New York PSC allows three power companies to stay in Ginna nuclear case

The New York State Public Service Commission on June 4 rejected a motion from its staff to remove three outside power companies in the case involving a life support deal for the Ginna nuclear plant of R.E. Ginna Nuclear Power Plant LLC.

Staff had sought reversal of an April 30 ruling denying a motion by R.E. Ginna Nuclear Power Plant to revoke the party status of FirstEnergy Solutions Corp. (FES). In addition, staff requested that the commission revoke the party status of Entergy Wholesale Commodities and NRG Energy.

“As grounds for its motion, Staff asserts that FES, Entergy, and NRG are businesses that supply energy in wholesale markets, and, upon information and belief, Staff says, these businesses compete with Ginna and it owners,” the June 4 order noted. “Given this dynamic, Staff suggests, continued participation by FES, Entergy and NRG in this proceeding as active parties engaged in discovery, settlement negotiations, and/or evidentiary hearings ‘is likely to reduce the potential record’ rather than contribute to its development. This, Staff says, is because the active involvement of these competitors of Ginna may provide an untoward incentive to both Ginna and Rochester Gas and Electric Corporation (RG&E) to constrain the record in order to protect proprietary information.

“The risk here, Staff says, is not that FES, Entergy, and NRG will release such information to outside parties, but rather that they will use it in developing their own competitive strategies. Party status, Staff argues, should not be a vehicle for obtaining an unfair commercial advantage.”

Said the June 4 decision in response to those arguments: “As yet, no concrete example of the inhibition of settlement negotiations due to the presence of FES, Entergy, or NRG has been presented to us. Furthermore, we understand from the responses received that FES, Entergy, and NRG have all, without our involvement, worked out arrangements with Ginna to allow for the sharing of competitively sensitive information. These arrangements include use of an addendum to the protective order we issued, and an agreement to modify the rights of the receiving party under that protective order. Apparently, heretofore, these arrangements have been sufficient to alleviate Ginna’s concerns about providing competitively sensitive information to competitors. This would seem to significantly alleviate Staff’s concerns that sharing such information will seriously inhibit settlement talks.

“While we see no need to intervene at this time concerning the involvement of FES, Entergy, and NRG in this case, we remind the parties that if settlement discussions are actually stifled by information disclosure concerns, we remain willing and available to hear those concerns and to devise appropriate procedures to protect legitimate competitive interests from undue compromise. In addition, if such discussions resume, the parties may wish to consider requesting the appointment of a settlement judge who can monitor negotiations and be readily available to mediate concerns as they arise.”

Rochester seeks to impose surcharge while this case proceeds

Also on June 4, Rochester Gas and Electric (RG&E) filed a motion with the commission for approval to implement a temporary rate in the form of a surcharge for its electric customers. More specifically, the company seeks to implement on a temporary basis the Reliability Support Services Agreement (RSSA)-related surcharge mechanism previously filed with and suspended by the commission.

This proceeding concerns an RSSA between the RG&E and R.E. Ginna Nuclear Power Plant, which was filed with the New York commission and the Federal Energy Regulatory Commission in February 2015. FERC subsequently approved in part the RSSA in an order issued on April 14.

RG&E argued in its June 4 request: “The Company seeks to establish a temporary rate surcharge in this proceeding because, as noted by other parties in this proceeding, including the New York State Department of Public Service Staff, delaying RSSA collection from customers during the pendency of this proceeding and the FERC proceeding raises the concern of rate compression. Because FERC has already accepted, subject to refund, the RSSA, the cost of reliability services provided by Ginna under the agreement is being tracked from April 1, 2015 and is accumulating, with interest, as a Deferred Collection Amount, which will be recovered from customers if the Commission ultimately accepts the RSSA.

“RG&E submits that implementation of a temporary rate surcharge in this proceeding would mitigate rate compression by initiating collection of funds now to satisfy the Deferred Collection Amount for which customers will ultimately be responsible if the RSSA is accepted by the Commission. RG&E therefore requests that the Commission grant immediate authorization for the Company to implement the requested temporary rate surcharge, subject to refund.”

RSSA is designed to keep Ginna operating until at least 2018

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, which is without a long-term power sales contract and would potentially have to be shut without the RSSA protection.

In July 2014, Ginna initiated this proceeding by filing a petition with the NYPSC in which Ginna referenced sustained cumulative losses of nearly $100 million in 2012 and 2013 and indicated that its management had determined that expected revenues from the 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’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 commission.  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 were filed with the federal 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. From 2004 until the expiration of a power purchase agreement (PPA) with RGE in June 2014, RGE purchased 90% of the generation output of Ginna. 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.