of its transactions as required of transmission providers.
On regional reliability and operational efficiency, TDI-NE noted again that it commits to turn over operational control of the project to ISO-NE and will comply with all applicable reliability requirements. Additionally, it will provide to ISO-NE all required information necessary to inform its regional planning process.
The company also noted that at the completion of the open solicitation process, it commits to make a subsequent section 205 filing with FERC to disclose the results of its capacity allocation process and to seek FERC approval of that process. At a minimum, TDI-NE will provide such information as the actions it took to provide broad notice, including information about the project and the customer evaluation criteria that were relayed in the broad notice and provided on the TDI-NE website.
In a Jan. 9 statement, Donald Jessome, president and CEO of TDI-NE, said: “By asking FERC to grant us negotiated rate authority, we are following through on our stated commitment to develop the Clean Power Link as a merchant project. Once completed, families and businesses in Vermont and New England will benefit from the clean, lower-cost hydropower that the project will deliver to the marketplace.”
About 100 miles of the project are proposed to be buried under Lake Champlain and the balance buried underground in existing rights-of-way, the company said in the statement.
According to the application, TDI-NE is a limited liability company that was established for the purpose of developing and financing the project and it does not own or operate any existing electric generation, transmission or distribution facilities. TDI-NE is owned by Champlain VT Ltd., which is directly wholly owned by investment funds controlled by The Blackstone Group.
According to the statement, the TDI-NE team is made up of the same leadership team developing the Champlain Hudson Power Express project in New York.
Last year, the U.S. Department of Energy’s (DOE) Office of Electricity Delivery and Energy Reliability endorsed a Presidential permit for the 320-kV HVDC Champlain Hudson Power Express line. DOE’s recommendation followed New York state regulators’ April 2013 approval of a certificate of environmental compatibility and public need for the $2.2bn project proposed by Transmission Developers Inc.
In discussing the project in its application, TDI-NE said the HVDC transmission system primarily consists of two six-inch, solid-state HVDC electric cables connecting the converter stations in each country. Each HVDC converter station will, in turn, be connected to a nearby (HVAC) substation by a double circuit HVAC interconnection.
The final route is subject to ongoing evaluations and analysis and the project’s estimated total capital cost is $1.2bn.
TDI-NE has completed an engineering pre-feasibility study as well as a market analysis to assess the commercial opportunities available to the project’s potential customers. Among other things, TDI-NE also said that it has retained engineering and environmental consultants to help in the prosecution of necessary permits, and it is continuing its outreach efforts with resource agencies, non-governmental organizations and interested stakeholders to facilitate the design, siting and permitting of the project.