NYRI threatens pullout?
Asks FERC to guarantee profits
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NEW YORK STATE — The company that wants to build the $2.1 billion power line through New York also wants to be sure it can recoup its entire investment, but that might not be possible under current rules. In New York, the New York Independent System Operator (NYISO), the not-for-profit that manages the state’s electricity grid, determines whether a utility, such as a power line, can pass the entire cost of a project onto ratepayers.
Under current NYISO rules, the cost of the power line proposed by New York Regional Interconnect (NYRI) can be passed along only if 80 percent of the entities who receive electricity from the line agree. In this case, the entities receiving the electricity would be downstate power companies like Con Edison, which serves New York City. The problem for NYRI is that Con Edison, which in a weighted system accounts for 21 percent of the vote for the NYRI project, has already said that it is unnecessary.
NYRI, therefore, asked the Federal Energy Regulatory Commission (FERC) to conduct a rehearing on the NYISO policy in November 2008. In another filing with FERC on February 2, NYRI wrote, “Unless the commission grants the requested rehearing or clarification, it is unlikely that large-scope, technologically innovative, congestion-reducing projects like the NYRI project will be built because there will be no way to recover a return of and on the investment. NYRI respectfully requests that the commission issue a decision by March 2009 so that NYRI’s investors can decide whether to continue investing in this project.”
Opponents of NYRI saw this as a threat to withdraw if FERC does not act according to NYRI’s wishes. Eve Ann Shwartz, a spokesperson for Communities Against Regional Interconnect (CARI), in a press release said, “NYRI’s latest threat to withdraw this project indicates that NYRI investors and backers see the handwriting on the wall.”
Troy Bystrom, another CARI member, said, “NYRI is looking for a guaranteed federal ‘bailout plan’ to build this unneeded project in New York State. They are seeking to make a profit at the expense of ratepayers for a green washed project using 20-year-old technology.”
But Len Singer, the lawyer for NYRI, said a decision against the company and in favor of NYISO would not necessarily mean the death of the project. He told a reporter the situation would be re-evaluated, and that investors don’t intend to walk away from the power line.
Some amount of profit for NRYI has already been guaranteed by FERC. In September 2008, the agency ruled that NRYI was eligible for an “incentive rate” if it builds the powerline, which would amount to 2.75 percent more that it would otherwise earn as a regulated utility under NYSIO.
At the time, Congressman Maurice Hinchey lashed out against the FERC action, saying, “It is outrageous that FERC has required ratepayers to subsidize a project that is neither warranted nor wanted by the residents of New York.”