The Independent Power Producers of New York (IPPNY) on Nov. 12 filed with the Federal Energy Regulatory Commission a copy of a reliability agreement that could extend the life of the coal-fired Cayuga plant out to 2017.
The independent power producers group was responding to a complaint against the New York Independent System Operator (NYISO). IPPNY moved to lodge the Reliability Support Services Agreement (called the “Second Cayuga RSSA”) between New York State Electric & Gas (NYSEG) and Cayuga Operating Co. LLC (Cayuga).
As explained in the complaint, New York Control Area (NYCA) installed capacity (ICAP) prices have been, and continue to be, artificially suppressed by uneconomic existing resources that receive out-of-market revenues under reliability must-run (RMR) contracts or similar mechanisms, the group said.
“In particular, and as further explained in the Complaint, Cayuga is currently providing Reliability Support Services from Units 1 and 2 at the Cayuga Generating Facility (the ‘Cayuga Facility’) in Lansing, New York, to NYSEG pursuant to the Reliability Support Agreement entered into by Cayuga and NYSEG on December 27, 2012 (the ‘First Cayuga RSSA’),” the power group wrote. “The First Cayuga RSSA has an initial term from January 16, 2013 through January 15, 2014, and artificially suppresses NYCA ICAP prices, because it mandates that ‘Cayuga shall offer the [Cayuga Facility’s] capacity value into the NYISO UCAP auction at a de-minimus price, in compliance with NYISO market rules.’”
On Nov. 4, NYSEG filed the Second Cayuga RSSA with the New York Public Service Commission (NYPSC), stating that NYSEG and Cayuga will immediately execute the agreement upon the receipt of a NYPSC order approving it. The Second Cayuga RSSA would become effective on Jan. 16, 2014, and remain in effect through June 30, 2017, which could be extended by NYSEG under certain conditions. Like the First Cayuga RSSA, the Second Cayuga RSSA states that “Cayuga shall offer Cayuga UCAP into the NYISO spot market UCAP auction at a de-minimus price, in compliance with NYISO market rules.”
“In the case of the Cayuga Facility, the harm to the market and other market participants will not end with the expiration of the First Cayuga RSSA on January 15, 2014, but can now be expected to continue, at a minimum, through June 30, 2017, assuming that the NYPSC approves the Second Cayuga RSSA,” the power group said. “IPPNY therefore requests that the Commission take action on the Complaint as soon as possible to prevent the continued artificial suppression of prices in, and the continued undermining of, the NYCA ICAP market.”
Cayuga owns and operates the Cayuga Generating Facility, a coal-fired station in Lansing, N.Y., 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) (together called the “RSS Units”).
In July 2012, Cayuga submitted a notification to the NYPSC of its intent to mothball the RSS Units by Jan. 16, 2013. NYSEG and NYISO decided that the plant was needed for a period of time for grid support and worked out the original RSS deal. The short-term plan is to make transmission upgrades that would allow the plant to shut, though there is an argument ongoing at the NYPSC where Cayuga wants to repower the plant with natural gas over the long term, while NYSEG has said it can compensate for shutting the plant entirely with grid fixes alone.