April 9, 2009, River Reporter: NYRI ‘suspends’ powerline application

NYRI ‘suspends’ powerline application

FERC ruling decisive

link to complete article here:

http://www.riverreporter.com/issues/09-04-09/head1-nyri.html

By FRITZ MAYER

ALBANY, NY — In a dramatic and unexpected move, the lawyer for the company that has been seeking permission to build a powerline in the region for more than three years, suddenly said his company was withdrawing its application.

The stunning turn of events came in the midst of a hearing of the New York Public Service Commission (PSC), during which details for the 180-mile proposed line were being examined. The plan, proposed by New York Regional Interconnection (NYRI), was first announced in the spring of 2006. The news of the withdrawal came on April 3.

An administrative law judge hearing the case instructed NYRI to submit a letter regarding the withdrawal to all interested parties and to indicate whether the company intends to re-apply in the future. The letter in response, filed on April 6, said the company is “suspending” the application, and that, “At this time, NYRI has not made any decisions with respect to future actions or activities by the company.”

Troy Bystrom, a representative of Communities Against Regional Interconnection (CARI), a group of local and state governments and activists groups that have been fighting the project, called the wording of the letter “duplicitous” and accused NYRI of “playing games.”

Still, it’s not clear if the interested parties will formally object to the suspension or withdrawal, and if no objections are raised by April 13, the case will be officially closed by the PSC.

NYRI said the decision to withdraw was prompted by a ruling by the Federal Energy Regulatory Commission (FERC), which was handed down on March 31. NYRI had asked FERC to re-examine the rules under which NYRI could recoup the costs of the $2 billion project.

In the complex world of the electricity in New York, the grid is operated by the New York Independent System Operator (NYISO), a non-profit organization. Under current NYISO rules, the cost of the powerline could be passed along only if 80 percent of the utilities that would receive electricity from the line agreed to the arrangement. In the case of NYRI, those utilities would have included Con Edison, which serves New York City. The problem was that Con Edison, which in the weighted system accounts for 21 percent of the utilities that would vote, had already declared that the NYRI project was unnecessary.

In early February, when NYRI asked for a rehearing or clarification on the grid rules, NYRI said if FERC ruled against the company, it might need to pull out of the project. Opponents called this a sign that the company was beginning to understand that it was losing the battle to build this powerline.

CARI spokesperson Eve Ann Shwartz wrote in a press release at the time, “NYRI’s latest threat to withdraw this project indicates that NYRI investors and backers see the handwriting on the wall.”

In response, NYRI attorney Len Singer denied that a negative decision from FERC would mean the end of the project, and said that investors, who had already spent nearly $20 million in engineering, legal and other costs, did not intend to abandon it. But that was directly contradicted when the FERC ruling made it impossible for investors to be certain the project would be profitable.

In a press release, NYRI explained that the March 31 FERC denial of their request to review the recently approved NYISO rules for transmission tariffs had created an unacceptable financial risk for NYRI’s investors. “Even if the NYRI project were to be sited by the PSC, NYRI would face the prospect of being unable to recover transmission costs from the ratepayers who would benefit from the project,” the company wrote.

CARI members hailed the withdrawal as an important victory. Politicians, including senator John Bonacic, assemblywoman Aileen Gunther and Sullivan County chairman Jonathan Rouis, applauded the development, as did Bill Douglas, executive director of the Upper Delaware Council.

A call to arms

The NYRI project, which was the successor to a proposal for a similar power line made by the Canadian firm Pegasus Power Systems, Inc. in October 2003, united politicians from across the political spectrum and allied them with citizen groups that sprang up along the length of the proposed power line that would have stretched from Utica to Orange County. There was anger at what was considered the arrogance with which NYRI executives operated when dealing with municipalities.

Early on, Bonacic railed against the company and the project and vowed to stop it. He helped secure funds from the New York Senate to form CARI, which spearheaded the legal fight against the powerline in Albany and Washington, D.C.

He also sponsored legislation signed into law in October 2006, which specifically prohibited NYRI from using the power of eminent domain to acquire land. Without eminent domain, the process of acquiring the land needed to site the line would become almost cost prohibitive. Some experts expected the law to be struck down by the U.S. Court of Appeals, but it was not.

A federal judge in October 2007 dismissed NYRI’s lawsuit seeking to overturn the law. At the time, New York State Attorney General Andrew Cuomo said, “The ruling preserves New York’s right to make decisions on projects like NYRI based on our state’s environmental and energy needs, not on the desires of private companies or the federal government.”

The federal connection

For a while, it looked as if the federal government, specifically FERC, might have the final say in the matter of whether the line could be built. That’s because of provisions contained in the controversial Energy Policy Act of 2005, which gave FERC, under certain circumstances, the power to override decisions made by a state if the state should fail to give permits for a power line in a timely manner.

This, again, riled politicians and residents on both sides of the political spectrum. Some were angered that the Bush Administration gave too much to the energy companies with the energy act at the expense of the environment and other groups. Elsewhere on the political spectrum, others were angered because the powers given to FERC were seen as an intrusion into states’ rights by the federal government.

The application of the powers granted to FERC relied on a power line project being situated within National Interest Electricity Transmission Corridors (NIETC), which were later referred to as national corridors. These were areas, whose creation was stipulated by the energy act, where delivery of electricity was found to be significantly congested.

Congressman Maurice Hinchey introduced legislation in February 2007 in the House of Representatives that would have stripped the U.S. Department of Energy (DOE) of the power to form national corridors and would have stripped FERC of the power to override state agencies. The measure did not pass.

On April 26, 2007, the DOE created two national corridors, one in the Southwest and one in the Northeast. The Northeast corridor covered eight states, including much of New York and Pennsylvania, and could have greatly enhanced the possibility of NYRI coming to fruition had the PSC turned down the proposal at the state level. However, the Northeast national corridor was so expansive that the uproar against the portions of the energy act that allowed the creation of it became a target of NYRI line opponents.

While measures to strip FERC of the power to override state agencies have not passed, and the expansive national corridor designations have been upheld in court, Hinchey and other lawmakers in Washington are still pressing the fight against the energy act, and they seem to be gaining support in Congress.

Senator Charles Schumer, who in July 2007 introduced legislation that would have dramatically lessened the authority of FERC to overrule state agencies regarding power line siting decisions, scheduled a news conference for April 8, when he was expected to renew his commitment to rolling back portions of the 2005 Energy Act.

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