U.S. approves startup of N.Y. Millennium Valley lateral natgas pipe

July 9 (Reuters) - U.S. federal energy regulators on Monday approved Millennium Pipeline's request to start service on the Valley lateral natural gas pipeline project in New York.

The 0.13 billion-cubic-feet-per-day (bcfd) pipeline will connect Competitive Power Ventures' (CPV) 680-megawatt Valley Energy Center, which entered service in February using diesel as its fuel. CPV has said it will switch to gas once it is available. Diesel was supposed to be a backup fuel.

One billion cubic feet is enough gas to fuel about 5 million U.S. homes for a day.

The plant is one of several being built in New York that will help replace generation that will no longer come from Entergy Inc's 2,051-megawatt Indian Point facility once the two reactors there are retired in 2020 and 2021.

One megawatt can power about 1,000 U.S. homes.

The Valley lateral is a small pipeline but it received outsized notice after the U.S. Federal Energy Regulatory Commission (FERC) in September 2017 found that the New York State Department of Environmental Conservation (NYDEC) waived its authority to provide a water quality certification under the Clean Water Act within one year, as required by statute.

Other much bigger pipelines, including Williams Cos Inc's proposed 0.65-bcfd Constitution and National Fuel Gas Co's proposed 0.5-bcfd Northern Access projects from Pennsylvania to New York, also hope FERC will overturn similar water permit denials from New York environmental regulators.

Millennium filed with FERC to build the pipeline in November 2015. FERC approved construction in November 2016, pending receipt of other approvals like the NYDEC water quality certification.

The company also filed with the NYDEC for a water quality certification in November 2015. After twice telling Millennium the application was incomplete in December 2015 and June 2016, the NYDEC denied Millennium's application in August 2017.

That was after Millennium filed with both a federal appeals court and FERC seeking a ruling that the NYDEC had waived its authority to decide on the water permit.

The appeals court said FERC would have to make that determination. FERC in September 2017 found that the NYDEC's delay constituted a waiver of its authority.

After FERC denied the NYDEC's request for a rehearing, the state appealed the decision to the U.S. 2nd Circuit Court of Appeals in New York, which denied the petition in March.

Millennium is owned by subsidiaries of TransCanada Corp (Dusseldorf: TRS.DU - news) , DTE Energy Co and National Grid Plc (LSE: NG.L - news) .

(Reporting by Scott DiSavino; editing by Jonathan Oatis)