For years, New York City’s electric grid has faced a difficult challenge. Electricity demand continues to rise, older power plants are retiring, and the city often depends on imported power during periods of extreme heat and peak usage. Now, one of the largest transmission projects in decades has officially entered service, and it is expected to have a meaningful impact on energy prices and reliability for New York City customers.
What is the Champlain Hudson Power Express
The Champlain Hudson Power Express, or CHPE, is a 1,250-megawatts transmission line that delivers hydropower from Hydro-Québec into New York City. If officially entered commercial operations on May 13, ahead of schedule.
At full output, the line can supply roughly 20% of New York City’s electricity demand. That makes it a major new source of power for Zone J, which is the NYISO market zone that covers New York City.
CHPE is a high-voltage direct current transmission line that runs primarily underground and underwater from Canada into Astoria, Queens. The project was built to bring clean, renewable power directly into New York City and help support the state’s clean energy goals.
Why was it built
New York City has historically been one of the most expensive and constrained power markets in the state. Demand is high, local generation is limited, and it can be difficult to move enough lower-cost power into the city during peak periods.
CHPE was developed to help address several of these challenges:
How the NYSERDA contract helps stabilize CHPE deliveries
CHPE is supported by a long-term Tier 4 REC contract with NYSERDA. The contract delivery term begins June 1, with an initial strike price of $97.50/MWh in year one that escalates over the 25-year term.
The simplest way to think about that strike price is that it helps support project revenues; it is not a hard trigger for when power flows over the line into New York City.
Under the indexed REC structure, NYSERDA support generally falls as Zone J market values rise, and rises when those market values are lower. So if New York City market prices are below the strike price, the contract can help make up part of the difference. If New York City market prices are above the strike price, the project relies less on contract support.
In other words, power does not flow only when market prices are above $97.50/MWh. The contract structure should make deliveries more consistent by giving Hydro-Québec a stronger financial incentive to deliver into New York City even when spot energy prices are not especially high.
What if Québec needs the power
Hydro-Québec is still operating within its own system, and there could be instances where local conditions in Québec affect export availability.
That said, CHPE is not just a casual spot-market sale. It is backed by a long-term agreement with delivery obligations. If Hydro-Québec does not deliver enough power under the terms and conditions of the contract, there can be consequences tied to delivery shortfalls.
For end users in New York City, the practical takeaway is that CHPE should generally be viewed as a committed supply resource, not simply extra power that may or may not show up. However, like any major energy supply asset, performance can still be affected by system conditions, outages, hydrology, and broader reliability needs.
Impact on energy prices
For Zone J, the most immediate impact may be during periods of high demand.
New York City power prices can spike during heat waves or under tight grid conditions because the city has limited local supply and is often transmission constrained. When demand rises quickly, the market often needs to rely on more expensive local generation.
By adding up to 1,250 MW of imported hydropower, CHPE increases the amount of available supply in New York City. That should help reduce the severity of some price spikes, especially during summer peak periods.
This does not mean New York City energy prices will suddenly become low or always be stable in all conditions. Weather, fuel prices, demand growth, and generation retirements will still matter. But CHPE gives the market another large supply option during times when the grid is most stressed.
Impact on capacity prices
CHPE will also participate in the NYISO capacity market beginning with the July auction.
Capacity costs are different from energy costs. Energy prices reflect the electricity used. Capacity prices reflect the cost of making sure enough supply is available to meet peak market demand in the future.
New York City capacity prices have been elevated, in fact May 2026 spot auction prices cleared at new highs, at over $32/kW-month because the city doesn’t particularly have enough local or deliverable supply to maintain reliability. Adding CHPE to the capacity market increases the amount of supply that can count towards those reliability needs.
That should put downward pressure on future Zone J capacity prices over time. This is especially relevant for large commercial and industrial customers because capacity costs are often a meaningful part of retail electricity supply charges.
What this means for end users
CHPE will not eliminate volatility in New York City power markets. However, it is one of the most significant additions to the state's electric supply in years.
For businesses and energy buyers, the project will help improve reliability, soften extreme price spikes, and create more stable market conditions over time. The biggest impacts are likely to show up during summer peak demand periods, tight grid conditions, and in future capacity auction results.
About Stanwich Energy
Stanwich Energy is a trusted, independent energy advisory firm dedicated to helping organizations across the U.S. buy and manage energy more strategically. We provide energy procurement, sustainability solutions, risk management, reporting, and ongoing market intelligence supported by deep industry expertise and proprietary technology. Our client-first approach helps businesses reduce costs, optimize energy usage, and confidently navigate the complexities of today’s energy markets.
Ready to talk energy strategy? Share a few details on our Contact Us page and we’ll reach out to schedule a quick call.