Empire State Connector Corp., on Nov. 27 announced the start of an open solicitation process for interested parties to reserve space on its 265-mile, 1,000-MW, fully buried Empire State Connector (ESC) high voltage direct current (HVDC) electric transmission line.
Empire State Connector added in its statement that the open solicitation represents the next step in the development of the ESC, following a FERC order that authorizes Empire State Connector to sell transmission rights and services on its proposed merchant transmission project at negotiated rates.
As noted on the project’s website, oneGRID is developing the ESC, which would connect Upstate New York to New York City. Energy in Upstate New York would be collected at a converter station built near Utica, and it would then be transported via transmission cables, which would be located in existing waterways to minimize the project’s environmental impact and eliminate any visual impact, the site noted. The southern terminus would be located in New York City, the site noted, adding that commencement of construction is expected in 2019, with the in-service date anticipated by 2022.
An Article VII application with the New York State Public Service Commission is expected to be filed by year end, according to the site.
According to the Nov. 27 statement, the ESC would support New York’s Clean Energy Standard (CES), which outlines aggressive low carbon power goals for the state’s power suppliers, as it would bypass the major congested transmission interfaces and deliver energy directly into New York City.
As a participant-funded transmission project, the ESC would be built and paid for by the shippers who would contract for capacity, the company added.
The project holds New York ISO (NYISO) interconnection queue position #506 and has completed the NYISO interconnection feasibility study, the company said.
London Economics International will serve as the independent solicitation manager for the open solicitation, the company said, adding that non-binding expressions of interest (EOIs) will be accepted until Dec. 22. A “WebEX” information session will be held for those interested in participating on Dec. 5, the company said.
As noted in the “information memorandum,” a traditional open solicitation seeks transmission service clients who will purchase a given amount of transmission capacity for a specific, typically long-term, duration. In the current power markets environment, generation suppliers or load serving entities (LSEs) are generally unwilling to purchase long-term transmission capacity on a pure “merchant” basis, the memorandum said. In recent years, the completion of large transmission projects has been facilitated by long-term request for proposals (RFPs) from LSEs or their agents, the memorandum said.
In the current environment, there is not yet an official RFP from an LSE that would fit the ESC project, the memorandum said, adding that there may be interest, however, from some LSEs to purchase supply for a long-term period, if that supply can be cost competitive with their current supply sources, and if the supply resources can also provide sought-after attributes given environmental policies in the state.
As such, if Empire State Connector can solicit offers from suitable upstate suppliers willing to offer the energy, capacity, and environmental attributes, then a situation could arise where New York City LSEs would be interested in providing contracts to those suppliers in order to secure the supply resources for the benefit of New York City customers, the memorandum said.
Similarly, upstate suppliers would probably not be interested in acquiring transmission rights for a long period without some form of price guarantee, the memorandum said, adding that they might be interested, however, if an LSE was willing to offer them a contract that would provide them with revenue certainty and ensure that they recover, at the very least, their going-forward costs.
The open solicitation is designed as a two-step process in order to include provisions to facilitate long-term contracts between upstate suppliers and New York City LSEs, the memorandum said.
In the first step, the memorandum said, the open solicitation will seek offers in the form of EOIs for two categories of products:
- EOIs for transmission service from those entities that are willing to sign up for transmission service on the ESC pursuant to the minimum requirements of the open solicitation
- EOIs for supply from those entities that are looking to deliver power through the ESC contingent upon long-term contractual arrangements for the purchase of energy, capacity, and/or renewable energy credits/zero-emission credits
In step two of the process, Empire State Connector and London Economics International would contact several large LSEs serving load in New York City and present them with bundled supply and transmission product that consists of a menu of the previously received suppliers’ offers and the Empire State Connector transmission tariff.
The memorandum added that after the presentation of the menu of bundled product offerings, a tri-lateral negotiated process would ensue between Empire State Connector, the short-listed suppliers on the menu, and interested LSEs in order to match supplier offer characteristics and LSE supply needs.
The negotiations would conclude with one or more LSEs entering into one or more power purchase agreement(s) with one or more supplier(s) and those supplier(s) would enter into transmission service agreements with Empire State Connector, according to the memorandum.
Project development is being jointly led by oneGRID and Forum Equity Partners Inc., with oneGRID as project manager and Forum providing development advice and financing, according to the site.