STATE OF NEW YORK

PUBLIC SERVICE COMMISSION

________________________________________

Petition of CHPE LLC and CHPE Case 20-E-0598

Properties, Inc. for Approval of Financing
Pursuant to Public Service Law Section 69.
________________________________________

VERIFIED PETITION OF CHPE LLC AND CHPE PROPERTIES, INC. FOR

MODIFICATION TO FINANCING APPROVAL PURSUANT TO PUBLIC SERVICE
LAW SECTION 69

Steven D. Wilson
Young Sommer LLC
Executive Woods
Five Palisades Drive
Albany, New York 12205
Tel.: (518) 438-9907
Email: [email protected]

Dated: June 20, 2022

STATE OF NEW YORK
PUBLIC SERVICE COMMISSION

________________________________________

Petition of CHPE LLC and CHPE Case 20-E-0598

Properties, Inc. for Approval of Financing
Pursuant to Public Service Law Section 69.
________________________________________

VERIFIED PETITION OF CHPE LLC AND CHPE PROPERTIES, INC. FOR

MODIFICATION TO FINANCING APPROVAL PURSUANT TO PUBLIC SERVICE
LAW SECTION 69

I. INTRODUCTION

On April 18, 2013, the New York State Public Service Commission (the “Commission”),

acting pursuant to Article VII of the New York State Public Service Law (the “PSL”), issued an

Order (the “April 2013 Order”) granting to Champlain Hudson Power Express, Inc. (“CHPEI”)

and its wholly-owned subsidiary, CHPE Properties, Inc. (together with CHPEI, “Petitioners”), 1 a

Certificate of Environmental Compatibility and Public Need (the “Certificate”) authorizing the

Petitioners to build, maintain, and operate the Champlain Hudson Power Express Project (the

“Project”).2 The Project is a high voltage, direct current transmission line extending approximately

339 miles from the international border with Canada to a converter station in Astoria, Queens.

1
On July 16, 2020, the Commission issued an order approving, among other things, an intra-corporate reorganization
though which (1) CHPEI would convert from a corporation to a limited liability company (CHPE LLC), (2) CHPEI
would transfer its interests in the Certificate from CHPEI to CHPE LLC, and (3) CHPE Properties, Inc., would become
a wholly-owned subsidiary of CHPE LLC. See Case 20-E-0145: Petition of Champlain Hudson Power Express, Inc.,
CHPE Properties, Inc., and CHPE LLC for a Declaratory Ruling that a Series of Intra-Corporate Transactions are
Not Transfers Subject to Review Under the Public Service Law or, in the Alternative, for Certain Approvals Pursuant
to Sections 70 and 121 of the Public Service Law, Order Approving Transfers (July 17, 2020) (the “Transfer Order”).
The reorganization took place on August 28, 2020.
2
Case 10-T-0139: Application of Champlain Hudson Power Express, Inc. for a Certificate of Environmental
Compatibility and Public Need Pursuant to Article VII of the PSL for the Construction, Operation and Maintenance
of a High Voltage Direct Current Circuit from the Canadian Border to New York City, Order Granting Certificate of
Environmental Compatibility and Public Need (April 18, 2013).

1
 On November 30, 2020, Petitioners filed a petition (the “2020 Petition”) with the

Commission requesting flexible financing approval as lightly-regulated entities to incur

indebtedness of up to $4.5 billion through various financing instruments in order to raise capital,

which will be primarily used to fund the construction of the Project.

On February 17, 2022, the Commission issued an Order “authoriz[ing] the Petitioners to

enter into indebtedness of up to $4.5 billion, payable over more than 12 months.” 3 Petitioners

were also granted authority to modify, without prior Commission approval, the identity of the

financing entities, payment terms, and the amount financed, so long as it does not exceed $4.5

billion.4 The Commission noted that the Project is being developed, financed, constructed, and

operated on a merchant basis.5 Based on Petitioners’ merchant status, the Commission determined

that “Petitioners will bear the financial risks associated with the financing arrangements and

captive New York ratepayers cannot be harmed by the terms and conditions.” 6

As explained herein, economic circumstances outside of the Petitioners’ control have

changed significantly since the 2020 Petition was filed necessitating an increase in the amount of

authorized indebtedness to $6 billion. The Project remains a merchant project and Petitioners will

continue to bear the financial risks associated with the financing arrangements and captive New

