FERC allows New York entities to recover costs if transmission project abandoned

The Federal Energy Regulatory Commission granted incentive requests allowing the New York Power Authority and Niagara Mohawk Power to recover costs should regulatory delays force developers to abandon a transmission project aimed at helping reach New York's clean energy goals.

The commission granted the two entities' requests for the Abandoned Plant Incentive, which would allow NYPA and Niagara to "recover 100% of [their] prudently incurred costs of certain transmission facilities ... in the event the project is cancelled or abandoned for reasons" beyond their control, according to March 11 orders (EL22-15, EL22-17). The incentive applies to costs incurred on or after the order's date.

The project, known as the Smart Path Connect Project, aims to help the state meet its ambitious renewable energy targets by connecting renewable generators in northern New York to downstate load centers. In 2019, New York passed the Climate Leadership and Community Protection Act that required the state to reduce economywide greenhouse gas emissions 40% by 2030 and at least 85% by 2050 from 1990 levels.

Significant risks

FERC agreed with NYPA and Niagara -- a public utility operating transmission facilities in New York -- that the transmission project "faces significant regulatory and siting risks" beyond their control that could result in the project being abandoned. NYPA and Niagara requested the Abandoned Plant Incentive due to a projected near-term increase in the project's development costs.

The commission's decision is contingent on the New York Public Service Commission issuing a certificate of need for the project that addresses reliability and congestion. NYPA and Niagara must issue a compliance filing within 30 days after that certificate is issued.

The entities also sought a FERC determination that the project qualified for a "rebuttable presumption" under section 219 of the Federal Power Act, showing that the project ensures reliability or reduces the cost of power by mitigating congestion, to obtain incentive rate treatment under Order 679.

However, FERC determined that the project does not qualify for rebuttable presumption because it has "neither been approved in a regional planning process nor received state construction approval," the commission said.

"Although NYPA argues that the designation of the project as a priority project by the New York commission should qualify the project for the rebuttable presumption, we find that NYPA did not demonstrate that this process considered whether the project ensures reliability or reduces the cost of delivered power by reducing the cost of congestion," FERC said.

Project details

On March 30, 2021, NYPA and Niagara decided to develop the estimated $1.1 billion project, with construction beginning in 2022 and an expected in-service date of December 2025.

The project includes rebuilding about 100 linear miles of 230 kV transmission lines in northern New York to 345 kV, among other upgrades, to help create a continuous line from planned renewable generation areas to load centers in the state.

Niagara said the project would enable another 1,000 MW of transfer capability for clean energy from northern New York and Canada to downstate demand centers. Reducing congestion could save an estimated $450 million in northern New York, according to the utility.