The Green Line Project

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3 The Green Line Project A 660 MW High Voltage Underwater DC Transmission Project Between Maine and Massachusetts An Introductory Project Proposal to ISO-NE For A Reliability Transmission Upgrade For Inclusion in the 2007 Regional System Plan By: New England Independent Transmission Company, LLC December 5, 2006

4 TABLE OF CONTENTS I. Executive Summary... 3 II. Background...5 III. Green Line Responds to ISO-NE Long-term Reliability Needs... 8 A. Transmission... 9 B. System-Wide Resource Adequacy and Fuel Diversity C. Sub-regional Reliability Concerns Maine Canadian Maritimes Boston and NEMA IV. Project Description and Technical Details V. Project Timeline VI. Conclusions VII. Appendices A. Preliminary Project Route Map B. The New England ITC C. Request for FERC Declaratory Order New England ITC 2

5 I. Executive Summary The New England Independent Transmission Company, LLC ( New England ITC or the Company ) hereby submits to ISO-New England Inc. ( ISO-NE ) an Introductory Project Proposal to develop the Green Line Transmission Project ( the Project ) as a Reliability Transmission Upgrade ( RTU ) that addresses the reliability needs outlined in ISO-NE s 2006 Regional System Plan. New England ITC proposes the Green Line project be included in ISO-NE s next 2007 Project List Update and in its 2007 Regional System Plan ( RSP ) as a Reliability Transmission Upgrade as defined in Section II.G of the ISO-NE Open Access Transmission Tariff ( OATT ). 1 Under ISO-NE procedures for Regional System Plan upgrades, an RTU may be added to the RSP at any time in a given year. 2 As part of the Green Line s review, New England ITC will submit at the appropriate time a Proposed Plan Application ( PPA ) to ISO-NE in accordance with Section I.3.9. of the OATT and follow the applicable procedures outlined in ISO-NE Planning Procedure No. 5. New England ITC will conduct and submit technical studies needed by ISO-NE in order to consult with and consider input from the Planning Advisory Committee and the Reliability Committee as provided in Attachment N of the OATT and in order to demonstrate that the project will be designed and operated so that it will have no significant adverse impact on the stability, reliability or operating characteristics of the interconnected system. 3 New England ITC intends to work with ISO-NE s advisory committees, including the Reliability and Transmission Committees, to undergo the technical evaluation necessary to demonstrate the Project benefits. After review by the technical committees, New England ITC will submit a Proposed Plan Application for the Project. Further, New England ITC seeks to have the Project accepted as a pool transmission facility. The Project is an underwater, 500kV, 660MW direct current ( DC ) transmission cable capable of bi-directionally transmitting power between the Maine Yankee 345 kv 1 OATT Section II defines a Reliability Transmission Upgrade as Those additions and upgrades not required by the interconnection of a generator that are nonetheless necessary to ensure the continued reliability of the New England Transmission System, taking into account load growth and known resource changes, and include those upgrades necessary to provide acceptable stability response, short circuit capability and system voltage levels, and those facilities required to provide adequate thermal capability and local voltage levels that cannot otherwise be achieved with reasonable assumptions for certain amounts of generation being unavailable (due to maintenance or forced outages) for purposes of long-term planning studies. 2 Attachment N of the OATT Procedures for Regional System Plan Upgrades provides that A Reliability Transmission Upgrade or Market Efficiency Upgrade may be added to the RSP anytime in a given year, and in doing so the ISO shall consult with and consider input from the PAC and the Reliability Committee, within the scope of their respective functions. OATT Original Sheet ISO New England Planning Procedure 5-1, Section Effective February 1, New England ITC 3

6 substation and the K Street 345 kv substation in downtown Boston. (See Conceptual Map in Appendix A.) Green Line relieves one of the most prominent transmission constraints in the ISO-NE control area, allows much-needed generation capacity now bottled up in Maine to access the rest of New England, and contributes to the resolution of reliability problems in both Northern New England and northeast Massachusetts. Because the Green Line is a controllable, direct current transmission line, it effectively brings 660MW of capacity resources in Maine, where there is a surplus, into the heart of the city of Boston, where ISO-NE projects new generation resources will be needed beginning in As such, the Green Line is a clean virtual power plant for an urban area where the construction of new power plants is extremely difficult. The Green Line will facilitate the development of market-based responses to systemwide reliability needs by enhancing transmission access to Maine and enabling it to serve as a location for economical and innovative power generation projects that will help meet ISO-NE s projected resource adequacy needs and its need for increased fuel diversity. Today, congestion on the existing high-voltage alternating current ( AC ) overhead transmission lines between northern and southern New England discourages the development of new generation in Maine. The congestion problem was identified by the U.S. Department of Energy in its National Electric Transmission Congestion Study, which listed the Maine Southern New England interface as one of just four Congestion Areas of Concern in the country. Maine has the highest potential for renewable energy development of any state in New England, but transmission constraints severely inhibit the development of renewable resources. As an underwater project, the Green Line would not only support the development of more renewable resources in Maine, but also would have minimal environmental impact in its own right. While underwater transmission projects require careful attention to avoid environmental impacts during installation and operation, the environmental impacts of a submarine high voltage DC ( HVDC ) cable and associated AC/DC converter stations are modest compared with the installation and operation of in-city generation or overland high-voltage AC or DC transmission lines. As a transmission project, the Green Line is an environmentally sound addition to Boston s power resources. In recent years, NSTAR has successfully developed the 345kV Reliability Project between Stoughton and Boston, which will meet Boston s resource needs until 2013 (with the exact date depending on whether any additional Boston generation units are retired or deactivated in the interim). After 2013, Boston will face long-term challenges to meeting its growing demand for electricity, even assuming successful efforts to deploy new demand management, efficiency, and distributed generation efforts. Moreover, the Green Line reduces the city s extreme dependence on power plants fueled by LNG imports while improving the overall reliability of electric power in Boston and New England. New England ITC 4

