Power line granted ‘incentive’

Lawmakers express outrage

By FRITZ MAYER

WASHINGTON, DC — If the power line is ever built, it will receive 2.75 percent more in profits than it might otherwise expect to earn. That’s the impact of a decision made by the Federal Energy Regulatory Commission (FERC) on September 18 in response to an application by New York Regional Interconnect (NYRI) regarding the return on equity (ROE) it will be able to earn.

The approval is for an “incentive rate” that is intended to generate investment in the controversial project, which would consist of a 190-mile power line, to traverse through eight New York counties. “FERC recognizes the need for, and promotes, greater investment in energy infrastructure to strengthen and improve reliability of the transmission grid,” FERC chairman Joseph T. Kelliher said.

In February, NRYI applied to FERC under policies established under the 2005 Energy Policy Act, to be guaranteed to earn a 13.5 percent overall ROE for the project. FERC did not address the total ROE, but said that the 2.75 percent incentive rate would be granted “subject to the ROE being within the zone of reasonable returns.” The decision is also subject to approval of the project by the New York State Public Service Commission (PSC). If the PSC approves the project, the overall ROE will be determined by FERC at a later date.

The announcement from FERC sparked an immediate and angry response from state senator John Bonacic, U.S. Congressman Maurice Hinchey, U.S. Senator Hillary Clinton and other New York officials.

Hinchey linked the development to the upcoming presidential election. “It is outrageous that FERC has required ratepayers to subsidize a project that is neither warranted nor wanted by the residents of New York,” he said. “This is just another example of how the Bush administration has consistently behaved in ways that are in opposition to the best interests of the American people. This is why we need a new President, one who will operate and make decisions with the best interests of the people in mind, not the best interests of corporations inside this country or, as in this NYRI case, outside this country in Canada.”

Bonacic also blasted the decision and noted that New York legislators passed a law, which was upheld by the federal courts, that prohibits NYRI from using right of eminent domain to acquire the necessary property rights to build the power line. Without that condemnation power, analysts have said that NYRI would have a very difficult time building the power line. Bonacic urged federal lawmakers to repeal the “2005 failed energy law,” which allows companies such as NYRI to sidestep state decisions regarding the siting of power plants by appealing to FERC.

Additional hearings ordered

The PSC had scheduled two public hearings on the powerline project that were to be held toward the end of October in Oneonta and Utica, but that number will now be expanded. Administrative law judges Michelle Phillips and Jeffrey Stockholm determined that a total of 13 hearings should be held, with at least one hearing in each of the counties that will be affected by the route. The judges wrote that the location of the meetings should be no more than 15 to 20 miles from the proposed pipeline route.

The meeting schedule has not yet been set, but a spokesman for the PSC has indicated that the meetings will be held between October 21 and the middle of November.