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King Neptune

Consultant Ed Krapels makes waves with undersea transmission.

Fortnightly Magazine - May 2007

Hudson. Green Line is conceptual; it’s a different animal, because it’s meant to be in the rate base.

Fortnightly: Where do we stand right now with the Green Line?

Krapels: The Green Line is in the process of negotiating an ITC agreement, the first one, with the New England ISO (ISO-NE), for the purpose of participating in transmission development as an ITC, under the conditions of “Attachment M,” under the New England tariff.

Fortnightly: Do you have a time frame on when you will be certified by ISO-NE as a qualifying ITC? When will we know if the ISO accepts the Green Line project as part of its regional transmission plan?

Krapels: Those are two different questions with two different answers.

First, we have obtained an order [Docket EL07-21, Feb. 20, 2007, 118 FERC ¶61,127] that we have both the independence and the capability to develop transmission in New England. It’s a peculiarity of the New England tariff that we need to go to FERC for that kind of order.

For the second step, we have to negotiate an ITC agreement with the ISO. That is ongoing. We hope to be finished with that in April or May. And that, if you will, gives us our second leg—our ability to do business in New England for the purpose of developing a rate-based transmission project. This would not be necessary if we were proposing a merchant project, but we’re not.

Fortnightly: When you say “rate base,” you mean that the ISO will allocate the cost of the line under its regional tariff, in the same way as if an investor-owned utility was building out the grid?

Krapels: Yeah. But I want to be sure, though, not to misspeak in terms of any specific allocation, because that’s yet to be decided. And I guess that, in essence, we would be a utility. But we would be a utility, if you will, with no customers: a utility for the purpose only of developing transmission.

And I think it’s somewhat felicitous that our project, as it’s proposed, would lie in no one single service area.

Fortnightly: Now that you’ve put in some work on three different lines, can you look back and determine whether one was easiest?

Krapels: None of them has been easy. But one of the things we’ve learned is that when FERC effectively abandoned its standard market design, it created a challenge that we actually relish. And that’s that each region has its own eccentricities, and you have to be able to do business within those eccentricities. So Neptune is a fantastic idea, within the New York and PJM scene. We don’t think it would work, necessarily, in the New York/New England scene. Nor would it work within the New England market. And Green Line, I don’t think, would necessarily work within PJM, but it’s just the right approach for New England. We’ve learned to adapt our approach to the market.

Fortnightly: What led you to branch out from consulting and get into the transmission business?

Krapels: When we started this, back in