Power-hungry areas shop around for electricity

Electricity has become such a precious commodity that states are fighting over who gets it.

In the latest dust-up, New Jersey regulators and consumer advocates are battling a plan by a state utility, Public Service Enterprise Group, to send power from a local plant to the more lucrative New York City market.

Federal regulators on Tuesday helped clear the way for the project, which critics say will increase electric rates and threaten the reliability of the power grid in New Jersey and the rest of the Mid-Atlantic.

Similar battles are playing out across the country as electricity demand surges and it becomes tougher to build power plants that spew global-warming gases, especially near population centers.

The tug of wars are also a product of the power industry's deregulation in many states. That has allowed utilities to sell power out of state to the highest bidder.

In other inter-region battles:

•Arizona regulators last year rejected a request by Southern California Edison to build a 230-mile transmission line from Arizona to California. The agency said the project would increase prices for Arizona consumers.

•Central New York state residents say a planned line to New York City would shrink their region's power surplus and increase electric prices about 3%.

The projects would mean net benefits for the grid and consumers. But they create "winners and losers," says Jone-Lin Wang of Cambridge Energy Research Associates. "You're going to see more squabbles."

In New Jersey, PSEG wants to disconnect a 550-megawatt, natural-gas-fired plant in Ridgefield from the Mid-Atlantic grid and redirect its electricity over a new transmission line that would link to a Con Ed substation in Manhattan.

The project would help ease soaring power demand and electric prices in New York City.

And it would be a boon for PSEG. Its plant has been running at 35% capacity, and wholesale electric prices are about 30% higher in New York, says Skip Sindoni of PSEG Power, the PSEG unit that operates the plant. "We're responding to pricing signals," Sindoni says.

But Stephanie Brand, director of the New Jersey Division of Rate Counsel, says losing the Ridgefield plant's supply will drive up electric rates in the state by $120 million a year in 2011.

Sindoni disagrees. To offset the move, he says, PSEG plans to build two plants, retain a third that was to be mothballed and use another's excess capacity.

Jeanne Fox, president of the New Jersey Board of Public Utilities, said the new plants would be less efficient and "generate electricity more expensively."

In a boost for the Ridgefield project, the Federal Energy Regulatory Commission on Tuesday said Cross Hudson, builder of the transmission line, can charge PSEG a negotiated rate to carry the power rather than a fee based on costs.

However, the agency refused to guarantee that it would never order the line reconnected to the Mid-Atlantic grid. And it did not agree to set aside the entire capacity of the line exclusively to PSEG.

The project also must be approved by the New York Power Authority, which would buy the electricity.