US FERC Asks Northeast For More Info On NY-Conn. Pwr Line

- US federal energy regulators have instructed a unit of Northeast Utilities (NU) to submit by next week assurances that the company won't prevent potential competitors from shipping power along a proposed transmission line between Connecticut and Long Island.

The Federal Energy Regulatory Commission also directed Northeast Utilities Service Co. to confirm that the company's affiliates - and not customers of its regulated utility - will bear the cost of the project.

Northeast is seeking to build by 2004 a 330-megawatt transmission line that would connect a Connecticut Light and Power Co. substation in Norwalk, Conn., to a Long Island Power Authority substation.

Unlike two other proposed merchant power projects that aim to link power-hungry Long Island with other parts of the Eastern Seaboard and Canada, Northeast has transmission, generation, marketing and gas distribution affiliates. FERC expressed concern in an order it issued late last week that because Northeast units own the Connecticut substation to which the line will connect, the company could prevent other transmission lines from hooking up to the substation.

"Although the proposal is similar to other underwater cable projects which we recently addressed, this project raises significant affiliate issues that weren't before us in those proceedings," according to the FERC order. "Northeast's proposal doesn't adequately address market power issues such as barriers to entry and assumptions of risk."

Northeast asked FERC to approve the transmission rates it planned to charge companies shipping power across the line. The company proposed selling these transmission rights through a competitive open-season process.

Two Other Lines Already Approved

FERC has already approved two other merchant power lines in the Northeast.

As previously reported, the commission granted conditional approval in late July to the Neptune Regional Transmission System, a limited liability corporation formed by Atlantic Energy Partners, a Maine-incorporated LLC that is assuming all the risk of its proposed transmission line as a merchant developer.

The first piece of the four-phase plan would allow 1,200 megawatts of power to move between northern New Jersey, New York City and Long Island, and is scheduled to be completed by the end of 2003, Charles Hewitt, Atlantic Energy's chairman and chief executive, said.

The other three phases, which would allow 3,600 megawatts of power to move between Canada and New York City, are slated to be done by the end of 2006, Hewitt said.

About 30 companies with investment-grade credit are preparing to bid in November and December on the right to ship power along the New Jersey-New York portion of the line. This open-season bidding process is for 20-year contracts. The company will sell any unused capacity in shorter-term contracts, Hewitt said.

FERC has required Neptune to work with the new regional transmission organization developing in the Northeast to make sure the transmission structure of the new grid will accommodate the merchant line.

FERC and energy regulators in New York have approved another underwater merchant line that would carry 330 megawatts of power between New Haven, Conn., and Long Island. The Cross Sound Cable Project was proposed by a unit of TransEnergie, the transmission subsidiary of Hydro-Quebec, and United Capital Investment Inc., an unregulated subsidiary of UIL Holdings Corp. (UIL)

Connecticut officials rejected the line's original route earlier this year, saying it would damage the state's oyster beds.

The company proposed another path and the Connecticut Siting Council, the state agency that must approve the project for it to proceed, is expected to issue a decision in late December or early January, Joel Rinebold, executive director of the council, said.

If the council gives its approval, the project must also receive the go-ahead from federal and state environmental regulators, and could be in service by summer 2002, the company said.