7 As a truly independent transmission project, the Green Line will be developed by a new company the New England Independent Transmission Company, LLC. (See Appendix B.) Concurrent with this proposal, the Company is seeking an order from the Federal Energy Regulatory Commission (FERC) making the independence and capability findings that are required under Attachment M of the ISO-NE OATT for New England ITC to participate in ISO-NE as an independent transmission company. New England ITC will be the first Independent Transmission Company ( ITC ) a pure, stand-alone transmission entity without distribution or generation interests in the control area administered by ISO-NE. New England ITC s Petition for a Declaratory Order from FERC is attached as Appendix C. The Company is highly confident that the Green Line project will provide substantial reliability, portfolio diversity, environmental, and economic benefits to the electric ratepayers of New England. It is a huge step towards a more integrated and sustainable electric system. Given the necessary approvals, New England ITC has the experience, the funding, and the technology to successfully develop the Green Line project on budget and on schedule. The remainder of this Introductory Project Proposal provides in summary form the Background to the Proposal (Section II), how the Green Line Project contributes to the resolution of ISO-NE reliability needs (Section III), a technical description of the Green Line (Section IV), the Project s timeline (Section V), and conclusions and project benefits (Section VI). New England ITC is submitting this Introductory Project Proposal to ISO-NE concurrent with its filing of the request for a Declaratory Order to the Federal Energy Regulatory Commission ( FERC ) for the ITC findings required under Attachment M of the ISO-NE Open Access Transmission Tariff. Based on the information and description of the Project in this document, New England ITC requests that ISO-NE include the Green Line as a proposed project in its next Project List Update and for preliminary consideration of candidate transmission projects for the Regional System Planning process for 2007, in which the benefits and costs of the Green Line project will be fully reviewed. II. Background New England, like other regional markets, has developed several transmission bottlenecks. Areas like Southwest Connecticut and northeast Massachusetts can become load pockets where old, inefficient, and highly polluting power plants cause high urban power prices. Other areas like Maine, southeast Massachusetts and Rhode Island can become generation pockets with surpluses of capacity. The presence of load pockets is neither new nor surprising: cities are extremely difficult places in New England ITC 5

8 which to install generation. When installed, urban generation is usually extremely expensive. Both before and after the restructuring process of the electricity industry began, bulk transmission was built to connect cities with locations where large-scale generation was economical to build. Hence, in Boston, there were transmission projects to link the city with large-scale hydro (power from Quebec which terminates at Sandy Pond in northern Massachusetts), and the Seabrook nuclear facility. In more recent years, NSTAR developed high voltage transmission projects from Southeast Massachusetts another area where generation development was possible and economical into the K Street substation in Boston. In 1997, ISO-NE was given the authority to run the transmission system under the auspices of a FERC-approved Open Access transmission tariff. Since then, ISO-NE has grown into one of the leading power system managers in the world. FERC approved ISO-NE s request to become an independent Regional Transmission Organization in 2004 and as such ISO-NE has the authority not only to manage the transmission system, but also to plan for its expansion. It undertakes that expansion by way of an annual Regional System Plan ( RSP ). Under these RSPs, ISO-NE has approved $1.9 billion of new transmission projects. Two of those projects address the needs urban load pockets. NSTAR was authorized to build an 18-mile, underground, high voltage AC transmission project in Massachusetts, between Stoughton and the K Street substation in Boston. That project will be substantially completed in Northeast Utilities was authorized to build a high voltage AC projects in Connecticut between Bethel and Norwalk and between Middleton and Norwalk. The three projects were harbingers of recognition, at both the federal and state levels, of the need for much more transmission. At the federal level, the Energy Policy Act of 2005 ( EPACT ) (Titles IX, XII, and XIII) provides various forms of assistance to transmission projects, from backstop federal eminent domain assistance to a series of financial incentives to developers. EPACT 2005 instructed that not later than one year [after its enactment], FERC shall establish rules for incentive-based rate treatments for transmission in interstate commerce by public utilities for the purpose of ensuring reliability, and reducing cost of delivered energy by reducing transmission congestion. 4 FERC responded by issuing Order No. 679, Promoting Transmission Investment Through Pricing Reform in July EPACT (section 368B and 1221) also directed the U.S. Department of Energy ( DOE ) to conduct studies to determine suitable locations for National Interest En- 4 Order No. 679, Promoting Transmission Investment, Docket No RM , 116 FERC 61,057 (2006). New England ITC 6

9 ergy Transmission Corridors, taking into account the need for upgraded and new electricity transmission and distribution facilities to (1) improve reliability; (2) relieve congestion; and (3) enhance the capability of the national grid to deliver electricity. DOE was directed to undertake an investigation of electric transmission congestion. That study was released in August 2006, and identified several transmission constraints in the New England region, including Maine New Hampshire, and the Boston import area as a whole. The study concluded that the New England region faces growing electricity supply challenges that new transmission could mitigate. New England has a growing load and many of its older power plants are close to retirement, so the region will need to consider new investments in some combination of local generation, transmission to bring new low-cost power into the area (e.g., hydropower from Quebec), and more energy efficiency and demand response to better manage loads. The area now depends to a substantial extent upon natural gas and oil as generation fuels, which in today s markets leads to high retail electricity prices. 5 In October 2006, ISO-NE added its voice to those of federal regulators, when it stated in its Regional System Plan 2006, Transmission upgrades are required throughout New England to maintain system reliability, simplify system operations, increase system transfer capability, serve major load pockets, and reduce locational dependence on generating units. Furthermore, the ISO concluded that: Several areas of Maine and New Hampshire have serious reliability issues. The transmission improvement studies for northern New England will identify projects that will resolve these issues. These studies will also identify upgrades that will increase the transfer capabilities of the northern New England interfaces and simplify the operation of the system. Other transmission improvements are required to serve load pockets or to meet basic transmission reliability criteria. The targeted areas include western Maine, Boston, the North Shore, southeastern Massachusetts, western Massachusetts, Springfield, Greater Connecticut, Middletown, Norwalk Stamford, and southwestern Connecticut. Not only are these transmission upgrades critical for maintaining bulk transmission system reliability and meeting the reliability standards of the North American Electric Reliability Council (NERC) and Northeast Power Coordinating Council (NPCC), they also can improve the economic performance of the system. Over the next five to 25 years, all of these projects will enhance the region s ability to support a robust, competitive wholesale power market by reliably moving power from various internal and external sources to the region s load centers. 6 5 U.S. Department of Energy, National Electric Transmission Congestion Study, August 2006, p ISO New England Inc., Regional System Plan 2006, page 9. New England ITC 7

