CITIZEN POWER ALLIANCE

The New York Regional Interconnect said Friday it is suspending plans to build a 190-mile power line in the state, saying a recent decision by federal regulators makes the $2.1 billion project too risky.

The company had asked the Federal Energy Regulatory Commission to reverse a rule established by the region's power grid operator, saying it gave utilities too much power over the project. But the commission denied the request this week, prompting NYRI to suspend operations nearly five years and more than $20 million into the line's development. NYRI is a partnership between privately held American Consumer Industries Inc. and Borealis Infrastructure, which manages the infrastructure investments of Canadian pension plan OMERS.

The FERC decision chills investment by an independent transmission developer at a time when federal officials are trying to expand the nation's electric grid in part to incorporate renewable generation, said Chris Thompson, the company's president.

"It seems like FERC, the Department of Energy, and the Obama administration are not on the same page," Thompson said in an interview Friday.

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A $278 million rate hike request by New York State Electric & Gas and its sister utility, Rochester Gas & Electric, is on the agenda for Tuesday’s meeting of the Public Service Commission.

Staff at the Department of Public Service have sought dismissal of the request, so it is possible that the commission members could vote on Tuesday whether to approve the motion and stop the case from moving forward. It could also deny the motion by the staff and allow the case to move forward. The DPS is the administrative arm of the PSC.

NYSEG, which has 800,000 customers in upstate New York, is owned by Iberdrola SA, a Spanish utility. Iberdrola acquired NYSEG and RG&E last fall as part of a $4.5 billion acquisition of Energy East Corp. Under the terms of the PSC’s approval of the deal, NYSEG and RG&E were told they cannot seek a rate increase until October of this year.

NYSEG and RG&E say that their poor financial condition merits a rate increase earlier than that.

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