Toronto company proposes 2000 MW power line between Quebec and New York

Mar 2, 2010 - Sylvain Larocque - The Associated Press

A Toronto company financed by U.S. investment firm Blackstone hopes to build a 2,000-megawatt power line between Montreal's south shore and New York City for US$3.8-billion.

The 570-kilometre line proposed by Transmission Developers would largely be buried under Lake Champlain and the Hudson River in order to minimize environmental impacts.

Several projects using overhead power lines in the Northeast United States have failed in recent years under the weight of opposition from residents.

The Quebec portion would cost between US$400 million and $500 million and be built by Hydro-Quebec TransEnergie, which would recover its investment by charging users of the line, Transmission Developers president Donald Jessome said in an interview Tuesday.

The company said it has initiated discussions with Hydro-Quebec, but the provincial utility didn't want to say much.

"Hydro-Quebec is still watching business opportunities and follows the evolution of this issue," said spokeswoman Arianne Connor in an email.

Talks are more advanced with Nalcor, Newfoundland and Labrador's energy company, which wants to sell electricity from the future complex of Lower Churchill to Americans using Quebec's transmission network.

Hydro-Quebec says there isn't enough space available to accommodate Nalcor, but Quebec's energy regulator will rule later this year on an appeal of that decision.

"Our belief still is that the Hydro-Quebec system is a very robust transmission system with lots of capacity," said Jessome (...) "We're still very optimistic that the two parties can resolve the issue and that (Nalcor) will be able to wheel through Quebec."

Transmission Developers is about to apply for service with TransEnergie.

Transmission Developers' project - which is scheduled to be completed in 2015 - would compete with another proposed transmission line being pushed by Hydro-Quebec and U.S. energy suppliers NStar and Northeast Utilities.

The 1,200-MW line that would connect the Eastern Townships and New Hampshire has been well received by the U.S. energy regulator and is slated to enter service in 2014.

Jessome believes that the market is big enough for two new players or more.

In addition to Nalcor's Lower Churchill project, Hydro-Quebec is building the Eastmain-1-A-Sarcelle-Rupert complex, which will enter service in 2011-12, and La Romaine, whose first kilowatts will be produced in 2014.

But he believes his plan is better than Hydro-Quebec's venture with the two American partners.

"Buried transmission projects certainly do not have as much of a not-in-my-backyard concern that overhead transmission has," said Jessome, adding that the power would be sent directly to New York instead of passing through New Hampshire.

"Having said that, we still have to get through very similar regulatory processes that every other transmission lines face."

The Toronto firm has already filed an application for loan guarantees under an economic recovery program designed to improve the U.S. electrical grid. If the project is approved, the loan guarantees could cover up to 80 per cent of the US$3.8 billion cost.

Transmission Developers is also working on a 1,000-MW line stretching from Maine to Boston passing under the Atlantic Ocean.