Energy consumers ask for rehearing of Cayuga RSS decision

An association of over 55 large industrial, commercial and institutional energy consumers in New York, including in the New York State Electric & Gas service territory, on Jan. 15 petitioned the New York State Public Service Commission to reconsider its Dec. 17, 2012, order that granted a year or more of extra life to the coal-fired Cayuga power plant of Cayuga Operating.

The customer group, calling itself “Multiple Intervenors,” said they want a rehearing of the commission’s decision to authorize NYSEG to allocate indefinitely all Reliability Support Service (RSS) costs of this extra time for the plant to retail customers, notwithstanding uncontroverted facts, application of basic cost causation principles, and a prior order all demonstrating that a material portion of such costs should be allocated to wholesale customers.

On July 20, 2012, Cayuga Operating filed a notice informing the commission of its intention to mothball Units 1 and 2 at the Cayuga plant in Lansing, N.Y., by Jan. 16, 2013. In response, NYSEG conducted an analysis of the proposed mothballing and determined that:

  • the facility needs to remain capable of operating and available for commitment in order to maintain reliability on the utility’s electric system; and
  • system reinforcements that would remedy the reliability impacts of this mothballing are not likely to be completed until the end of 2016, at the earliest.

On Oct. 29, 2012, NYSEG filed a proposed term sheet for the provision of RSS between itself and Cayuga that would provide for the continuing availability of the facility. Cayuga would provide RSS for the one-year period running from Jan. 16, 2013. through Jan. 15, 2014. Additionally, NYSEG would continue to procure RSS beyond this period, if necessary, dependent upon the implementation of system reinforcements or alternative reliability solutions.

On Nov.13, 2012, comments on the term sheet were submitted by Multiple Intervenors and other parties. In its submission, Multiple Intervenors raised a number of concerns regarding the term sheet and NYSEG’s accompanying cost recovery proposal, including: the substantial, projected cost of RSS; the process utilized in the negotiation of the term sheet; the manner in which NYSEG was proposing to allocate RSS costs to retail customers; and the utility’s failure to allocate any RSS costs to wholesale customers.

Intervenors say commission never acted on its complaints

In its December order, the commission authorized NYSEG to enter into a contract with Cayuga for the provision of RSS consistent with the term sheet. “In so ruling, the Commission rejected Multiple Intervenors’ procedural and substantive arguments that the Term Sheet be rejected or modified,” said the Jan. 15 rehearing petition.

In terms of allocating RSS costs to wholesale customers, the commission declined to adopt Multiple Intervenors’ arguments. In so ruling, the intervenors wrote, the commission: recognized that approximately 7% of RSS costs are allocable to NYSEG’s wholesale customers; decided not to follow its prior decision, involving the provision of RSS from the coal-fired Dunkirk plant to Niagara Mohawk Power d/b/a National Grid, wherein it directed that an equitable portion of RSS costs be allocated to the utility’s wholesale customers; and ruled that if NYSEG ever seeks to amend its wholesale transmission revenue requirement at the Federal Energy Regulatory Commission, then, at that time, it would be expected to allocate a portion of RSS costs to wholesale customers.

“The clear import of the Commission’s ruling is that until such time that NYSEG seeks to modify its wholesale transmission revenue requirement, the utility is authorized to recover wholesale customers’ share of RSS costs from retail customers,” the Jan. 15 rehearing request said. “It is from this ruling that Multiple Intervenors petitions for rehearing.”

On Jan. 3, NYSEG filed the New RSS agreement at the commission with Cayuga Operating. Cayuga is a coal-fired station which consists of two generating units; Unit 1, which has a 154 MW net capacity (winter), and Unit 2, which has a 158.7 MW net capacity (winter).

The reliability support agreement, dated Dec. 27, becomes effective on Jan. 16, 2013, and runs until Jan. 15, 2014 (the “Initial Term”). Upon 60 calendar days written notice, either party may terminate this agreement prior to Jan. 15, 2014, if any of the following events or circumstances materially and adversely affect either party during the Initial Term: a change in law; a change to the NYISO Tariff or other NYISO policy or rule; or an order of any governmental authority, other than as a result of an action or proceeding commenced by such party.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.