An amendment introduced by U.S. Representatives Chris Gibson (NY-19) and Sean Maloney (NY-18) that would repeal utility rate increases caused by the new capacity zone (NCZ), which was implemented May 1 in the Hudson Valley, has passed the House of Representatives.
Federal lawsuits by Central Hudson Gas & Electric and the New York Public Service Commission, which regulates utilities, have so far failed to revoke the new capacity zone, which was implemented by the Federal Energy Regulatory Commission (FERC), but Gibson is optimistic that U.S. Senator Charles Schumer, also an opponent of the NCZ, will introduce the amendment in the Senate.
“Our staffs have reached out to U.S. Senator Schumer, and his comments were positive. We look to him to help carry this in the Senate.”
After passage in the Senate, the bill would then have to be signed into law by President Obama.
Since going into effect May 1, the new capacity zone has resulted in rate increases of six to 10 percent on customer’s utility bills by raising what’s called the capacity price of electricity. The increase is designed to lure more power plants to the Hudson Valley by guaranteeing increased profits. The additional power generation is needed to fill a gap in back-up power capacity in New York City, which is otherwise at risk of blackouts during peak-demand periods, such as a heat wave — although critics have questioned whether such a gap exists, let alone the fairness of having the Hudson Valley bear the burden of New York City’s capacity problem.
“Quite frankly, this provides the utility industry with $200 million in windfall profits without any commitment to provide anything in return,” said Dutchess County Executive Marc Molinaro. Meanwhile, “we have residents who have just lived through the worst winter in a generation, with the highest energy costs many have seen in a lifetime. Many are living paycheck to paycheck. There’s also an impact on the business community. It’s criminal that FERC is able to wreak such devastation with no real public accountability.”
Besides prohibiting FERC from implementing, administering or enforcing the NCZ, the amendment requires FERC to be more proactive in addressing the concerns of ratepayers, taking into account the view of local and state officials and addressing the costs to ratepayers as well as electrical reliability and availability.
“Sean and I think we have an effective strategy to combat this,” said Gibson. “What our amendment does is to defund the authority for FERC to conduct the new capacity zone. It’s very precise and mentions the docket number that provides the legal authority for this new capacity zone.”
Especially considering the exorbitant increases on residents’ utility bills over the winter, FERC’s implementation of the zone is “outrageous and unacceptable,” Gibson said. “Sean and I were resolved to do this.”
It could be weeks or months before the Senate takes up the appropriation bill (and complications could arise if the amendment in the Senate is worded differently than the House version, though Gibson said he and Maloney were optimistic that Schumer would use the exact same language of the House amendment). But Molinaro said relief could come much sooner, given that the confirmation of the new FERC chairperson by the Senate presents an opportunity to revoke the new capacity zone.
“We’re hopeful Senator Schumer and [U.S. Senate Majority Leader Harry] Reid will get a concession to repeal the rate hike as part of the confirmation,” said Molinaro. “We’re pretty certain the powers that be would like this confirmation and that Schumer will do everything in his power to turn this decision back.”
No guarantees of relief
Claims that the change will ultimately result in a lowering of utility bills as new power plants come online is fallacious, said elected officials.
“There’s no guarantee and no expectation as to when users of electricity may see relief,” said Molinaro. Although four additional power plants are scheduled to start up operations in the Hudson Valley, intended to address the capacity problem, he said building a new plant takes years. “It’s like your local grocery store saying to [its customers], ‘pay 20 percent more because within the next ten years we may expand our business.’”
Especially given the recessionary economic conditions in the mid Hudson Valley, the windfall profits the FERC decision gives to the industry in the hope that some day in the future the creation of more energy will ultimately reduce rates is “pure lunacy,” Molinaro said.
He said the capacity problem exists in New York City not the Hudson Valley. “We certainly want the city to prosper, but we don’t share the same problem and there are other alternatives,” said Molinaro. “The Hudson Valley gets trampled on one way or another, either by the forced NCZ or monster power lines crossing over the region. We haven’t done much to harden the infrastructure in the last 60 years and now we’re being force fed a bad solution, onto people who can’t afford it. Instead, there needs to be a thorough, comprehensive approach.”