York ratepayers cannot be harmed by the terms and conditions of the indebtedness. In addition,

on November 29, 2021, HQ Energy Services (U.S.), Inc., (“HQUS”) executed a contract with the

New York State Energy Research and Development Authority (“NYSERDA”) under which

3
Case 20-E-0598: Petition of CHPE LLC and CHPE Properties, Inc. for Approval of Financing Pursuant to Public
Service Law Section 69, Order Approving Financing (February 17, 2022), at 4-5.
4
Id.
5
Id. at 4.
6
Id.

2
NYSERDA will purchase Tier 4 renewable energy credits at a fixed price. Accordingly, any

additional project costs cannot alter the prices established in the contract.

Petitioners further respectfully request that the Commission take emergency action

pursuant to State Administrative Procedure Act (“SAPA”) § 202(6) and provide the requested

approval without soliciting additional public comment. SAPA § 202(6) provides that the

Commission may immediately adopt a rule where such action “is necessary for the preservation of

the public health, safety or general welfare and that compliance with the requirements of

subdivision one of [SAPA §202(1)] would be contrary to the public interest.” In these

circumstances, the Commission may “dispense with all or part of such requirements and adopt the

rule on an emergency basis.”7

As explained further below, emergency approval of the financing modification is

warranted. Petitioners filed the first Environmental Management and Construction Plan

(“EM&CP) for segment one of the Project on April 15, 2022 (“EM&CP 1”) and Commission

approval is anticipated in July or August 2022. In order to commence planned construction in

September 2022 both the EM&CP 1 approval and the closing on the Project’s construction

financing is targeted for August 2022. Any delay in Commission approval of this financing

modification beyond August 2022 could impact the start construction and jeopardize the Project’s

in-service date. It is important to note that construction start delays can have compounding delays

on the in-service date due to the various construction windows mandated by the Certificate.

Petitioners have determined that Commission approval of indebtedness for the total estimated

construction costs is necessary pre-closing. Regulatory risk associated with seeking additional

7
SAPA § 202(d).

3
Commission approvals once the $4.5 billion credit facility has been exceeded would jeopardize

Project financing.

In support of this request for modification of the authorized indebtedness, Petitioners

restate the facts and discussion contained in the 2020 Petition.

II. BACKGROUND

A. The Parties

CHPE LLC is a limited liability company organized and existing under the laws of the

State of New York. CHPE LLC is a special purpose entity created for the purpose of constructing,

owning, and operating the Project. CHPE Properties, Inc. is a transportation corporation organized

and existing under the Transportation Corporations Law of the State of New York. Both entities

are electric corporations subject to a lightened regulatory regime. 8

CHPE LLC is a wholly-owned subsidiary of TDI-USA Holdings LLC a/k/a Transmission

Developers, Inc. (“TDI”), a development company that is majority-owned by the Blackstone

Group, Inc. TDI develops unique energy transmission projects in an environmentally responsible

manner using proven high-voltage direct current (“HVDC”) cable technology to link trapped

generation resources such as wind, hydro, and other renewables with energy markets that are

seeking to enter those markets per State mandates. TDI’s approach to HVDC avoids the visual

impacts of overhead transmission by installing projects either underwater or underground. These

buried lines increase the electric grid's safety and reliability, while providing hardened

infrastructure that is less susceptible to damage from natural disasters.

8
See Case 13-E-0392: Petition of Champlain Hudson Power Express, Inc. and CHPE Properties, Inc. for a
Declaratory Ruling that the Companies are Subject to a Lightened Regulatory Regime, and a Declaratory Ruling that
a Prior Transfer of Ownership did not Require Commission Approval or in the Alternative Approving Such Transfer,
Declaratory Ruling and Order Concerning Ownership Transfer and Providing for Lightened Rate Making Regulation
(January 21, 2014).