10 The Green Line Project meets many of the key transmission development needs identified by ISO-NE. As an underwater project, it establishes a new corridor for the transfer of bulk power between Maine and Boston. As a controllable transmission injection into a load pocket, it reduces congestion in the City that is the economic engine of New England. By increasing transfer capacity out of Maine, it ensures that Maine will continue to be a good location for the development of market-based generation projects that will help meet the resource adequacy needs of the entire system and it allows Maine to further expand its plans to become the center for renewable energy development in New England. By facilitating additional North-South transfers, it enables New England to benefit from the more diverse portfolio of electric assets in the Canadian Maritimes and Quebec. New England ITC is willing to take early project risk to begin to address these needs in the absence of viable market-based responses and to help relieve market inefficiencies. Adoption of the Green Line project will stimulate market-based responses to system needs identified by ISO-NE. III. Green Line Responds to ISO-NE Long-term Reliability Needs The Green Line Project responds to the reliability concerns, transmission constraints, and market inefficiencies outlined in the ISO-NE 2005 and 2006 Regional System Plans that are not being addressed by market-based solutions. The Green Line will provide reliability benefits in the areas of transmission, capacity, and fuel diversity. In addition, implementation of the Green Line will facilitate the response of marketbased solutions in each of these three areas in the form of new generation, transmission lines, and other system upgrades that would not otherwise be brought forward without the completion of the Green Line. These benefits will accrue at both a system-wide and sub-area basis. ISO-NE conducts an annual regional system planning process in accordance with Section II.48 of the OATT. The purpose of the process is to identify system reliability and market efficiency needs that may not be met by Market Participants through market solutions, such as demand-side response, distributed generation and/or merchant transmission. Attachment N of the OATT, Procedures for Regional System Planning Upgrades, further outlines the planning process. Attachment N establishes standards and procedures for identifying Reliability Transmission Upgrades ( RTU ) and Market Efficiency Transmission Upgrades ( ME- TU ). The procedures include regular and on-going studies of the New England transmission system that identify the location and nature of any problems. 7 Identi- 7 Attachment N, Original Sheet No New England ITC 8

11 fied factors that pose reliability concerns, transmission constraints and market inefficiencies and that might be resolved by RTUs or METUs are reported to the Planning Advisory Committee ( PAC ) and posted on the ISO website. These reports and postings serve as market signals intended to stimulate market-based solutions that can address these factors through generation, merchant transmission and demand management. In the event that market-based solutions do not adequately respond to the market signals, ISO-NE will identify needed projects in the RSP that address both reliability and market efficiency needs and which may facilitate market-based solutions. 8 With activation planned for 2013, the Green Line is within the planning horizon of the ISO-NE planning process. Inclusion of the project on ISO-NE s next Project Listing Update as a Reliability Transmission Upgrade and for inclusion in the 2007 Regional System Plan is requested of ISO-NE at this time in order to allow time for regulatory approvals and construction so that Green Line is operational at the time it is needed to meet the system need projected beyond ISO-NE s 2006 Regional System Plan ( RSP06 ) analyzes load, system resources, and transmission through the years 2015 and makes major finding in four areas of importance to which the Green Line Project responds. These include transmission, capacity, and fuel diversity. A. Transmission The constrained interfaces between Maine, New Hampshire and Massachusetts constitute a major obstacle to market-based responses to ISO-NE system needs. DOE s August 2006 National Electric Transmission Congestion Study identifies New England as one of only four Congestion Areas of Concern in the country. In particular the DOE study identifies the Maine/New Hampshire interface as one of the top 40 constraints in the Eastern Interconnect and the only one located in New England. 9 The severity of the constraints was demonstrated this past summer when the ISO-NE system set a new system peak load record three times: July 18, August 1, and August 2, The highest peak was 28,130 MW on August 2 nd. That day the North-South Interface between northern and southern New England reached between 86 and 96 percent of its interface limit. The Southern Maine/New Hampshire interface reached 86 to 87 percent of its limit. And, power flow to the Boston Import area was between 8 The ISO will publish its identification of such relevant factors on the New England Transmission System on its website and to the PAC, thereby providing market signals for generation, merchant transmission and load responses to develop and implement market-based solutions for the relief of actual and projected system reliability concerns, transmission constraints and market inefficiencies. OATT Original Sheet U.S. Department of Energy, National Electric Transmission Congestion Study, August 2006, p. 27. The other three Congestion Areas of Concern were the Phoenix-Tucson area, the Seattle-Portland area, and the San Francisco Bay area. The Atlantic coastal area from metropolitan New York southward through Northern Virginia and southern California were identified as Critical Congestion Areas. New England ITC 9

