In its September 2015 Final Report, the New York State Department of Public Service (DPS) Trial Staff outlined the need for the AC Transmission Upgrades, which were subsequently adopted by the New York Public Service Commission in December 2015. The determination was that a project like NYES would fulfill thirteen calls to action. These public policies are:
Reduced production costs resulting from congestion relief
Historic congestion on New York’s bulk electric grid between Upstate and Downstate has resulted in higher electric bills for Downstate New York customers. (Congestion is more thoroughly explained here.) Relieving congestion would allow cleaner, cheaper energy to flow from where it’s produced Upstate to where it is needed Downstate. This would result in lower energy production costs.
Improved preparedness for impacts of generator retirements
In New York, many power generators are reaching or exceeding their useful life expectancy. Generator retirement poses risk to electric reliability and market competition in New York, especially in southeast New York where there is a lot of electric demand. With the build-out of the project, New York could respond to generator retirements more flexibly.
A reliable transmission system has a strong AC transmission backbone, and can respond to emergencies on the system. In 2014, the New York Independent System Operator (NYISO) completed its 2014 Comprehensive System Plan, and while the electric grid is reliable today and looks to be in the next ten years, an upgraded AC transmission system will allow the NYISO to be flexible in its reliability planning. This would be important if, for example, a Downstate electric generator retires and more of Upstate New York’s surplus power is needed to serve customers reliably.
Reduced costs of meeting the Renewable Portfolio Standard (RPS)
Relieving congestion on the bulk electric grid would provide greater access to wind power from Upstate New York, and provide greater revenues to encourage these clean resources. Currently, there are over 20 wind projects in Upstate New York in development and waiting to be built.
Reduced capacity resources costs
To ensure that adequate energy supplies can meet demand, capacity must be purchased on a long term basis along with purchasing energy to serve daily needs. When a transmission constraint exists, this drives up the price of that energy capacity downstream from the constraint (in this case, southeast New York). Relieving transmission congestion could result in capacity savings for all of New York.
Enhanced incentives to develop new efficient generation upstate
As with many goods and services, it is cheaper to build and produce power in Upstate New York than it is Downstate (e.g., cheaper real estate, lower taxes, etc.). Relieving congestion could promote the build-out of cheaper, cleaner power generators Upstate with a wider, more flexible market to sell to Downstate.
Reduced environmental emissions and improved health impacts
When congestion constraints are relieved and energy is able to flow more freely, greenhouse gas emissions caused by older, dirtier generators can be avoided. Large scale renewable generation is sited mainly in Upstate New York due to cost and space limitations in Downstate New York.
Avoided refurbishment costs of aging transmission
Much of the existing transmission infrastructure along the NYES route is over 50 to 80 years old. The project would replace aging infrastructure that would need replacing within the next 10 years,
Increased tax receipts from increased infrastructure investment
Utilities pay property taxes to municipalities for the property and assets that they own, like transmission lines. New infrastructure would increase tax revenues for municipalities, allowing for an increase in services, and/or a reduction in resident property taxes for the community.
Not only would temporary jobs be added in New York to construct the project, but permanent operations and maintenance jobs would also be created. If the project is built, there would also be an increased probability that new generation would be sited in Upstate New York, adding more jobs to those communities as well.
Enhanced resiliency/storm hardening
Upgrading New York’s transmission system is imperative to continue the state’s storm hardening efforts in the wake of Superstorm Sandy. The upgraded facilities would help guard against the volatility of severe weather events, including heat waves in the summer and below-freezing days in the winter.
Enhanced planning and operational flexibility
When transmission is increased, this provides the electric grid operator with greater and more efficient operational flexibility. When congestion bottlenecks are relieved, this allows the grid operator to dispatch lower-cost, cleaner energy to the bulk electric grid. Further, if lines need to be taken out of service for maintenance and congestion on the Central East and UPNY-SENY interfaces persists, it could cause increased congestion on other lines and increased energy prices during that time. Relieving this congestion will be beneficial as aging transmission lines continue to be maintained, replaced, and upgraded.
Other potential benefits include: synergy with other future transmission projects; relief of gas transportation constraints; improved market competition and liquidity; and fuel diversity.