4
 B. The Champlain Hudson Power Express Project

On March 30, 2010, the Petitioners submitted the original Certificate application (the

“Original Application”) and initiated a three-year process that culminated with the issuance of the

April 13 Order. The Petitioners carried their burden of demonstrating that the Project would serve

the public interest, convenience, and necessity, and the Commission made all of the findings that,

by statute, must accompany issuance of a certificate pursuant to Article VII of the PSL (see PSL

§126). Furthermore, during that process leading to issuance of the April 13 Order, the Petitioners

successfully built a coalition of affected parties, and, after a significant and productive process,

that coalition produced the joint proposal of settlement that formed the basis of the Commission’s

favorable decision (the “Joint Proposal”). The Commission issued an order granting the Certificate

on April 18, 2013.9

With respect to the Project’s public benefits, the April 13 Order took note of the Project’s

“unique and substantial benefits” and concluded that it would “advance major energy and policy

goals” of both New York State (the “State”) and the City of New York (“NYC”). 10 The

Commission also concluded that the Project would provide a “significant amount of additional

capacity that would enhance energy security” in NYC and, through the import of “renewable

energy,” would increase supply diversity and enhance system reliability. 11 In addition, the

Commission noted that the Project would serve to facilitate proper functioning of the energy

9
Case 10-T-0139: Application of Champlain Hudson Power Express, Inc. for a Certificate of Environmental
Compatibility and Public Need Pursuant to Article VII of the PSL for the Construction, Operation and Maintenance
of a High Voltage Direct Current Circuit from the Canadian Border to New York City, Order Granting Certificate of
Environmental Compatibility and Public Need (April 18, 2013).
10
April 13 Order, at 100.
11
Id., at 97.

5
markets in the State and would afford “price stability benefits.” 12 At the heart of the Commission’s

determination to grant the Certificate was the conclusion that “the Facility’s expected emission

reductions are a substantial environmental benefit, a benefit that is expected to be enduring.” 13

Since the Certificate was issued, the need for urgent and substantial efforts to address and

reduce the amount of greenhouse gases (“GHG”) released into the atmosphere due to human

activity has become increasingly evident. In 2019, both NYC and the State adopted major

legislative programs aimed at curbing GHG. On April 18, 2019, the NYC Council adopted the

Climate Mobilization Act, which includes measures that will reduce the carbon footprint of large

commercial buildings.14 Four days later, on Earth Day, Mayor DeBlasio publicly announced that

his administration had decided to supply 100% of the NYC governmental electricity demand with

renewable hydropower transmitted from Canada to NYC. 15 Following the Mayor’s remarks,

Daniel Zarrilli, Director of OneNYC, stated that NYC expected to begin relying on Canadian

hydropower within five years. 16 The State moved no less dramatically to curb GHG in 2019. On

July 18, 2019, Governor Cuomo signed into law the Climate Leadership and Community

Protection Act, the most ambitious effort to curtail GHG emissions adopted to date by any state. 17

This landmark legislation will require the deployment in the State of very significant amounts of

12
Id., at 97.
13
Id., at 52.
14
Local Law 97 of 2019; NYC Charter Chapter 26 Section 651; NYC Code, Title 28, Chapter 3, Article 320; NYC
Code, Title 28, Chapter 3, Article 321.
15
The relevant portion of the press release reads as follows: “The City government of New York City, in an average
day, uses as much electricity as everybody in the state of Vermont. And within the next five years, we will convert all
of our electricity that the City government uses to renewable sources. All of it will come from renewable energy. That
electricity will come down to us – it's zero-emission electricity coming to us from Canada, from Quebec, hydropower
that is being produced right now.”
16
https://www1.nyc.gov/office-of-the-mayor/news/211-19/transcript-mayor-de-blasio-new-york-city-s-green-
new-deal
17
https://www.governor.ny.gov/news/governor-cuomo-executes-nations-largest-offshore-wind-agreement-and-
signs-historic-climate

6
new renewable energy in order to meet the goal of having 70% of the State’s energy needs supplied

by renewable energy in a decade. The urgency that prompted these initiatives effectively mandates

that financial close for the Project take place as soon as possible.

