Efforts fail to overturn FERC zone, rate hikes

power-lines-SQLast month, your electricity bill increased — and the reason is to fatten the profits of power plants that don’t even exist yet. Despite efforts by Central Hudson Gas & Electric, the New York Public Service Commission (PSC), which regulates the state electricity industry, and elected officials to, first, prevent, then — after that failed — to have rescinded the New Capacity Zone (NCZ), implemented by the Federal Energy Regulatory Commission (FERC) on May 1, the FERC won’t budge. As a result, Hudson Valley ratepayers will be stuck with a higher bill to help solve New York City’s purported dearth of back-up power.

Another attempt to fight the FERC decision has also fallen short. In the most recent case, the U.S. Court of Appeals for the Second Circuit on June 4 denied a motion by Central Hudson and the PSC to suspend the implementation.

Thus, as will be reflected in your next bill, ratepayers paid six percent more in May, according to Central Hudson media relations director John Maserjian. The percentage will likely increase as the weather gets hotter and demand for electricity goes up, he said.

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Central Hudson and the PSC, elected officials, and various municipal, environmental and citizen groups have tried to make the case that the NCZ is unfair, since Hudson Valley ratepayers are now paying more for power that’s needed in New York City, not here in the valley; and because it’s unnecessary and ill-timed, given that many residents got clobbered by huge electricity rate increases over the winter.

“We are very disappointed in the court’s and FERC’s rulings, as the new capacity zone will needlessly increase electricity costs for our customers,” wrote Maserjian in an e-mail. “We are considering our next steps in light of their decisions.”

The NCZ, in which Ulster County is lumped together with Westchester and New York City, is supposed make sure the city has enough back-up power during peak demand times, such as a heat wave. The FERC caused the price increase for us (the downstate counties and the city always paid more than us upstaters) in the Hudson Valley because it says the higher rates will attract investment in new plants by boosting profits.

 

Incentives for fossil fuel use

Representatives Sean Patrick Maloney (NY-18) and Chris Gibson (NY-19) have introduced legislation that would prohibit FERC from approving a NCZ that raises rates for consumers. Maloney “vowed to keep fighting the Federal Energy Regulatory Commission’s new capacity zone” following the court’s decision, according to a press release.

A few state Assemblymen are seeking to offset the pain of the NCZ by subsidizing the affected ratepayers. State Senators Terry Gipson (D-Rhinebeck), Cecilia Tkaczyk (D-Duanesburg), and George Latimer (D-Rye) have proposed to Governor Cuomo that he issue an executive order allowing money from a special fund collected from a surcharge on customers’ bills be used to help offset the rate increases.

But Dayle Zatlin, assistant director of communications at New York State Energy Research and Development Authority (NYSERDA,) responded by e-mail that while there may be a lag between the collection of the funds and the program it funds, “the…funds collected to date are fully committed.” She further noted that the fund, called the Systems Benefit Charge (SBC) has “never been used to offset ratepayer increases.”

Jennifer Metzger, co-founder of Rosendale-based Citizens for Local Power (CLP), says it has vociferously opposed the NCZ not only because it raises rates but also because it incentivizes fossil fuel production, in direct opposition to the NYSERDA programs.

Indeed, four conventional power plants burning fossil fuels are due to come online in the Hudson Valley, at least two of which are possibly being lured by the promise of higher profits due to the Zone configuration.

 

Utility insiders

The New York Independent System Operator (NYISO), which operates the grid and oversees the auctions at which electricity is bought and sold, initially proposed the NCZ to the FERC and raised the alarm about the capacity shortfall.

Ned Sullivan, president of Scenic Hudson, which formed the Hudson Valley Smart Energy Coalition to fight the right of way for the proposed new transmission lines through Dutchess County, disputes NYISO’s projections, along with its motives, in a recent blog about the NCZ on the Huffington Post. Electricity demand has flattened out, “meaning utilities are scrambling to find new sources of return for their shareholders’ investments,” Sullivan wrote. The NYISO board is “largely composed of utility insiders, including a chairman whose career includes two decades at New Orleans-based Entergy” — owner of the Indian Point nuclear plant and “a prime beneficiary of the NYISO-sponsored rate hike,” according to Sullivan.

Speaking to this reporter by phone, Sullivan said “this agency has huge power and is really dictating the energy future for New York State. I believe this entity should be looked at carefully by elected officials and subject to scrutiny to make sure the public interest is being represented.” Sullivan noted that when the NYISO first claimed there was a capacity shortage, “there was no public presentation of these numbers and no opportunity to question and challenge them.”

Meanwhile, it’s not just the capacity price that’s going up: Central Hudson is filing an overall rate increase with the PSC, which would go into effect next summer. Not to worry: eventually the capacity price will come down, as all those plants fire up, although it “will take years,” said Maserjian.

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