12 90 and 100 percent of its interface limit. 10 Because these interface limits were reached, the zonal price difference between Maine and NEMA exploded: on July 18, it was $5.24/MWh; on August 1 it was $13.39/MWh; and on August 2, 2006 it was $14.29/MWh. Transmission improvements in the NEMA area between 2005 and 2008 substantially mitigate this potential for congestion through 2012, but the experience during the summer of 2006 is indicative of the high cost of transmission constraints that would then return to the NEMA market in the absence of new transmission and/or generation. ISO-NE has identified a number of alternatives to address the reliability and performance issues in northern New England and to improve transfer limits across several north-south interfaces. In general, these alternatives will provide only limited, shortterm improvements. More substantial, long-term improvements will be needed. RSP06 finds that Eliminating constraints and improving the technical performance of this transmission corridor will become increasingly important as demand for capacity and fuel diversity in the region increases. 11 The Green Line establishes a new transmission corridor that will, in the first instance, substantially reduce if not eliminate the chronic congestion that is likely to return between northern and southern New England from 2013 to At a minimum, it will increase power flow between northern New England and the Boston Import area by up to 660 MW. Additional study may also show that the operation of the parallel Green Line corridor will enhance the transfer capacity of the existing 345 kv lines between northern and southern New England. In addition, construction of the Green Line is likely to stimulate the development of additional transmission reinforcements in Maine, including north of the Maine Yankee substation to Orrington or beyond, increasing the overall New England system s ability to deliver energy and capacity from the North to the South. B. System-Wide Resource Adequacy and Fuel Diversity RSP06 forecasts that New England will need at least 4,300 MW of new capacity systemwide by The forecast assumes that the system can continue to rely on 2,000 MW of imports from ties to adjacent systems (referred to as tie-line benefits ) through the 2015 horizon and that there will be no generation retirements. 12 The North American 10 ISO-NE, NEPOOL Committee Report, August 11, 2006, PowerPoint presentation, Stephen Whitley, Senior Vice President & COO, available at tation.pdf. 11 ISO New England Inc., Regional System Plan 2006, p ISO-NE states, however, that the 2015 need could be greater if the tie-line benefits do not continue at their current level, or if generating units are retired. ISO-NE s analysis shows that the reduction of tie-line benefits to 1,000 MW would increase the need for capacity within the system to 5,400 MW and that the elimination of all tie-line benefits would increase the capacity needed within New England to 6,400 MW. New England ITC 10

13 Electric Reliability Council ( NERC ) in its 2006 Long-Term Reliability Assessment found that in New England, Installed reserve margins will be declining throughout the study period from a high of 15 percent in 2008 to almost 0 percent by To meet that need for new generation, it is critical to make new resources developed in Maine and the Canadian provinces accessible to the rest of New England. Today, because of the constraints in the Maine New Hampshire interface, ISO-NE considers it ineffective to add more than 700 MW in Maine, without upgrading the transmission system to export the power. 14 For a system that needs at least 4,300 MW of new generation by 2015 to maintain reliability, sending a market signal that effectively eliminates one of the largest geographic areas in the system as a viable place to build needed new generation indicates a need for a reliability transmission upgrade that would support market responses in that region. The Green Line would remove this constraint and re-establish Maine as a location for building market-based responses that would help meet reliability needs in the areas of resource adequacy and fuel diversity. Maine s diminished appeal as a place to build new generation has adverse implications for ISO-NE s desire to improve fuel diversity and lessen its dependence on natural gas. Natural gas, oil, or both now fuel more than 60 percent of ISO-NE s generating resources. RSP06 points out that, in the long-term, this over reliance on a single fuel source and the failure to develop alternative fuel sources could result in further exposure to high electric energy prices and significant price volatility. 15 Meanwhile, new state and federal environmental regulations could trigger the retirement of existing non-gas fossil units, thus increasing the system s dependence on natural gas as a fuel and the need for new capacity. In the Northeast, the Regional Greenhouse Gas Initiative ( RGGI ), a seven-state voluntary commitment program to cap carbon dioxide (CO 2 ) emissions beginning in 2009, calls for increased use of renewable energy or from fuel sources that do not emit carbon dioxide. Maine, New Hampshire, Vermont, and Connecticut have signed the Memorandum of Understanding committing to the program. 16 RSP06 identifies several ways to increase New England s fuel diversity, including further development of renewable resources, development of integrated coalgasification combined cycle ( IGCC ) plants with CO 2 sequestration, new nuclear, Of particular concern is the growth in demand within the neighboring systems. The ISO s reliance on neighboring systems would increase at the same time that these systems would likely have less capacity available to sell to New England. ISO New England Inc., Regional System Plan 2006, p NERC, 2006 Long-Term Reliability Assessment, October 2006, p ISO New England Inc., Regional System Plan 2006, Table 4-6, p ISO New England Inc., Regional System Plan 2006, p The seven states are Connecticut, New Hampshire, Vermont, Maine, New York, New Jersey, and Delaware. Rhode Island and Massachusetts participated in the talks and have identified caps. The two states did not sign the MOU, but retain the option to do so in the future. ISO New England Inc., Regional System Plan 2006, Section , p. 75. New England ITC 11