In the Clean Energy Standard (“CES”) proceeding, the Commission recently re-

emphasized the need for increased deliveries of renewable energy to NYC. According to the

Commission, “without displacing a substantial portion of the fossil fuel-fired generation that New

York City currently relies upon, the statewide 70 by 30 Target would be difficult to achieve.” 18

“[A]bsent new transmission capacity, the addition of new upstate renewable developments will

fail on its own to increase the penetration of renewable energy consumed in New York City to a

level that enables statewide compliance with the 70 by 30 Target.” 19

Since the Certificate was issued, the Petitioners have worked diligently, in parallel efforts,

to obtain the additional governmental permits and approvals necessary in order to fully and finally

authorize construction and operation of the Project, to conduct outreach and coordination efforts

directed at interested stakeholders, to finalize the commercial arrangements that will allow for

Project financing, and to refine the Project construction program with a view towards further

minimization of Project impacts.

On April 14, 2022, the Commission issued an Order finding that NYSERDA’s contracts

with CPNY and HQUS met the requirements in the CES proceeding and was otherwise in the

public interest. According to the Commission the two projects would: 1) collectively result in a

significant displacement of fossil-fuel fired generation in New York City, and 2) deliver economic

18
Case 15-E-0302: Proceeding on Motion of the Commission to Implement a Large-Scale Renewable Program and
Clean Energy Standard, Order Adopting Modifications to the Clean Energy Standard (October 15, 2020), at 78.
19
Id.

7
benefits to New York totaling $8.2 billion of investments in labor, materials, and development,

including more than $460 million of investments in community benefits funds and the creation of

approximately 10,000 jobs.20 A significant portion of the $8.2 billion in economic benefits from

the two projects would accrue to disadvantaged communities. 21 This includes HQUS’

commitments to pay $189 million in community benefit funds for Hudson River and Lake

Champlain restoration, support for disadvantaged communities, workforce development and job

retraining for fossil industry workers, and capital improvements in host communities. 22 According

to the Commission, “[d]isadvantaged communities have also incurred substantial public health

impacts associated with air pollution in New York City. In this regard, the Petition notes that a

significant portion of the public health benefits from air quality improvements, quantified as $2.8

billion across both projects, would accrue to disadvantaged communities in New York City that

have been impacted disproportionately by emissions from combustion of fossil fuels.” 23

C. The Proposed Financing Modification

On February 17, 2022, the Commission issued an Order “authoriz[ing] the Petitioners to

enter into indebtedness of up to $4.5 billion, payable over more than 12 months.” 24 Petitioners

were also granted authority to modify, without prior Commission approval, the identity of the

financing entities, payment terms, and the amount financed, so long as it does not exceed $4.5

billion.25 The Commission found notable that the Project is being developed, financed,

20
Tier 4 Order, at 32.
21
Id.
22
Id., at 32-33.
23
Id., at 33.
24
Case 20-E-0598: Petition of CHPE LLC and CHPE Properties, Inc. for Approval of Financing Pursuant to Public
Service Law Section 69, Order Approving Financing (February 17, 2022), at 4-5.
25
Id.

8
 constructed, and operated on a merchant basis.26 Based on Petitioners’ merchant status, the

Commission determined that “Petitioners will bear the financial risks associated with the financing

arrangements and captive New York ratepayers cannot be harmed by the terms and conditions.” 27

Major global supply chain issues, inflationary pressures that are at a 40-year high and

geopolitical events that have emerged in 2022 have put significant upward pressure on the Project

costs.28 To support the construction of the Project, CHPE LLC now expects it will seek to raise

debt financing in an amount not to exceed $6 billion. The type of financing has still not yet been

determined, but may take the form of bank loans, bonds, or other financial instruments, as dictated

by Project needs and market conditions.29

III. DISCUSSION

A. The Commission Should Take Emergency Action Under SAPA § 202(6)

SAPA § 202(6) provides that the Commission may immediately adopt a rule where such

action “is necessary for the preservation of the public health, safety or general welfare and that

compliance with the requirements of subdivision one of [SAPA §202(1)] would be contrary to the

public interest.” In these circumstances, the Commission may “dispense with all or part of such

requirements and adopt the rule on an emergency basis.”30

26
Id. at 4.
27
Id.
28
See FORTUNE MAGAZINE, U.S. inflation unexpectedly accelerates to 40-year high of 8.6% (June 10, 2022), available
at, https://fortune.com/2022/06/10/us-inflation-accelerates-may-8-6-40-year-high/.
29
The details of the lender security program also have yet to be finalized, but it may include a mortgage on the Project
converter station site; an assignment of contracts, such as the Transmission Services Agreement and construction
contracts; an assignment of options on real estate; UCC filings; and a pledge of the equity interest in CHPE LLC held
by TDI.
30
SAPA § 202(6)(a).

