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NJ offshore wind project secures interconnection rights at site of closed nuke

Ocean Wind LLC can purchase rights to bring power from New Jersey's first offshore wind farm to shore at the shuttered Oyster Creek nuclear power plant, state regulators said.

The Ørsted A/S subsidiary won the state's first offshore wind solicitation in June, getting approval from the New Jersey Board of Public Utilities to build the 1,100-MW Ocean Offshore Wind Farm project 15 miles off the coast of Atlantic City, N.J. The company filed a petition in August seeking approval to procure capacity interconnection rights, or CIRs, from Exelon Generation Co. LLC at the Oyster Creek plant in Ocean County. The Exelon Corp. subsidiary closed the plant in 2018.

The board approved the request Sept. 11, finding that Ocean Wind's purchase of CIRs is in the best interest of ratepayers and is expected to reduce the risk of higher costs for system upgrades and the risk of transmission upgrade cost uncertainty than if the CIRs are not procured.

Ocean Wind estimated that the difference between the purchase of CIRs at the price indicated in its agreement with Exelon plus any remaining upgrade costs would be about $25 million less than the estimated upgrade costs without the purchase of the CIRs.

"The acquisition of CIRs may ultimately reduce the risk of delay in the project schedule since the scope of the system upgrades is reduced and the related timeframe associated with the necessary construction of such upgrades is also reduced," the order said. "Lowering the project's schedule risk also aligns with New Jersey ratepayer interests."

The exact cost of transmission system upgrades is still unknown, though according to the board's June order, Ocean Wind estimated them at between $36 million and $130 million and said they could go up to $174 million.

Because the costs of transmission system upgrades are uncertain and will remain so until the project is built, the board said companies taking part in the offshore wind solicitation will be allowed to true-up the portion of their offshore wind renewable energy certificate price attributable to the costs of transmission system upgrades once the final cost is determined.

The board approved Ocean Wind's proposed true-up mechanism in its June order.

Under that mechanism, Ocean Wind will pay for the first $10 million of any upgrades. If costs are between $10 million and $130 million, Ocean Wind will pay 70% of costs, with the remainder recovered from ratepayers. Should costs run between $130 million and $174 million, Ocean Wind will pay 50%, with the other half recovered from ratepayers. For costs above $174 million, 100% will be recovered from ratepayers.

Ocean Wind is to give the board the final costs of upgrading the transmission system within two days of getting them. (New Jersey BPU Docket No. QO18121289)