Several units of Entergy (NYSE: ETR) told the New York State Public Service Commission that a “straw proposal” covering how to allocate the costs of preparing contingency plans in case Entergy’s two-unit Indian Point nuclear plant has to be shut should be thrown out.
Entergy Nuclear Indian Point 2 LLC, Entergy Nuclear Indian Point 3 LLC, Entergy Nuclear Fitzpatrick LLC and Entergy Nuclear Operations filed July 22 comments at the commission on a “Straw Proposal for Indian Point Shutdown Regulated Reliability Cost Allocation and Cost Recovery.”
The straw proposal describes a methodology on how the costs associated with implementing the transmission or generation solutions that are ultimately part of the Indian Point Reliability Contingency Plan could be allocated and recovered from retail ratepayers. The straw proposal attempts to allocate costs based on application of the “beneficiaries pay” principle.
In November 2012, the PSC initiated this proceeding targeted solely at the reliability impacts in Southeastern New York if a single generating facility, Indian Point, was ultimately required to cease operations. While the PSC acknowledged that Indian Point’s owners had timely filed an application for a 20-year license renewal with the Nuclear Regulatory Commission (NRC), the PSC nonetheless found that “significant advanced planning” was required for alternatives to be available in 2016.
Thus, the PSC directed Consolidated Edison Co. of New York (Con Edison), in consultation with the New York Power Authority (NYPA), to develop and file a reliability contingency plan for PSC review containing the information determined in the November 2012 order.
On June 4, Department of Public Service (DPS) staff filed its straw proposal in this proceeding. The Entergy companies said in their July 22 remarks that the PSC may not approve the straw proposal because:
- The Federal Power Act (FPA) grants the Federal Energy Regulatory Commission exclusive jurisdiction over the rates, terms and conditions of the transmission service and wholesale generation service proposed in this proceeding.
- Even if the PSC could be found to have any authority, the facts in the record of this proceeding could not trigger the PSC’s authority to implement the cost allocation and cost recovery provisions set forth in the straw proposal;
- Due to the informational deficiencies in a Con Edison/NYPA Joint Plan of action filed in February, the PSC does not have sufficient information to make any substantive determinations in this proceeding, including with respect to the form and adequacy of the straw proposal;
- The PSC has no jurisdiction over NYPA and NYPA otherwise lacks the statutory authority to take the steps envisioned for it in the straw proposal; and
- The straw proposal represents an unwarranted departure from PSC precedent and an impermissible intrusion into FERC-regulated markets.
Entergy points out what it considers a number of flaws in the process
“Notwithstanding the clear direction provided by the November Order, the Joint Plan provides scant information concerning the extent, timing and characteristics of Indian Point-based system needs,” the Entergy companies said. “First, it unilaterally and impermissibly proposed to deduct 100 MW from the NYISO’s 2012 Reliability Needs Assessment (‘RNA’) system base case load forecast before identifying the system needs that would result if Indian Point were required to cease operations. The Joint Plan proposes that this 100 MW will be addressed by Con Edison’s Energy Efficiency Project at an estimated cost of $300 million. Using this unilaterally modified system base case but without providing any of the underlying analyses, the Joint Plan concluded that an ‘updated’ 2012 RNA base case produced an Indian Point-based system need of 950 MW. With the recent [coal-fired] Danskammer facility retirement taken into account, the deficiency increased to 1,350 MW to 1,375 MW.”
Entergy added: “The Joint Plan then exceeded the November Order’s directive to develop and file a contingency plan by requesting immediate implementation of, and cost recovery for, the [Transmission Owner Transmission Solutions] TOTs Projects and the Energy Efficiency Project. Specifically, the Joint Plan requested that the PSC issue an order in April, 2013: (i) directing that the Utilities ‘begin development’ of their three proposed TOTs Projects ‘subject to the halting mechanism and cost recovery proposal set forth in this Plan;’ (ii) directing Con Edison to implement the Energy Efficiency Project apparently as a final determination; and (iii) finding, on a preliminary basis, that the TOTs Projects were ‘public policy projects that meet the public policy requirements of New York State.’”
The Joint Plan, said Entergy, further exceeded the November PSC order’s directive by also requesting the implementation of, and cost recovery for, a “final set of transmission and/or generation projects to move forward subject to the halting, cost allocation and cost recovery mechanisms set forth in this Plan.”
Indian Point is the site of two pressurized-water reactors. The initial 40-year operating license for Indian Point Unit 2 is set to expire on Sept. 28, 2013, while the initial license for Unit 3 runs through Dec. 12, 2015. Entergy is seeking a 20-year license extension for each unit. It submitted an application to the NRC seeking the license renewals in April 2007, but no final decisions have been reached yet by the NRC.
Indian Point 2 has a design net capacity of 1,078 MW, while Indian Point 3 has a design net capacity of about 1,080 MW. The closure of one or both of those units would leave a big hole in New York’s power portfolio, particularly since the plant is near the New York City load center.