14 and increased imports from Canada. The Green Line would support market-based responses for the development of each of these non-gas resources. However, given the difficulty of permitting coal and nuclear facilities, the Green Line s influence will likely be greatest in the area of renewable resource development and Canadian imports. Currently, there are regulatory incentives to develop renewable resources in New England. Renewable portfolio standards ( RPS ) have been established under which load-serving entities are required to purchase a percentage of their total energy needs from renewable sources. Massachusetts has a goal of 10 percent by 2015, while Connecticut has a goal of between 3 and 7 percent depending the class of renewable resource that is purchased. Maine offers the highest potential for renewable resource development in New England. Studies indicate at least 1,000 MW and as much as 2,000 MW of Maine s 8,000 MW of potential wind capacity can be developed. 17 The Maine State Planning Office finds, however, that the resource is significantly underutilized, partly due to the lack of sufficient transmission. 18 Maine also has significant biomass potential whose development would be aided by additional transmission development. A November 2005 report on economic development in Washington County found that while the raw material for further biomass plants in Washington County would appear to be plentiful, the congestion on Southbound bulk electric transmission lines makes it difficult and expensive to export such power to southern New England, Washington County will benefit from constructing additional electric transmission capacity connecting Southern Maine to Massachusetts. 19 Finally, coastal Maine and the Canadian Maritimes have recently been identified by Electric Power Research Institute ( EPRI ) as one of the richest areas for tidal energy production in the world. EPRI found more than 1,100 MW of available tidal power in Maine, Nova Scotia and New Brunswick. 20 Today there are permit applications pending with FERC for the development of between 37 and 51 MW of tidal capacity in the western passage of Washington County, Maine. 21 In addition to renewable energy, ISO-NE has also indicated that additional imports from Canada could help to improve New England s fuel diversity. The eastern Canadian premiers and Canadian utilities have announced a plan to develop between 4, Maine Public Utilities Commission, Report on the Viability of Wind Power Development in Maine, March 2005.The estimates do not include Maine coastal areas. They also remove areas for aesthetic and environmental considerations, as well as those located far from existing infrastructure such as roads or transmission lines. 18 University of Maine, Overcoming Obstacles to Wind Power Development in Maine, A Report Prepared for the Maine State Planning Office, December 22, 2005, p Report on an Economic Development Strategy for Washington County, Prepared by David Flanagan, Governor Baldacci s Special Representative to Washington County, November 17, 2005, p EPRI, North America Tidal In-Stream Energy Conversion Technology Feasibility Study, June 11, Federal Register / Vol. 71, No. 148 / Wednesday, August 2, 2006 / Notices New England ITC 12

15 and 6,000 MW of new hydroelectric power by One purpose of the development would be to make it available for sale during the summer to Ontario and New England. 22 The increase in the Maine-New Brunswick interface capacity by 300 MW resulting from the completion of the Northeast Reliability Interconnection ( NRI ) project in 2007 will allow more imports from the Canadian Maritimes. Additional upgrades are needed in the transmission system to move this power further south, especially during summer peak periods when there is excess capacity available in New Brunswick, which is a winter peaking system. C. Sub-regional Reliability Concerns The Green Line would provide sub-area reliability benefits to the ISO-NE system. These benefits would be realized in both Maine and in the Boston Import area. Excess generation in Maine and the rest of northern New England was identified in both RSP05 and 06 as creating reliability problems. 23 RSP06 finds that addition of nearly 3,000 MW of new generation within the past decade has significantly stressed the northern New England export capability and affected all northern New England resources. 24 Maine Increased development of renewable energy resources in the Maine, in addition to the imports available in summers from Canada, will potentially exacerbate the reliability problems cited by ISO-NE in northern New England due to excess generation. Current regulatory incentives to develop renewable resources in New England including RPS in Connecticut and Massachusetts, and RGGI suggest that there will be incentives to develop these resources that do no fully consider transmission needs. Both the Massachusetts and the Connecticut programs count renewable generation developed anywhere within the ISO-NE grid as deliverable, despite the known constraints between northern New England, where the highest potential for renewables is located. Today, there are more than 800 MW of Maine-based wind generation proposals in the ISO-NE interconnection queue. Development of these intermittent wind projects without providing an outlet for the power could pose further operating and reliability challenges to the northern New England system. Maine s potential as a center of renewable energy investment is already manifesting itself in proposals for interconnection by wind, biomass, and other renewable developers that, as of the end of 2006, 22 RSP 06 describes imports from Canada one of its system-wide initiatives designed to improve reliability and security of New England s bulk power system. ISO New England Inc., Regional System Plan 2006, Section 11.3, p ISO New England Inc., Regional System Plan 2005, Appendices, Section C , p. C ISO New England Inc., Regional System Plan 2006, p. 86. New England ITC 13

16 amounted to nearly 1,000 MW. The total renewables capacity potential in Maine is believed to be in the thousands of megawatts. Because renewables particularly wind receive a variety of incentives from federal, regional, and state energy policies, it is likely that a substantial amount of renewable generation capacity will be added to the New England system in the period between 2006 and the Green Line s in-service date of Much of this could be developed in Maine where Governor John Baldacci has made the development of a renewables industry a central goal of his administration. 25 Once built, renewables like wind and hydro bid into the pool at zero prices. Naturally, the more such capacity exists, the lower the energy price. 26 Canadian Maritimes The electricity trade between New England and New Brunswick is very dynamic. New Brunswick is a winter-peaking market, while New England is a summer-peaking market. Because New Brunswick must design its system to meet winter loads, in the summer it has up to 1,000MW to inject into the Maine/New England market. Whether or not those injections are made at their full capacity depends on each season s market conditions. In the next five years, investments in large-scale hydroelectric generation in the Canadian provinces of Quebec and Newfoundland and Labrador will substantially expand New England s opportunities to purchase energy from those sources. ISO-NE has called attention to this potential, and has recommended that it be given serious consideration given its unique ability to substantially enhance the generation portfolio diversity of the New England market. 27 If New England chooses not to host a new nuclear power or coal-fired power plants, Canadian hydro is the only large-scale alternative to increased reliance on natural gas. Even if a very substantial amount of renewables is developed in Maine and elsewhere, energy from the Canadian provinces can serve a vital role as a backstop to the availability of (especially) wind energy. Without the Green Line, however, it is doubtful that Canadian investment sufficient to provide New England with such opportunities would be made. Expanded Canadian capacity that terminates in Maine, and simply adds the surplus there, is not an economically sustainable proposition. 25 The Governor s stance on energy has been described in issue #8 of The Maine Democrat, available at 26 The bulk of the expense of renewables like wind is in the initial capital cost. The total cost allocation of transmission costs ultimately associated with the Green Line and the other transmission projects that may be part of RSP 2007 will be determined in the ISO-NE approval process. 27 ISO New England Inc., Regional System Plan 2006, Section 11.3, p New England ITC 14

