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The failure of the Empire Connection spells trouble for private transmission projects.
Fortnightly Magazine - January 2005

fully regulated model where the incumbent welcomes the low-cost generation benefits of increased transmission, Con Edison would have welcomed the project, experts say.

In fact, if Con Edison had taken on such a project in the 1970s, Empire would have been easily built and financed, Empire backers say. It's the competitive generation in the city, those voices add, who stood the most to gain by quashing Empire. Some experts claim that's also the reason no bids were made when Empire had its open season.

How Politics Intruded

One year ago, in a report to Mayor Michael Bloomberg, the New York City Energy Policy Task Force suggested running one or more big, new transmission lines into Gotham to help import lower-cost power from neighboring regions. The report says:

"New York City's electricity needs can be met through several options, including 2,550 MW of proposed transmission lines and approximately 3,700 MW of new and repowered generation projects." The report, commissioned to improve reliability in the wake of the largest U.S. blackout, identified two lines in its recommendations to achieve this objective; these were the 2,000-MW Empire Connection and PSEG Power's 550-MW Cross Hudson project ().

But six months later, many of the same stakeholders who had signed their names to the report supporting Empire as a solution to what ailed New York were openly tearing it down at the Federal Energy Regulatory Commission's 2004 technical conference on the electricity infrastructure of the Northeast region. These turnabout naysayers included NYISO, New York City Economic Development Corp., and Con Edison. Even FERC Chairman Pat Wood had referred to Empire Connection in the past tense in his opening address at the conference. So what happened?

Here are some anecdotes from last year's conference.

  • Gil Quiniones , the senior vice president of energy with the New York City Economic Development Corp., backtracked from his report to Mayor Bloomberg: "Well, the [Empire] Project is still in the planning stages. I don't want to be picking and choosing what's in the pipeline."
  • Eugene R. McGrath , CEO of Con Edison, feared that Empire might start a chain reaction, boosting costs and stepping on toes: "So what that means is I have to support the city infrastructure in such a way that it could handle the loss of that 2,000 megawatt line at peak. And that requires a whole lot of infrastructure to be built in the city to support that new line…. And there are other unintended consequences. Does it cause some of the in-city plants to be uneconomical and shut down?"
  • William J. Museler
  • , CEO of NYISO, worried about project profitability: "The large what I call 'home run' projects like [Empire] … look at what it would cost to carry that project and then factor it in to energy bids. I am not commenting on the economics of that particular project, I don't know them. But it was hugely expensive, and whether or not the economics would even work, even with upstate and PJM power being significantly less expensive than downstate power … ."

    Past history teaches that