By Rich Heidorn Jr.

FERC last week approved the New York Power Authority’s request for transmission rate incentives for its portion of a new AC transmission line (EL19-88).

The commission approved NYPA’s request for:

• recovery of 100% of prudently incurred plant costs if the project is abandoned for reasons outside of the authority’s control (abandoned plant incentive);
• inclusion of 100% of construction work in progress (CWIP) in rate base (CWIP incentive); and
• a 50-basis-point return on equity for the risks of developing the projects (ROE risk adder).

In April, NYISO selected NYPA and units of LS Power to build Segment A (Project T027), and National Grid’s Niagara Mohawk Power and NY Transco to build Segment B (Project T019). (See NYISO Board Selects 2 AC Public Policy Tx Projects.)

Segment A will add 350 MW of “Central East” transfer capacity by replacing National Grid’s two existing 80-mile 230-kV transmission lines with a new 86-mile, double-circuit 345-kV line from the Edic substation in Oneida County to the New Scotland 345-kV substations, and adding a new Princetown 345-kV switchyard between them. It is expected to cost $750 million, with NYPA’s share at $281 million.

Segment B will add 900 MW of transfer capacity between upstate and southeast New York. It includes a new double-circuit 345/115-kV line from a new Knickerbocker 345-kV switching station to the existing Pleasant Valley substation, a rebuild of the Churchtown 115-kV switching station, an upgrade of the existing Pleasant Valley 345/115-kV substation and 50% series compensation on the 345-kV Knickerbocker-to-Pleasant Valley line.

The two projects are projected to cost a combined $1.2 billion and provide production cost savings of up to $1.2 billion and $9.6 billion in reduced demand congestion charges over 20 years. The projects also will avoid transmission refurbishment costs of $839 million and provide capacity benefits of approximately $1.9 billion.

The projects are expected to be in service in December 2023. In its request, NYPA noted that NYISO requires both to be completed at the same time, and that the failure of one may lead to the abandonment of the other, “thus enlarging the potential for the loss of NYPA’s investment.”

“We find that NYPA has demonstrated that each of the requested incentives that we grant here, and the incentives package as a whole, address the risks and challenges faced by NYPA in undertaking Segment A,” the commission ruled.

The commission in 2015 said it would grant NY Transco — affiliates of the New York Transmission Owners, Consolidated Edison of New York, National Grid, Iberdrola USA and Central Hudson Gas & Electric — the same transmission rate incentives requested by NYPA if NY Transco were selected for any of the AC projects (ER15-572). (See Divided FERC Trims ROE on NY Tx Projects, Orders Hearing.)