17 Boston and NEMA The Boston import area is at risk of being short as much as 720 MW of capacity by the time the Green Line is operational in RSP06 includes an analysis of the adequacy of the transmission-import capability into Boston for a study period between 2007 and While the analysis finds that the Boston area has sufficient resources through summer 2015 to meet the 90/10 peak-load forecast, it also finds that a lack of development of new resources, coupled with unit retirements within BOSTON, would decrease the load margin by the same amount as the size of the lost resource and advance the need to improve transmission, add resources, or both. 28 A key assumption in ISO-NE s analysis is that all the existing generation resources within the Boston area will remain on-line through the study period. 29 At least two generators within the Boston import area, however, are at risk of closure. The New Boston Station (350 MW), which had been operating under a reliability-must-run ( RMR ) contract, was approved for deactivation by ISO-NE effective November 16, Also at risk for closure is the 700 MW Salem Harbor Station. Long targeted by environmentalists for closure due to emissions, the future of the plant would be further jeopardized if Massachusetts were to join RGGI and cap CO 2 emissions from the plant. Meanwhile, recent improvements to the North Shore 115kV grid make Salem Harbor Station less important to local reliability needs. 30 Closure of both the New Boston and Salem Harbor Stations would accelerate the need to develop new resources in the Boston area. Moreover, in 2005 and 2006, the Northeast Massachusetts market area incurred substantial costs as a result of the need to pay certain generators reliability payments. 31 The 2006 RSP report acknowledges, but does not explicitly account for extreme contingencies that would adversely affect resources available to Boston. Extreme contingencies include a disruption of liquefied natural gas ( LNG ) delivery to supply in- City generators or a severe winter weather event that would limit the delivery of natu- 28 ISO New England Inc., Regional System Plan 2006, Section , p. 101 and The analysis for the BOSTON area assumed forced outages will be at an expected level, adequate resources will be available in New England to meet reliability criterion, and no generating units will retire in the area. However, a lack of development of new resources coupled with unit retirements within BOSTON would decrease the load margin by the same amount as the size of the lost resources and advance the need to improve transmission, add resources, or both. ISO New England Inc., Regional System Plan 2006, Section , p Transmission improvements to the North Shore Boston 115 kv system completed in the past year by National Grid, including the installation of capacitor banks adjacent to the station, have reduced the reliability dependence of the area for reactive power from the station. 31 As explained by ISO-NE documents, In 2005, daily reliability payments, comprised of first and second contingency, voltage, and distribution, totaled $287 million. Approximately 28% of this total was paid to two generators in Boston. ISO New England, 2005 Annual Markets Report, page 117. New England ITC 15

18 ral gas to electric generators. 32 Concern about extreme contingency events and their potential adverse effect on Boston was expressed in the aftermath of the August 2003 Northeast blackout when Governor Romney of Massachusetts commissioned a task force on electric reliability and outage preparedness in Massachusetts. One portion of the report focused on the NEMA/Boston area and found that Transmission upgrades designed to bring energy from existing generation resources into the NEMA/Boston area may be key to providing reliable electric service to this area. 33 The ISO-NE forward capacity market is designed to stimulate the development of new generation in the Boston Import area, but it is too early to tell if market-based solutions will emerge that have the desired effects. The Green Line will provide ISO- NE an additional level of reliability that would not otherwise be available during extreme contingency events, or in the event that unaccounted for plant retirements are not replaced with market-based responses. The Green Line s injection of up to 660 MW of power to the Boston import area beginning in the year 2013 will provide much of the projected new capacity that the sub-area is forecast to need. IV. Project Description and Technical Details The Green Line will deploy state-of-the-art HVDC technology used in scores of applications worldwide for many decades. HVDC has long been the preferred technology for moving bulk power over long distances. There are more than 20 underwater cables operating around the world at lengths up to 360 miles and at water depths of up to 1000 meters (3,300 feet). In the United States, submarine HVDC cable systems are becoming preferred solutions to reliability, portfolio diversity, and resource needs of highly urbanized power markets (whose alternative is oil or gas). The underwater cable systems connect the urban markets with better supplied and more fuel diverse areas. Examples include the Cross Sound Cable, which is now operating between Long Island and Connecticut; the Neptune Cable, which is under construction between New Jersey and Long Island; and California s TransBay Cable, a 55-mile 500 kv submarine cable between Pittsburg and the San Francisco peninsula, which is in the permitting stage and is forecast to begin operation HVDC systems have a demonstrated history of very high reliability. A survey of thyristor valves systems operating around the world found energy unavailability was less 32 This analysis does not illustrate the ability of the network to withstand extreme contingencies, such as storms that take out more than one 345 kv line at the same time, the loss of a major substation, or the loss of a major fuel sources to the Boston area. ISO New England Inc., Regional System Plan 2006, Section p The Governor s Task Force on Electric Reliability and Outage Preparedness, Status of the Electric Grid in Massachusetts, March 2004, p. 44. New England ITC 16

