By William Opalka

A 1000-MW merchant transmission line that would deliver Canadian hydropower to New York City has completed its federal environmental review, clearing the way for construction.

The U.S. Army Corps of Engineers on Tuesday issued a permit to Transmission Developers Inc. that allows the Champlain Hudson Power Express project to be placed in U.S. waters along the proposed route. The entire 333 miles from the Quebec border to the Astoria neighborhood in Queens will be underground or underwater, including sections beneath Lake Champlain and the Hudson River.

TDI said the project has secured all of the federal and state siting permits necessary to proceed with construction, which could start next year. The permit authorizes TDI to construct the project under Section 10 of the Rivers and Harbors Act and Section 404 of the Clean Water Act.

The estimated $2.2 billion project would boost Canada’s interest in exporting electricity to New York and New England. (See Hydro-Quebec Seeks to Boost Exports to Northeast.)

“The terms of the permit reaffirm that our project will take appropriate steps to protect New York’s environmental and commercial resources, and we are excited to have moved substantially closer to the moment when we will begin to deliver cleaner, lower-cost power to New York’s residents and businesses,” TDI CEO Donald Jessome said in a statement.

The project has been under development since 2008. Its proponents claim it could reduce energy costs for consumers and businesses by $650 million a year.

The Independent Power Producers of New York, a trade association whose members would be in direct competition with imported energy sources, opposed the project. IPPNY insists the project is not financially viable without subsidies from Canadian power producers and an above-market-rate contract with New York utilities transmitting the energy.

The New York Public Service Commission has rejected those claims.

TDI plans to finance the project through private equity and support from shippers and contractors. TDI’s lead investor is the Blackstone Group.