Entergy's Big Problem

 | Jun 10, 2013 | 6:00 PM EDT
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New York City has a new connection. It is an $850 million extension cord connecting Consolidated Edison's (ED) substation in Manhattan to Public Service Enterprise Group's (PEG) substation in New Jersey's Bergen County.

The 660-megawatt Hudson Transmission Line is less than eight miles long and runs under the Hudson River. State-owned municipal utility New York Power Authority (NYPA) is the offtaker that helps finance the project.

It is not a surprise that the owner of the new Hudson line is not a typical utility. It is a private company located in Connecticut called PowerBridge. In fact, PowerBridge's Hudson line is only one of three New York area investments, all of which will likely change the power markets.

PowerBridge also owns the Neptune Regional Transmission System. According to their website, Neptune is a 660-MW submarine electric transmission cable originating from FirstEnergy's (FE) substation in Sayreville, NJ to the Long Island Power Authority's (LIPA) substation in Levittown, Long Island. The line is 65 miles long, it cost $600 million and it was completed in 2007.

According to Electric Energy Publications, LIPA announced the Neptune Project saved the utility more than $20 million in its first 100 days of operation. In addition, Neptune is expected to save LIPA more than $1 billion over the next 20 years. For readers who like massively large hardware, look at Electric Energy's photographs and technical description of the system.

PowerBridge is working on two other lines. One is the Green Line. According to PowerBridge, the Green Line Project is an undersea electric transmission line designed to move 800 megawatts of power from Maine to Southern New England. Its goals are to encourage the development of renewable resources in northern New England by providing the necessary infrastructure to bring green power to more densely populated areas to the south, including the Boston area, while at the same time increasing the supply of reliable energy into the largest demand center in New England. The bulk of New England's new renewable supply resources will likely come from Maine and Eastern Canada, where the greatest potential exists for renewable energy development in the form of wind, biomass, tidal and hydroelectric power.

PowerBridge's other project is more controversial. They call it West Point. It sounds patriotic, unless of course your family served in the nuclear navy or works for Entergy's (ETR) Indian Point Nuclear Generating facility.

Indian point is a two-unit nuclear power plant capable of producing 2,045 megawatts of base load power. Indian Point is responsible for about 2,500 jobs in five New York counties. If West Point becomes reality, Indian Point's nuclear jobs are forever lost. The bottom line is that West Point will kill far more jobs than it creates.

According to PowerBridge, West Point Transmission is an underwater and underground transmission system, which is expected to deliver power from Albany and follows the Hudson River about 75 miles south to end in Buchanan, NY, the location of Indian Point Energy Center. It will tie into existing transmission infrastructure to the north, west and south, without the need for intrusive new facilities between Buchanan and the New York City area.

With the exception of the Green Line, these transmission line projects will raise havoc with local power markets. PowerBridge's projects help Manhattan win, but they make losers out of New Jersey's consumers.

The reason is markets. Local market prices for power delivered in Manhattan and Long Island can be the highest in the nation. One big reason for high prices is transmission line constraints. By building new lines from New Jersey, constraints are relieved and New Jersey power can reach higher-priced markets.

That means the market-clearing price of New Jersey's power will likely move upward. Demand at the originating end of these new lines is suddenly hundreds of megawatts greater at the same time that no new supplies are available. High demand, low supplies and prices soar. It is just simple arithmetic.

It is amazing New Jersey did not object or aggressively block PowerBridge's projects. With these new projects, New Jersey's consumers must pay more so New York City consumers can pay less.

Without debate, New Jersey's citizens have been coopted into supporting New York's anti-nuclear plans. Taken together, PowerBridge's new transmission lines have the physical and financial capacity to replace Indian Point. That is the state's intention, to permanently retire Entergy's Indian Point 20 years early.

As of today, Entergy is in the middle of spinning off their southern transmission line assets. At the same time, other people's transmission assets are threatening Entergy's merchant plants.

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