New York regulators said Dec. 17 that a proposal by the New York Transmission Owners chosen as the best method to open choked power flows to the Lower Hudson Valley must be put out for bid to find a lower price.
Despite objections from the owners, who include the state’s six large utilities and their Transco partnership to develop transmission projects, the project now will go to the New York Independent System Operator to be competitively bid.
The owners had submitted a proposal in response to the Public Service Commission’s 2013 solicitation for ways to address congestion on the north-south transmission corridor.
More than half of the state’s demand is in New York City and surrounding areas, and the congestion along the transmission corridors prevents lower cost and cleaner power from reaching the densely populated region.
The estimated $1.2 billion project would allow transfer of 1,000 MW from upstate to to higher demand areas.
After evaluating 22 projects proposed by four bidders—North American Transmission, NextEra Energy, Boundless Energy and the New York Transmission Owners—the commission staff recommended that the transmission be upgraded from near Utica to Albany and south to Pleasant Valley near Poughkeepsie, primarily by adding new 345-kV lines.
The staff preferred the route proposed by the owners but decided the benefits of the project could be higher if other developers were given an opportunity to bid.
The staff recommended that the project be divided into two segments from Utica to Albany and another from across the Hudson River near Albany south to Pleasant Valley, with other developers allowed to propose them separately to the independent system operator. The segments were divided into corridors without specific requirements for locations other than the need to be primarily on existing rights-of-way owned by the transmission owners.
“The Public Service Commission should recommend that the [owners] submit their project to the NYISO in its entirety," the transmission owners said in late November. "The commission should not allow the other developers to modify and submit their proposals to mimic segments of the [owners]' project.”
Transmission owners' spokesman John Maserjian said on Dec. 18 that more would be learned about the competitive process as the proceedings move forward. Previously, he said putting the transmission owners project out for bid changes the rules of the bidding process in the middle of the proceeding and would have a significant chilling effect on future project development in New York. “It violates the spirit of the entire proceeding,” he said.
In its Dec. 17 order, the commission said three developers identified portfolios of projects and alternatives that are readily comparable. The commission also said that it is not ready to select the transmission owners' project as the best solution because of the significant disparity in cost between its proposal and the others “for essentially the same work.”
“In the commission’s view, those costs need to be further tested, and the best way to do that is through competition,” the order said.
The transmission owners argued that not selecting its project at this time and instead allowing other developers to modify their projects to match its proposal is arbitrary and chilling to the idea of competition.
The commission disagreed, saying that cost concerns are material and therefore not arbitrary, although it said minor project modifications needed for the other developers to put their projects on a comparable basis to maximize competition are not material.
The commission also expects most of the new transmission will be built on existing rights-of-way, which are owned by the transmission owners.
The commission agreed that North American Transmission and NextEra could be disqualified based solely on the fact that they do not own utility rights-of-way.
The regulatory entity also determined that the transmission upgrades were driven by a public policy requirement that triggers a solicitation and review of transmission and other solutions by the New York Independent System Operator and then a decision on whether to issue siting certificates for those it selected.
The commission would like to have the selected projects online by the mid- 2019.
