New throughout, adds comment from grid operator New York ISO

By Tim McLaughlin

July 13 (Reuters) - A $6 billion transmission line designed to deliver Canadian hydropower to New York City shut down for a second time this month, disrupting a flagship clean-energy project meant to reduce the city's reliance on dirty fossil fuel generators.

The 1,250-megawatt Champlain Hudson Power Express (CHPE) transmission line can deliver up to 20% of New York City's electricity. It is currently offline due to a cable issue, Hydro-Quebec said on Monday.

Hydro-Quebec developed the project with private-equity giant Blackstone Inc BX.N.

"Teams working around the clock have identified a cable issue at a location on the U.S. portion of the transmission line," Hydro-Quebec said in a statement. Operation data published by New York ISO, which manages the flow of electricity for the state's grid, indicates the shutdown will last through at least Friday.

The current cable issue with CHPE, which operated during New York City's recent heat wave, is unrelated to a shutdown that happened on July 1, Hydro-Quebec said. The line commenced operation in May, capping a planning and development process that spanned more than 15 years.

Energy demand is expected to surge this week with temperatures approaching 100 degrees Fahrenheit (38 degrees Celsius) in New York. CHPE's outage means the city will lean on power plants that burn diesel fuel and produce nitrogen oxides, a key component of smog pollution, at rates up to 6 times greater than generators with the most advanced pollution controls, according to federal emissions data.

The 339-mile (546 km) power line stretches along the entire length of New York State, from the Canadian border to a converter station in Astoria, Queens, where energy enters the New York City grid.

New ISO said its energy demand planning studies did not assume CHPE would be available for peak summer demand.

"And that was one reason the grid performed reliably during the heat wave earlier this month. While reserves were extremely tight, we secured sufficient generation and other reliability resources to meet demand regardless of CHPE's status," New York ISO spokesperson Kevin Lanahan said.