FERC approves Quebec-New England power line plan

NEW YORK, May 21 (Reuters) - The U.S. Federal Energy Regulatory Commission (FERC) Thursday approved a funding plan for a major transmission project expected to reduce carbon dioxide emissions and deliver about 1,200 megawatts of Quebec power to New England.

FERC did not say how much the project would cost in its release, but in December, the developers said the line would cost about $1 billion and transmit enough power to serve more than a million homes.

The project is expected to reduce greenhouse gas emissions by about 4 million to 6 million short tons of carbon dioxide per year by displacing gas-fired generation in New England.

A typical 1,000 MW coal plant produces about 6 million tons of CO2 each year.

While the federal government moves closer to controlling greenhouse gas emissions, New England has already done so and therefore needs to invest in low carbon power sources to meet the mandates of the Regional Greenhouse Gas Initiative (RGGI).

Northeast Utilities (NU.N), NSTAR (NST.N) and Quebec province-owned Hydro-Quebec are negotiating a joint development agreement for the design, planning and construction of the high voltage direct current (HVDC) line.

Northeast Utilities and NSTAR said in December they would build the U.S. part of the line and Hydro-Quebec would build the Canadian part. It will connect the Des Cantons substation in Quebec with a point to be determined in southern New Hampshire.

Hydro-Quebec will pay for the line and recover its investment through long-term power purchase agreements, the parties said in December.

As opposed to other big transmission lines in New England, the companies did not seek to recover the cost of the project from all of the utilities in New England.

Although Northeast Utilities and NSTAR would own the U.S. portion of the line, any company could sign power purchase agreements with Hydro-Quebec to buy the power.

In December, the companies said they could start construction in late 2011 with power flowing in mid-2014 when some of the 4,500 MW of new generation Hydro-Quebec is developing was expected to enter service.

Northeast Utilities, of Berlin, Connecticut, transmits and distributes power and natural gas to more than 2 million customers in New England.

NSTAR, of Boston, transmits and distributes power and natural gas to 1.4 million customers in Massachusetts.

Hydro-Quebec, of Montreal, owns and operates more than 40,000 MW of generating capacity (97 percent of which comes from hydropower) and transmits and distributes electricity to 3.8 million customers in Quebec. (Reporting by Scott DiSavino; Editing by Lisa Shumaker)