The development capital will allow Atlantic Energy Partners, the consortium developing the Neptune Regional Transmission System (NeptuneRTS), to permit, finance and start building two planned 600 MW links between New Jersey and New York, the first of four phases in the proposed system. One of the links would connect the electric grid in New York City with Sayreville, New Jersey, while the second would connect the heart of Long Island to Sayreville.

Both links would carry power via high voltage, direct current transmission lines from the Jersey Central zone of the Pennsylvania, New Jersey and Maryland grid (PJM), where power is relatively abundant, to the increasingly power-starved zones of New York City and Long Island.

While the terms associated with providing the development capital are confidential, a TXU spokeswoman told Reuters the company does have the option to increase its participation in the project in the future. The total cost of the project has not been publicly disclosed, but a NeptuneRTS spokesman said the cost of these two legs planned to New York would be about $500 million.

NeptuneRTS has already received the go-ahead from the Federal Energy Regulatory Commission to build the two links, which would be operated as merchant facilities earning market returns rather than the guaranteed but capped rates of returns typically associated with regulated electric utilities.

The NeptuneRTS spokesman said the project was still pending public utility and environmental regulatory approvals by New York State, New Jersey and the U.S. Army Corp of Engineers.

Construction is scheduled to begin during the second quarter of 2003, with the NeptuneRTS facilities expected to be in service by 2005.

TXU Energy's participation in NeptuneRTS follows the company's previously announced acquisition of a 122-megawatt combined cycle generating plant in Pedricktown, New Jersey, and the award of 1,000 megawatts of load in the New Jersey Statewide Basic Generation Service (BGS) Electricity Supply Auction.

With $41 billion in assets, TXU provides electric and natural gas services, merchant energy trading, energy marketing, energy delivery and telecommunications services. The company, which sells over 330 million megawatt hours of electricity and 2.8 trillion cubic feet of natural gas annually, serves over 11 million customers worldwide, primarily in the U.S., Europe and Australia. Atlantic Energy Partners LLC is a consortium developing undersea transmission links from East Coast generation centers to cities in need of more energy.

As proposed, the NeptuneRTS undersea cable network will eventually consist of four 1,200 MW transmission lines from New Jersey, New Brunswick, Nova Scotia and Maine connected to high growth, energy-starved markets in Boston, Connecticut and New York City.