Regulatory delays have caused the developer of the $1.9 billion Champlain Hudson Power Express to push back its project schedule by nearly a year.
The project entails burying a high-voltage direct current cable for 355 miles from the U.S.-Canada border to New York City.
Company officials said that among the project’s benefits would be increased security of the electric grid and reduced energy costs for consumers. The power cables would be buried in waterways including Lake Champlain, the Champlain Canal system and the Hudson River. Company officials said the lines would also be buried within portions of existing railroad rights of way.
Josh Verleun, staff attorney at Riverkeeper, said that when the project was originally proposed it was “generally agnostic” about the project, although it did have some concerns regarding the placement of power lines in the Hudson River.
“As we continued to be an intervener in the Article VII process, we have been sort of working through a number of these concerns,” he said. “At this point, I would say that we generally support the project. We think that the goal of bringing renewable energy to the New York City market is a good one.”
However, “We still do have some concerns about sections of the cable that are still proposed to be in the Hudson River. Specifically there is a section from the Catskill-Saugerties area to the north end of Haverstraw Bay, which has a number of very sensitive habitat areas as well as areas of contaminated sentiment.”
Verleun said that Riverkeeper is actually “gratified” that the project’s approval process has slowed somewhat. While still an expedited process, the environmental review of the project in his view will now be more thorough.
Up until recently, the developer of the project had hoped to obtain federal loan guarantees that would have required construction to begin by the fall of this year. However, Don Jessome, president and CEO of Transmission Developers Inc. (TDI), said that construction on the CHPE project will now likely begin in the second quarter of 2012.
Jessome said the company, which is headquartered in Toronto and has an office in Albany, has been focused on obtaining regulatory approvals for the project that will transport Canadian wind and hydropower into New York state. The Blackstone Group, a leading investment and advisory firm, is the lead investor in TDI and the transmission project.
The venture scaled a significant regulatory hurdle, Jessome said, when the state Public Service Commission issued a completeness notification in August 2010. Jessome said that he had hoped to have the PSC issue its approval of the project by September of this year, which would have then qualified the project to secure debt financing through the U.S. Department of Energy’s 1705 Loan Guarantee Program, which requires the project be shovel ready by September 2011. However, Jessome said the project has encountered some regulatory-related delays.
The September deadline “was always ambitious,” Jessome said. “We just came to the conclusion that given the complexity of the project that we are going to need more time from a regulatory perspective to complete all of our permits.”
The company has also engaged in the Article VII approval process with the PSC and is in settlement discussions with various parties of record. The settlement talks had a timeline to be completed by this summer, but he now hopes that those discussions will lead to Article VII approval by the end of the year. The company will also be required to receive a presidential permit from the U.S. Department of Energy since the project crosses over into Canada, as well as approvals by the U.S. Army Corps of Engineers. Jessome expects all of those approvals should be in hand by the first half of 2012.
“Once that (presidential) permit is issued, we would be in a position to have a financial close and start construction.” The company anticipates having the line operational in 2015.
On March 17, the operating committee of the New York Independent System Operator (NYISO) approved the project’s system reliability interconnection study.
On receiving that approval, Jessome said, “Our goal of bringing 1,000 megawatts of clean hydro and wind power into the New York City market is another step closer to reality.”
The developer is studying three possible sites for a converter station that would cost about $200 million to build. The company previously had selected Yonkers as its primary location, but now indicates it is reviewing three sites for the project: a site in iPark on Hudson complex in Yonkers; at the Hudson Rail Yards in the Bronx and in Queens. The converter station would receive incentives from the Yonkers Industrial Development Agency if it is sited in the city.
The Quebec portion of the project is being built by TransEnergie, the transmission subsidiary of Hydro-Quebec. The line would begin at a power converter station near TransEnergie’s Hertel substation south of Montreal and would then connect to the line at the Canadian/New York border.
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