9
 On several occasions the Commission has granted immediate financing approvals under

PSL § 69 under similar circumstances. For example, in its petition filed in Case 04-E-0201,

Astoria Energy LLC requested expedited approval of its financing on an emergency basis pursuant

to SAPA § 202(6).31 According to Astoria Energy, its planned generation facility in New York

City was needed by 2006 to ensure adequate in-City reliability taking into consideration projected

reliability needs and uncertainty surrounding the viability of other planned in-City generation. 32

As stated by the Commission:

“Construction of new electric facilities in the City is lagging significantly behind

expected growth in demand. Failure to approve Astoria's generation financing now
will delay the construction schedule for this facility, raising a grave risk that it will
not be available to meet the demand expected in 2006. This risk to reliability of
electric service poses a significant threat to safety, health and the general welfare
in New York City.”

The Commission determined that,

“as required by SAPA § 202(6), that immediate financing approval is necessary for
the preservation of the public health, safety and general welfare and that compliance
with the prior notice and comment requirements of SAPA § 202(1) would be
contrary to the public interest. Because certainty of the authorizations for these
security issuances are essential to their success, we find that the purposes of the
emergency rule would be frustrated if subsequent notice procedures were required.
Thus, this approval is made on a permanent basis, pursuant to SAPA § 202(6)(c).” 33

Another example is the Commission’s expedited approval granted in Case 08-E-0231. 34 In this

proceeding, the Noble entities35 stated that immediate approval of the financing was necessary to

31
Case 04-E-0201: Petition of Astoria Energy LLC, Order Approving Financing (March 16, 2004).
32
Id., at 9-10.
33
Id.
34
Case 08-E-0231: Petition of Noble Altona Windpark, LLC, Noble Wethersfield Windpark, LLC, Noble Chateaugay
Windpark, LLC, and Noble Bellmont Windpark, LLC for Emergency Approval of Financing Under Section 69 of the
Public Service Law, Order Approving Financing Subject to a Condition (March 19, 2008); see also, Case 04-M-1235:
Brooklyn Navy Yard Cogeneration Partners, L.P., Order Approving Financing (November 10, 2004).
35
Noble Altona Windpark, LLC, Noble Wethersfield Windpark, LLC, Noble Chateaugay Windpark, LLC, and Noble
Bellmont Windpark, LLC.

10
ensure that the project financing would close and that the construction and operation of the wind

generation projects would be completed within NYSERDA and production tax credit (“PTC”)

deadlines. The Noble entities also pointed to the multiple public benefits associated with the

addition of renewable energy to the State's portfolio. In the case of wind power, the Noble entities

averred that such benefits include positive impacts on public health and welfare through the

development of energy sources that do not degrade air quality. The Commission expedited

approval on an emergency basis stating, “if this financing is not immediately approved, these

projects, which make significant contributions to public policy goals and which are supported by

public investment, could be delayed and possibly abandoned. This result would not further the

important public policy goal of promoting alternative energy sources.” 36

The present circumstances are substantially similar to those presented in the Astoria Energy

and Noble proceedings and, therefore, expedited approval is warranted. Delays in construction,

even by a few months, would:

 Frustrate State and NYC policy goals including the CLCPA and Tier 4.

 Delay public health improvements in NYC communities. Fossil fuel pollutant (e.g.,
SOx, NOx, PM, etc.) emissions reductions are of significant importance to
government and residents of NYC, including Astoria, Queens, and the South
Bronx. For example, in its comments in support of the Tier 4 contracts, NYC urged
Commission approval of the Tier 4 contracts stating that “these Projects will reduce
the need for in-City fossil-fueled power plants, which will result in lowered
criterion pollutant emissions in New York City, helping to improve public
health.”37

 Delay in funding of community benefit programs including the $117 million

Environmental Trust, $40 million Green Economy Fund and over $40 million in

36
Id., at 15-16.
37
Case 15-E-0302: Proceeding on Motion of the Commission to Implement a Large-Scale Renewable Program and
a Clean Energy Standard, NYC Comments on Tier 4 Contracts (Filed February 7, 2022).

