Entergy says New York PSC needs to defer to FERC on Ginna reliability issues

Four subsidiaries of Entergy Corp. (NYSE: ETR) with interests in New York power markets on May 20 again objected to a reliability deal that would keep the R.E. Ginna nuclear plant operating into 2018, saying this reliability area of regulation is under the exclusive jurisdiction of the Federal Energy Regulatory Commission.

This protest was filed at the New York State Public Service Commission by Entergy Nuclear FitzPatrick LLC, Entergy Nuclear Indian Point 2 LLC, Entergy Indian Point 3 LLC and Entergy Nuclear Operations Inc. (collectively called the “Entergy Entities”). They were responding to a Notice of Proposed Rulemaking published by the New York State Public Service Commission (NYPSC). The notice addresses a proposed Reliability Support Services Agreement (RSSA) executed by Rochester Gas & Electric (RGE) and R.E. Ginna Nuclear Power Plant LLC and filed by RGE with the commission on Feb. 13.

The RSSA would become effective as of April 1, 2015 with an initial term through Sept. 30, 2018, subject to an early termination provision. The RSSA provides for RGE to make monthly payments to Ginna to continue to operate the 581-MW R.E. Ginna Nuclear Power Plant.

Said the Entergy companies in their May 20 protect: “[T]he NYPSC cannot accept the RSSA as requested by RGE. The Federal Power Act (‘FPA’), 15 U.S.C. $ 824, et seq., confers upon the FERC exclusive jurisdiction over the rates, terms and conditions of wholesale electric and transmission service. As the Entergy Entities previously have shown in prior generation facility mothballing proceedings in which reliability needs were at issue, NYPSC acceptance of the RSSA is preempted by the FERC’s exclusive jurisdiction over these areas. Ginna has filed the RSSA with the FERC for approval in the Ginna FERC Proceeding. The FERC has issued an order rejecting certain aspects of the RSSA, finding that the RSSA may be unjust and unreasonable and setting its rates, terms and conditions for hearing. The FERC’s action alone on the sufficiency of the rates, terms and conditions of the RSSA is determinative.

“Given the nature of the RSSA, the NYPSC’s jurisdiction is limited to whether and to what extent RGE’s RSSA cost recovery from its retail ratepayers is prudent. To that end, in its November Order, the NYPSC expressly directed RGE to adequately accommodate altemative solutions within the terms of the RSSA. The record in this proceeding, however, does not contain any detailed assessment of the GRTA, including whether, and to what extent, its implementation can shorten the term of (or be a full substitute for) the RSSA. Consistent with the narrow scope of the NYPSC’s jurisdiction here and the requirements imposed by the NYPSC in other proceedings involving generators seeking to mothball their facilities, the NYPSC must, at a minimum, direct RGE and request the NYISO to provide an updated system reliability analysis, direct RGE to submit an analysis demonstrating that the GRTA resolves the reliability need identified in this proceeding, direct RGE to file a GRTA project schedule inclusive of milestones, direct RGE to file periodic status reports confirming that the GRTA project remains on schedule and direct the Staff of the Department of Public Service (‘DPS Staff’) to monitor the GRTA’s progress and take necessary actions if it begins to show evidence of becoming delayed.”

GRTA stands for “Ginna Retirement Transmission Alternative,” which, as the name implies, covers the transmission upgrades needed to compensate for any shutdown of the Ginna plant.

In July 2014, Ginna initiated this proceeding by filing a petition with the NYPSC in which Ginna referenced “sustained cumulative losses at [the Facility] of nearly $100 million (including the allocation of corporate overhead)” in 2012 and 2013 and indicated that its management had “determined that expected revenues from [the Facility’s] sale of capacity and energy into the NYISO markets will not be sufficient to cover its costs of continued operation, including required new capital investment.”

R.E. Ginna trying to fix the FERC issues with the reliability deal

R.E. Ginna Nuclear Power Plant LLC on May 14 filed with FERC proposed revisions to the RSSA. R.E. Ginna’s parent is Exelon Corp. (NYSE: EXC).

On Feb. 13, R.E. Ginna filed with FERC an executed Reliability Support Services Agreement with RGE. The RSSA provided for Ginna to be compensated for the reliability support service that the Ginna Facility would provide at a cost-justified rate that would enable Ginna to cover the costs of its continued operation, which continued operation was required by the New York Public Service Commission. Under the RSSA, Ginna would receive a monthly fixed charge, as well as a 15% share of market revenues from Ginna’s sales into the New York Independent System Operator (NYISO) energy and capacity markets (called the “15% Mechanism”). Between them, these two sources of revenue were part of a “black box” settlement expected to provide Ginna with revenues over the term of the RSSA of about $835 million, or about two thirds of Ginna’s full cost of service for the same period of $1,276 million. The RSSA also provided that RGE could elect to extend the term of the agreement beyond the initial term if the Ginna Facility’s continued operation was necessary to maintain reliability.

The federal commission accepted the RSSA in part subject to compliance and refund, rejected it in part, and set for hearing and settlement whether the RSSA rate was just and reasonable. The commission directed that, in the compliance filing, Ginna modify the RSSA. Those modifications are what was filed with the commission on May 14.

Ginna is a 581-MW, single-unit pressurized water reactor located along the south shores of Lake Ontario, in Ontario, New York, approximately 20 miles northeast of Rochester, New York. In 2004, the Nuclear Regulatory Commission extended the facility’s license to operate to September 2029.

From 2004 until the expiration of a power purchase agreement (PPA) with RGE in June 2014, RGE purchased 90% of the generation output of the Ginna Facility. Since the expiration of that PPA, the Ginna Facility has been operating as a fully merchant generator in the wholesale power market administered by the New York ISO.

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.