19 than 1.5 percent and scheduled unavailability was less than 4 percent. 34 The technical characteristics of HVDC technology, including overload capabilities and controllability, can be beneficial to overall system operations and reliability. HVDC lines can improve the stability of AC systems, including increasing the stability of parallel AC lines. They are capable of sharing spinning reserves and supplying peak load power. An HVDC line is fully controllable in its ability to react quickly to frequency of AC system oscillations and to be controlled independent of AC system variations or in response to AC system conditions. Additional benefits of controllability include reactive power control and support of AC voltage, frequency control, limitation of short circuit current, and transmission at reduced voltage. The Green Line will make use of a Mass-Impregnated Cable that can carry voltages up to 500kV and can be installed and can transmit power at depths of up to 1000 meters (3,300 feet). Cables can be extended hundreds of miles. The cable consists of a core of stranded copper conductor around a central circular rod. This is insulated with many layers of a special wood-pulp paper impregnated with a high-viscosity compound or by means of a special extruded XLPE material and protected from the outside environment by lead sheathing, anti-corrosive extruded polyethylene, galvanized steel tape (only for paper insulated solution), and finally armored with a heavy galvanized steel wire armor covered by a polypropylene string outer serving. The cable will be laid beneath the Gulf of Maine between AC/DC converter stations located in Wiscasset, Maine and Boston, Massachusetts, a distance of approximately 140 miles. Preliminary investigations of possible siting routes show that water depths in the Gulf range from zero feet in shoreline areas to 900 feet in an area known as Murray Basin, which is 36 nautical miles east of Rockport, Massachusetts. South of Wiscasset water depths are generally 480 feet or less within 12 nautical miles of the shoreline. The cable length and water depths are well within the design and construction parameters of existing submarine cables installed and operating around the world. Existing survey data provided on NOAA charts show that most of the ocean bottom in the potential route is comprised of sand and mud. There are also areas with rocky or hard bottom conditions. Navigational constraints are found in the major port areas such as Portland, Portsmouth, and Boston, including vessel separation areas and approach corridors. There are also near shore areas that include existing cables and pipe- 34 M.G. Bennett, et al., A survey of the reliability of HVDC systems throughout the world during , Cigré, Session The data in the report represents about 490 system-years of thyristor valve system operation over a period of 31 years. Reports were provided for 28 thyristor systems in Paper available through the International Council on Large Electric Systems or Cigré at or through the author at mgbennett@teshmont.com. New England ITC 17

20 lines. Finally, obstructions, including unexploded ordinance located primarily offshore of Portland, as well as submerged wrecks, exist that will need to be avoided in laying the cable. Thanks to the experience of its principals, consultants, and contractors, the New England ITC has substantial experience in siting and permitting sub sea cables. It is undertaking a variety of ocean surveys to identify cable routes that avoid all environmentally sensitive areas, existing obstacles, and navigational constraints. HVDC converter stations will be constructed at each end of the DC cable to convert AC power to DC power and then DC power to AC power. HVDC is advanced transmission technology that utilizes power electronics. The converter station layout consists of four sections: an open-air high voltage AC switchyard section, a valve hall, a control building, and a spare parts building. The open air section includes the following electric components: AC circuit breakers and bus-work, AC harmonic filter circuits, surge arrestors on the AC side, converter transformers, and air core smoothing reactor. The valve hall houses the thyristor valves. The control building contains control and protection systems, communication facilities, auxiliary supply batteries, valve cooling skid, air conditioning system, and offices. Spare parts and miscellaneous storage will be housed in the fourth section. At the Wiscasset end of the line, a 345 kv AC line will run from the Maine Yankee 345 kv substation to the converter station where the power will be converted from AC to 500 kv DC. At the Boston end of the DC power cable, power will be converted from DC to 345kV AC, and be transmitted by a buried 345 kv AC cable to the K Street 345 kv substation. Available property exists in the vicinity of both the Maine Yankee substation and the K Street substation that is large enough to allow construction and operation of the converter stations. In both areas, use of the available land will be consistent with past and currently zoned uses of the property. The valve hall and control building are steel, industrial style structures. Design of the exterior appearance of the building is flexible enough to conform to the surrounding area. The open-air section of the station appears similar to a typical high voltage utility electrical switchyard. A 500 kv sub sea line capable of moving 660 MW of power bi-directionally between Boston and Maine would not be confronted with the same range of environmental and permitting issues confronted by a land-based solution. Use of a DC cable concentrates the flow of power in a narrow path. Burying the line along the ocean floor has shortterm construction impacts, but no long-term adverse environmental effects. The converter stations at each end of the line are the most visible elements of system, and they can be designed to blend with the local aesthetic. These elements provide a distinct advantage for permitting and in bringing the project on-line within the time period required to meet ISO-NE s forecast system needs. New England ITC 18

21 A 345 kv land-based line running between Wiscasset, Maine and Tewksbury, Massachusetts and then continuing along an undefined route into Boston is an alternative to comprehensively resolve to the system problems addressed by the Green Line. However, it would face significant environmental permitting challenges and encounter much greater public opposition. 35 The existing 150-mile corridor between Maine Yankee and Tewksbury may need to be substantially widened. This corridor passes well-developed residential areas and town centers, and would need to cross several major rivers and extensive wetland areas. As the lines approach the more urbanized areas of Massachusetts, residential concerns and potential opposition, particularly about new overhead high-voltage transmission lines is likely to intensify. Conceptual consideration has been given to upgrades to portions of the north-south- 345 kv corridor that would address long-term needs, including a new line between the Scobie and Tewksbury substations, but as noted in RSP 05 s discussion of the increased dependence on the Tewksbury 345 kv substation, additional modifications might be necessary to fully realize the benefits of such an upgrade. Additional modifications, such as construction of a new 345 kv line from Tewksbury into Boston, potential alternatives to Green Line, but permitting and constructing the last 18 miles into the Boston import area, whether overhead, underground, or by combination of the two, would be a major challenge. Finally, under section 1223 of the Energy Policy Act of 2005, HVDC is considered and advanced transmission technology or a technology that increases the capacity, efficiency, or reliability of an existing or new transmission facility. EPACT 2005 directs FERC to encourage the use of advanced technologies where appropriate. As discussed elsewhere in this proposal, use of HVDC for the Green Line project offers several advantages to overhead, high-voltage AC transmission lines for moving power between Maine and Boston in the area of capacity, efficiency, and reliability. V. Project Timeline The Green Line Project will be developed in three phases beginning in December 2006, and ending with commercial operation date on April 1, The first phase begins with the submission of New England ITC s project proposal to ISO-NE as a candidate for inclusion in the 2007 Regional System Plan. Under the rules of the ISO, eligible market participants (transmission owners or certified independent transmis- 35 NERC s 2006 Long-Term Reliability Assessment underscores this concern. Not In My Back Yard (NIMBY) issues apply to may industries besides the electric power industry, but the higher public exposure to long transmission lines with wide right-of-way seems to cause the most consternation among the public. North American Electric Reliability Council, 2006 Long-Term Reliability Assessment, October 2006, p. 22. New England ITC 19

