The Federal Energy Regulatory Commission (FERC) has approved incentive rates for the New York Regional Interconnect (NYRI) on condition that the New York State Public Service Commission determines the 190-mile transmission line either ensures reliability or reduces congestion, and approves siting for the project.
FERC's conditional rate approval includes a 275 basis point (2.75%) addition to the return on equity (ROE) that will be earned by the company. That incentive includes 50 basis points (bps) for future participation in the New York Independent System Operator Inc. (NYISO), 100 bps for forming an independent transmission company (transco), and 125 bps for a combined transmission and advanced technology incentive.
FERC did not set the base ROE, but said the 2.75% adder would be granted ‘subject to the ROE being within the zone of reasonable returns.’ This will be determined when NYRI makes a future rate filing under the section 205 of the Federal Power Act. The adders are intended to enable NYRI to attract investment necessary to develop the project.
NYRI plans to finance, construct and maintain the 190-mile high-voltage line to gain access to New York energy markets within NYISO. NYRI estimates that the cost of the project may reach $2.1 billion. It expects the line to be in service by 2012.
SOURCE: Federal Energy Regulatory Commission