Lake Erie Connector Market Assessment Report
Prepared for ITC Lake Erie Connector LLC
The Lake Erie Connector (or the “Project”) is a 1,000 MW, bi-directional high-voltage direct current (“HVDC”) submarine transmission line proposed to be built between Nanticoke, Ontario and Erie, Pennsylvania by ITC Lake Erie Connector LLC (“ITC Lake Erie”). The Project will be the first direct connection between the wholesale electricity markets operated by the Independent Electricity System Operator (“IESO”) in Ontario and the PJM Interconnection LLC (“PJM”), which is one of the world’s largest power markets with a U.S. footprint spanning from Virginia and New Jersey in the east reaching west to include Ohio and Illinois.
ITC Lake Erie is developing the Project on a merchant basis, which means that ITC Lake Erie will bear the full costs and risks of the Project. ITC Lake Erie will need to attract sufficient interest from transmission customers (“transmission customers”) to contract for capacity on the line before initiating construction of the Project.
This Market Assessment Report provides an assessment of the market fundamentals of the Ontario and PJM wholesale electricity markets, the sources of “merchant value” of the Project and some of the future drivers likely to influence the value of the Project. The revenues that ITC Lake Erie can expect from selling transmission capacity on the Project will be determined through the open solicitation process expected to commence in 2015.
