In the funding plan for the 1.2GW connector, project costs will not be included in tariff rates charged to customers. The plan was agreed to by H.Q. Energy Services (US), which is taking responsibility for project risks, said FERC.

H.Q. Energy Services – a subsidiary of Hydro-Quebec – last year signed an exclusive development agreement for the project with two US companies, Northeast Utilities and NStar.

Planning work for the cross-border link is being undertaken by another of Hydro-Quebec’s subsidiaries, TransEnergie.

The US utilities aim to import hydro generated electricity from Hydro-Quebec, and the parties are negotiating a joint development agreement for the design, planning and construction of the high voltage link.

The utilities made an application for the project in late 2008 to FERC, which has noted that the import of hydro power would enable a reduction of 4M-6M tonnes per year of carbon dioxide per year by displacing some gas-fired generation.

‘This expansion will make significant amounts of surplus hydro power available for export to the United States,’ said FERC.