22 sion companies 36 ) may submit solutions to the needs set forth in each year s Regional System Plan report. If the ISO-NE process in 2007 concludes with a finding that the Green Line Project satisfies ISO-NE s reliability requirements, the Project could be included in the package of transmission projects submitted to the Board of Directors of ISO-NE at the end of 2007 and would begin the transmission cost allocation process to demonstrate that it is the most cost effective reliability solution and is eligible to inclusion in the ISO- NE grid as pool transfer facility. Once approved, the project would go through an intensive environmental permitting process that will last two to three years. The preparation of local, state, and federal regulatory permit applications will require completion of a variety of key field and technical studies prior to application submittals in order to receive completeness determinations and commence agency review. The following studies are anticipated to be required: Initial geophysical route surveys - Offshore routes and landfall/near shore routes; Geological borings and Thermal Capacity studies (entire route); Benthic and Aquatic Resource surveys; Landfall/Overland route studies including wetlands and ecological/siting impact assessments; Marine Historical/Archeological existing data review/field surveys. Beginning in late 2007, the Project will begin the Environmental Impact Assessment phase of development. Comprehensive environmental impact studies and assessments will be required to support regulatory permit applications. The actual scope of studies and impact assessments will be dictated by local, state, and federal environmental impact review and permitting agencies once initial reports and applications are filed. These may include, but not be limited to, the following: Fisheries, Water Quality, Shellfish; Sediment Quality, Aquatic Vegetation, Marine Cultural features; Navigation, Wetlands, Endangered Species. The environmental process is likely to include development of potential environmental impact mitigation plans, although the Project is unlikely to have a material environmental impact. The Maine state-permitting review is expected to include a Comprehensive Development Permit and other related state and local permits. The Massachusetts environmental impact and permitting reviews will include a Massachusetts 36 As stated above, in a separate filing, New England ITC has requested certification by the Federal Energy Regulatory Commission to issue an order making the ITC findings required under Attachment M of the ISO-NE OATT. New England ITC 20

23 Environmental Policy Act (MEPA) (Draft and Final EIR), a Boston Redevelopment Authority Article 80 review, Massachusetts Energy Facilities Siting Board, Approval to Construct Chapter 91 License, Massachusetts Department of Telecommunications and Energy Section 72 Approval, Waterways Licensing, Massachusetts Coastal Zone Management Federal Consistency Review, Water Quality Certification, Wetlands Protection Act Approval, and Massachusetts Historic Commission Approval. It is not clear at this time whether the proposed project will require a NEPA Environmental Impact Statement (EIS) by a lead federal agency (likely to be the US Army Corps of Engineers [USACE]). Based on the experience of other projects, the Company would prepare for the federal regulatory permitting applications that would include the initial application filing to the USACE. Based on the initial filing, the USACE would determine if a NEPA EIS would be necessary. At the conclusion of the environmental assessments work on financing arrangements, cable and converter manufacturing and civil works construction can commence. The Company anticipates that it will take roughly three years to complete these phases of the Project, leading to an in-service date in early VI. Conclusions In conclusion, the benefits of the Green Line Transmission Project can be summarized as follows. The Green Line: Provides a comprehensive approach to solving forecast system-wide resource adequacy and fuel diversity problems, while at the same time addressing subregion problems in northern New England and Boston. Contributes to the resolution of reliability problems in both Northern New England and northeast Massachusetts; Relieves one of the most prominent transmission constraints in the New England power market; Allows generation capacity now bottled up in Maine to access the rest of New England; Is a clean, virtual power plant for an urban area where the construction of new power plants is extremely difficult that will bring 660MW of capacity resources into the heart of the City of Boston, where new generation or transmission resources will be needed beginning in 2013; Reduces the city of Boston s extreme dependence on power plants fueled by LNG imports; Facilitates the continued development of Maine as a market for economical and innovative power generation projects; Helps Maine realize its objective to become a center for the development of renewable generation. New England ITC 21

24 The Green Line obtains these benefits with minimal environmental impact. While sub sea transmission permitting requirements are extremely demanding, the environmental impacts of the HVDC technology are small compared with in-city generation or overland high-voltage AC transmission. Finally, the Green Line is the product of a truly independent transmission company, which will be dedicated to developing this Project for the benefit of all transmission service customers in New England. As such, the Project will be a regulated pool transmission facility. Before it can go forward, the Project will have to undergo a series of rigorous ISO-NE, Maine Public Utilities Commission, and Massachusetts Department of Telecommunications and Energy reviews and evaluations. It will have to obtain approval from the Federal Energy Regulatory Commission and a host of federal, regional, and state environmental authorities. If the Project passes this series of technical, economic and competitive reviews, the Green Line will be in operation by early New England ITC is highly confident that the Green Line Project will materially enhance the reliability and portfolio diversity of the integrated New England power market. Given the necessary approvals, the New England ITC looks forward to applying its experience, capital, and technology to successfully develop the Green Line Project on budget and on schedule. New England ITC 22

25 VII. Appendices A. Preliminary Project Route Map Green Line Project AD/DC Converter Station connecting to Maine Yankee Substation, Wiscasset, ME 500 kv Submarine DC Cable ~140 miles AC/DC Converter Station connecting to the K Street Substation, Boston, MA Base Map Source: New England Geographic Transmission Map Through ISO New England, Inc., , Final. New England ITC 23