Merchant power transmission projects to move cheap electricity to high demand areas like New York City are being hobbled by the same credit crunch that decimated U.S. power trading, industry sources say. Merchant transmission projects, unlike the network of high-voltage lines built over the past century by regulated utilities, are commercial ventures that would charge market rates for carrying megawatts to wherever they’re most needed.

One such project would use an underwater transmission line to move Canadian electricity to power-hungry New York City. The Neptune project’s original timetable was pushed back after a client was hit with the same credit downgrade that has hurt most U.S. electricity and natural gas traders since the Enron Corp. collapse late in 2001.

Bottlenecks preventing the movement of cheaper power added over $145 million to the electricity bills of U.S. consumers in constrained regions in the summer of 2001 alone, according to a study by the Federal Energy Regulatory Commission.