Proposed Champlain Hudson Power Line Still a Bad Deal for New York Ratepayers
IPPNY's Brief on Exceptions Reinforces Argument that
Proposed Power Line Costs Significantly Trump its Benefits
Albany, N.Y., 1/17/13 - The Independent Power Producers of New York, Inc. (IPPNY) today filed with the New York State Public Service Commission (PSC) its Brief on Exceptions in response to the Recommended Decision issued in the PSC's Article VII Transmission Line Siting proceeding on the Champlain Hudson Power Express, Inc.'s (CHPE) application for a Certificate of Environmental Compatibility and Public Need to construct a transmission line from Canada to New York City. Last month, PSC Administrative Law Judges recommended approval of the proposed 333-mile power line project, saying it would get inexpensive electricity to a city that needs it, help reduce greenhouse gas emissions compared to other power sources, create jobs, and decrease pressure on the state's aging electrical grid. However, during the Article VII proceeding and in subsequent filings, IPPNY demonstrated many critical pitfalls concerning the economics of the Project and the associated risk to New York State residents and businesses.
IPPNY President & CEO Gavin J. Donohue said that New York's energy marketplace simply cannot provide sufficient revenues to support the unneeded and uneconomic transmission line, and as such, the Project, sponsored by Transmission Developers, Inc. (TDI), should not be granted a Certificate. "Our economic analysis shows that the proposed Champlain Hudson Project cannot be profitable unless it relies on subsidies. If that is the case, it is not truly merchant, as the developer TDI suggests, and is, therefore, not in the public interest. New York State already has adequate generation resources that do not rely on these kinds of subsidies and that can meet consumer demand safely and reliably well into the future. The potential entry of a subsidized transmission line will harm existing resources and impair the development of new non-subsidized resources. We encourage the PSC, if it approves the Certificate, to ensure that enough protections are in place to prevent the cost of the line from falling to the ratepayers and to prohibit TDI from receiving subsidies indirectly through the shippers that will contract with the Project to transmit their energy over the proposed line."
The Brief on Exceptions filed today restates the trade association's concerns about the Project's uneconomic nature and how that will affect the state's competitive electricity market. Today's filing notes that:
- CHPE has failed to meet its burden under Article VII to prove "the basis of the need for the facility" that the Project "conforms to a long-range plan for expansion of the electric power grid. . . which will serve the interests of the electric system economy and reliability" and that the "facility will serve the public interest, convenience, and necessity;"
- None of the proposed Certificate Conditions adequately prevent an above-market subsidy. Proposed Certificate Condition 15.b leaves a gaping loophole for the Project to obtain the subsidized financing it will need to be constructed and will not prohibit CHPE from receiving subsidies indirectly through the shippers that will contract with TDI to transmit their energy over the proposed line; and
- Because CHPE has failed demonstrate its burden of proof under Article VII, the PSC should reject the Joint Proposal and deny the issuance of a Certificate. However, if the PSC nevertheless should decide to grant a Certificate to the Project, it must require the Applicants to accept a Certificate Condition that specifies that the Certificate will be rendered null and void if the Project is able to access, directly or indirectly, a subsidy for the Project in any form whatsoever.
Additionally, Mr. Donohue stated that the success of New York's competitive markets has been noted through reduced wholesale prices, lowered emissions, and increased reliability. Mr. Donohue underscored that "the state has been making strides in becoming more business-friendly to encourage investment in the New York's infrastructure and improve the economy, and these necessary upgrades will be dictated, as has been the case for the last decade, by market signals."
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The Independent Power Producers of New York, Inc. (IPPNY) is an Albany-based trade association representing the competitive power supply industry in New York State. IPPNY Members generate over 75 percent of New York's electricity using a wide variety of generating technologies and fuels including hydro, nuclear, wind, coal, oil, natural gas and biomass.