11
 additional funding for various New York Communities. Payments for these
programs are all tied to financial close.

 Delay economic benefits realized from investment/jobs and by localities in the form
of tax revenues and other host community commitments. Petitioners have
committed to provide support for disadvantaged communities, workforce
development and job retraining for fossil industry workers, and capital
improvements in host communities.

 Potential delay to achieve project COD.

 Delay multiple public benefits associated with the addition of renewable energy to
the State's portfolio.

 Delay additional in-City reliability.

 Delay in achieving in-City public health benefits. Most importantly, delays in

construction will translate into delays in carbon emissions reductions.

For these reasons, emergency action is warranted for advancement of the public health and welfare.

It should also be noted that the 2020 Petition was published in the NYS Register allowing

for a 60-day public comment period. No comments were received on the request for approval of

the initial indebtedness authorization or the terms of financing. This petition merely seeks to

modify the authorized maximum amount.

B. The Commission Should Approve the Proposed Financing Under a Reduced

Level of Scrutiny.

Pursuant to PSL § 69, no gas or electric corporation “may issue stocks, bonds, notes or

other evidences of indebtedness payable at periods of more than twelve months…” without an

order from the Commission authorizing such issuance. 38 The Commission determined PSL § 69

applies to Petitioners but that “[a]ny required filings, however, will be reviewed with the extent of

scrutiny reduced to the level that the public interest requires be applied upon review of their

38
PSL § 69.

12
competitive operations.”39 According to the Commission, “[a]dditional scrutiny is not required to

protect captive New York ratepayers, who cannot be harmed by the terms arrived at for these

financings because lightly-regulated participants in competitive markets bear the financial risk

associated with their financial arrangements.” 40 Under this reduced level of scrutiny, “prompt

regulatory action [under PSL § 69] is possible through reliance on [Petitioners’] representations

concerning proposed financing transactions.” 41

As stated in the 2020 Petition, the Project is being “developed, financed, constructed, and

operated on a merchant basis.”42 The Project is an HVDC cable that will transport contracted

energy directly from Canada to a converter station in NYC. The Petitioners will not have any

retail customers, nor will they have any adverse effect on captive retail customers requiring the

protection of the Commission’s rate regulation.

As a result, the Commission does not need to undertake an in-depth analysis of the

proposed modification to the requested financing amount. Instead, by relying on the

representations that the Petitioners set forth in this Petition and the record in Case 10-T-0139,

emergency regulatory action is appropriate and will be consistent with the public interest.

C. The Commission Should Grant Petitioners Flexibility with Respect to the

Proposed Financing

The Commission has already authorized flexible financing authority in the Financing

Order. For the same reasons supporting such authorization in the Financing Order, the Petitioners

39
CHPE Lightened Regulation Order, at 5-6.
40
Id., at 6.
41
Id.
42
April 2013 Order, Certificate Condition 15(b).

13
 request that the Commission continue flexible financing authority so that Petitioners can raise the

capital necessary for construction of the Project.

D. The Commission Should Find That Granting the Financing Authority

Requested in This Petition is a Type 2 Action for Which No Further Action is
Required Under the State Environmental Quality Review Act.

Under the Commission’s regulations implementing the State Environmental Quality

Review Act, the approval of issuances of securities is a Type 2 action for which no further

environmental review of the financing is required under that statute. 43

IV. CONCLUSION

For the reasons set forth herein, Petitioners respectfully request that the Commission

approve the proposed financing modification with flexibility to modify, without our prior approval,

the identity of the financing entities, payment terms, and the amount financed.

/s/ Steven D. Wilson

___________________________
Steven D. Wilson
Young Sommer LLC

Attorneys for CHPE LLC and CHPE

Properties, Inc.

Dated: June 20, 2022

43
See 16 N.Y.C.R.R. §§7.2(a) and 7.2(b)(2)(v); see also Case 11-M-0483: Sithe/Independence Power Partners, L.P.,
Order Approving Financing (December 21, 2011), at fn 5.

14