LS Power has requested an abandonment incentive for the AC Transmission Upgrades in New York (the Project). The AC Transmission Upgrades are in the final stage of consideration by the NYISO under NYISO’s Order No. 1000 competitive process for Public Policy Transmission Planning and LS Power expects to be awarded at least one of the two segments of the Project. NYISO estimates that both segments of the Project will have a total capital cost of $1.1 to $1.2 billion (including a 30% contingency, but not including the cost of certain required upgrades). The Project has an anticipated in-service date of December 2023. The NYISO Board is expected to award the Project in March 2019, at which time construction expenditures will increase substantially. LS Power expects to request other transmission incentives, for example a hypothetical capital structure during construction, later. The Project meets the rebuttable presumption of Order 679 in that the Project was considered through the Public Policy Planning process of the NYISO and needs siting approval from the New York Public Service Commission (NYPSC). As described below, the Project faces significant regulatory, permitting, and other requirements that may result in the Project being terminated at no fault of LSPG-NY and New York Power Authority (NYPA). As a result, approval of Abandonment Recovery is warranted.
A NYISO Draft Report in mid-2018 recommended selection of a joint proposal from Joint LS Power and the NYPA for both Segment A and Segment B. The NYISO Board considered and reviewed the Draft Report over several meetings from July to December. On December 27, 2018, NYISO posted the AC Transmission Public Policy Transmission Planning Report Addendum (“Report Addendum”). The Report Addendum will be the subject of additional stakeholder review and comment, and the Board is expected to consider the Draft Report and Report Addendum as its March board meeting, with final approval of the AC Transmission Upgrades. The Report Addendum continues to recommend selection of a joint proposal from LS Power and NYPA for Segment A, but recommends a New York Transco proposal for Segment B.
There are substantial risks associated with the Project. Construction of the Project will require numerous permits and approvals at each of the federal, state, and local government levels. The Project is expected to pass through portions of eight different counties and over two dozen townships. There already has been thousands of public comments in the multi-year NYPSC process that proceeded the NYISO process. Significant additional public consultation will be required in the permitting process for
the Project, in order to obtain a Certificate of Environmental Capability and Public Need (CECPN) from the NYPSC under Article VII of the Public Service Law. This permitting process will provide an opportunity for many constituencies to raise issues and concerns regarding the impacts of the transmission line construction and operation within their communities. This includes participation from the New York Department of Agriculture and Markets, which protects the interests of agricultural resources, a party by statute to transmission line permitting in New York. The New York Department of Conservation will participate, and many provisions will be required to minimize impacts on sensitive species, such as the endangered Indiana bat, which will require seasonal limitations on construction activities. The CECPN requires a showing to be made for Project need. Since the Project is not strictly needed for reliability, there could be challenges to the need for the Project. There has already been significant public comment related to the AC Transmission Public Policy Needs, with over 3,000 public comments received to date, largely in opposition to aspects of the AC Transmission process including the need for new or upgraded transmission lines. Local regulations and the compatibility of the Project with local plans is another area that is required to be described in the Article VII application and considered in the Article VII process. There has already been significant participation in the NYPSC process by many local towns in the project area.
LS Power: Through various subsidiaries, LS Power develops, owns, and operates electric transmission and independent power projects throughout the United States. LS Power subsidiaries have the following transmission projects in operations, under construction or in advanced development: (1) the ON Line transmission project, a 231-mile, 500 kV transmission project in service in Nevada (co-owned with Nevada Power Company); (2) the Harry Allen to Eldorado 500 kV Transmission Project (selected through a competitive process by the California Independent System Operator), which will connect with the southern terminus of the ON Line transmission project; (3) an approximately 300 mile high-voltage transmission system in service in Texas; (4) the new Silver Run 230 kV substation in Delaware and a new 230 kV line connecting the Silver Run substation to an existing substation in New Jersey (selected through a competitive process by PJM Interconnection, L.L.C.); and (5) Duff to Coleman 345 kV transmission line, located primarily in Indiana with a portion in Kentucky (selected through a
competitive process by the Midcontinent Independent System Operator, Inc.).
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates.