The US Federal Energy Regulatory Commission Wednesday conditionally approved TransEnergie US Ltd.'s request to sell electric transmission capacity on a high-voltage undersea cable to be built between Connecticut and Long Island, NY.
The proposed 26-mile merchant transmission line will link the New York and New England independent system operators. The project can play a useful role in expanding competitive generation alternatives for customers, FERC said, in approving TransEnergie's proposal to provide service over the interconnector at market rates reflecting location-differential prices between the power and transmission-short New York and New England markets. TransEnergie, the US division of Canada's Hydro-Quebec, expects to begin service in 2002.
Calling the proposal "unusual," FERC Chairman James Hoecker said the order was a signal the agency is prepared to take action on regional transmission expansion and pricing innovation. "We promised transmission would be a stand alone business. Here it is."
TransEnergie will assume full financial risk for the project rather than recovering the cost of construction through mandatory electric rates, FERC said. TransEnergie plans to offer services over its facilities on a nondiscriminatory basis through an open season process.
The agency said its approval is subject to a number of conditions, including TransEnergie's providing more details about how it will conduct its open season and auction and a plan to join a regional transmission organization.