FERC rejects rehearing request related to Dunkirk reliability payments

The Federal Energy Regulatory Commission on March 19 rejected a rehearing request related to Reliability Support Services (RSS) payments for the coal-fired Dunkirk power plant of NRG Energy (NYSE: NRG).

In February 2014, the commission issued an order which accepted and suspended for a nominal period, subject to refund and further order, a December 2013 filing by Niagara Mohawk Power d/b/a/ National Grid to revise its Wholesale Transmission Service Charge (Wholesale TSC) formula rate under Attachment H of the New York Independent System Operator’s (NYISO) Open Access Transmission Tariff (OATT) to incorporate the costs it incurs for Reliability Support Services (RSS) under two agreements with NRG for power purchased from Dunkirk. The February 2014 order also waived the 60-day prior notice requirement to permit National Grid’s filing to become effective July 1, 2013, subject to refund and to further commission order.

In March 2014, the Municipal Electric Utilities Association of New York State (MEUA) filed a request for rehearing of the commission’s February 2014 order. MEUA asserted that the commission erred in waiving the 60-day prior notice requirement and permitting National Grid’s proposed modifications to its Wholesale TSC formula to become effective on July 1, 2013. MEUA requested that the commission grant rehearing and make the modifications effective in February 2014, subject to refund. MEUA additionally requested that the commission grant rehearing and suspend the filing for the full five-month period permitted under section 205(e) of the Federal Power Act (FPA), i.e., until July 5, 2014.

The commission members in the March 19 decision denied MEUA’s request for rehearing in all respects.

Said the decision: “We deny MEUA’s request for rehearing. First, we find that, by its March 29, 2013 filing, National Grid gave adequate notice to its customers that it would be passing through to them – using the formula rate currently in the NYISO OATT, revised to incorporate the pass-through of RSS expenses – the costs it incurs under the Dunkirk RSS agreements. Second, National Grid’s customers are aware that National Grid recovers its Wholesale TSC through a formula rate which is updated each year effective July 1, and the charges are based on actual costs incurred in the prior calendar year. Accordingly, National Grid’s customers were on notice that RSS-type costs were being incurred and were to begin to be passed through in TSC charges beginning July 1, 2013, even though the exact costs would not be determined until a later time.”

The RSS payments have to do with keeping the Dunkirk plant, due for retirement, in operation for grid reliability purposes. There is an ongoing plan to convert the plant from burning coal to natural gas.

In a separate March 19 order, FERC sets up a hearing process related to another aspect of this situation. In December 2013, pursuant to section 205 of the Federal Power Act, National Grid filed proposed tariff revisions to certain National Grid-specific components of the Wholesale Transmission Service Charge formula under Attachment H of NYISO’s Open Access Transmission Tariff. Specifically, National Grid proposed to amend its formula rate to incorporate the costs it incurs for the two RSS agreements with NRG Energy.

In the March 19 order, FERC established hearing and settlement judge procedures regarding whether National Grid’s proposed Wholesale TSC formula rate revisions, and the Dunkirk RSSA charges, are just and reasonable.  

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.