NYRI Pulls Plug on $2.1 Billion New York Transmission Project

A $2.1 billion project to build a 190-mile high-voltage direct current (HVDC) transmission line across New York State has been suspended because rules pertaining to transmission tariffs recently made by the regional grid operator had created an “unacceptable financial risk,” the New York Regional Interconnect Inc. (NYRI) said Friday.

NYRI, a consortium of private investors, had sought to build the 1,200-MW line to relieve transmission constraints and help move power from Oneida County in upstate New York, where energy is abundant, to Orange Country and other areas downstate, where demand is high—and is expected to grow at an average of 1.5% per year. The project was to be completed by 2011.

NYRI was making progress in the New York Public Commission (PSC) Article VII transmission line siting process. Last August, the PSC had deemed the consortium’s project complete, and in September, the Federal Energy Regulatory Commission (FERC) approved a rate incentive for the project.
Its decision to pull the plug on the project was made after a March 31 ruling by FERC upholding a review process recently approved by the New York Independent System Operator (NYISO), the nonprofit that oversees the state’s wholesale electric markets. That process requires new transmission projects to undergo a cost-benefit analysis, and, more importantly, to have the support of 80% of its beneficiaries.

NYRI had asked FERC to review those rules, saying that the rules would give Con Edison—a utility that buys most of New York’s power and was staunchly opposed to the NYRI plan—the authority to block the project. Con Edison had in January given testimony to the PSC that the project was “not economic,” and that it would “impose costs on [its] customers in excess of its benefits.”

“The March 31st decision by [FERC] denying NYRI’s request to review the recently approved rules of the [NYISO] for transmission tariffs has created an unacceptable financial risk for NYRI’s investors,” NYRI said in a statement announcing its withdrawal from the PSC’s Article VII process Friday. “Even if the NYRI project were to be sited by the PSC, NYRI would face the prospect of being unable to recover transmission costs from the ratepayers who would benefit from the project.”

Since it was announced three years ago, the project had been controversial in New York. Sen. Charles Schumer (D-N.Y.), in particular, had been a leading opponent of the project because the route it chose was “inappropriate.” Schumer had instead proposed that the company use the combination of burying its line and using existing rights-of-way, like the NY Thruway.

Schumer on Tuesday issued a statement saying that he had sought to hinder NYRI’s efforts since July 2007, after NYRI announced its plan. He said that he had pushed legislation “to restore the rights of states, such as New York, to maintain their more thorough siting process, without fear that FERC would step in and approve poorly designed projects.”

“We have defeated NYRI, which posed the most immediate threat to communities across upstate New York,” Schumer said. “Now it’s time to ensure that big power companies and Washington bureaucrats don’t dominate decisions over future transmission lines. States and communities must have an equal place at the table when these decisions are made.”

In a letter to the PSC last week, NYRI said it was unlikely to restart the approval process soon. “At this time, NYRI has not made any decisions with respect to future actions or activities by the company. In addition, regarding the issue raised by Staff Counsel concerning the NYISO interconnection queue, it is NYRI’s expectation that all matters associated with the interconnection queue will be determined in accordance with the NYISO tariffs and procedures.”

Sources: NYRI, NYPSC, NYISO, Sen. Charles Schumer