Sierra Club intervenes in sale deal for Cayuga and Somerset coal plants

Upstate New York Power Producers Inc. (USNYPP), Cayuga Operating Co. LLC and Somerset Operating Co. LLC told the Federal Energy Regulatory Commission on Oct. 23 that the Sierra Club is off-base in trying to bring fuel issues into the commission’s review of a planned sale of the Cayuga and Somerset coal-fired power plants.

“The Sierra Club suggests in its Comments that the Commission should require the Buyer in the Proposed Transaction ‘to disclose whether it intends to seek ratepayer support to add natural gas co-firing capability or to repower the Cayuga facility and whether it intends to seek out-of-market support in any form for the continued operation or repowering of the Somerset facility,” wrote the companies. “The Sierra Club further suggests that the Commission ‘should consider the likelihood that ratepayers will be required to provide ongoing or additional out-of-market support to these facilities.’

“The requests made by the Sierra Club in its Comments are beyond the scope of this proceeding, and the Sierra Club’s suggestions are not required or supported by Commission precedent,” the companies added. “Accordingly, the Commission should disregard the Comments in their entirety.

“As described in the Application, the Proposed Transaction involves a change in the upstream ownership of Cayuga and Somerset. The Proposed Transaction does not involve any change to the way in which either Cayuga or Somerset will make sales of electric energy at wholesale or to the rates that Cayuga or Somerset will charge to customers. Accordingly, the Proposed Transaction will have no effect on wholesale rates. Further, neither Cayuga nor Somerset has any ability to pass along to any captive customers any costs associated with the Proposed Transaction.”

Said the Sierra Club’s Oct. 16 comments in this case: “As set forth below, the proposed asset sale has the potential to adversely affect rates, and thus may be inconsistent with the public interest, to the extent that purchaser Riesling Power LLC seeks ratepayer subsidies for continued operation or repowering of either or both of the transacted assets. Currently, the Cayuga facility is operating subject to the terms of a Reliability Support Services Agreement, the costs of which are being passed on to New York State Electric & Gas Corp. (‘NYSEG’) ratepayers. Further, the current owner, Cayuga Operating Company, has submitted a proposal for NYSEG ratepayers to expend $145.5 million over ten years to subsidize the addition of natural gas co-firing capability to the Cayuga facility.

“Should Riesling Power intend to seek out-of-market payments from New York ratepayers to support the continued operation or repowering of either or both of the transacted assets, the Commission should require Riesling to disclose this intention so that an appropriate evaluation of the effects of the transaction on rates can be conducted.

“The proposed asset sale at issue in this docket has the potential to adversely affect rates to the extent that purchaser Riesling Power intends to seek out-of-market payments, recoverable from New York electric ratepayers, to support the continued operation or the repowering of the Cayuga or Somerset facilities.”

Under this proposed deal, applied for on Sept. 25, USNYPP will transfer its 100% ownership interests in each of Cayuga and Somerset to Riesling Power, which is a wholly-owned subsidiary of Bicent Power LLC. Bicent Power currently owns various other power plants.

  • Somerset owns and operates the Somerset Facility, which is a coal-fired plant with a summer rating of 668 MW located on approximately 1,800 acres in Somerset, New York, including related interconnection facilities, all of which are located in the balancing authority area controlled by the New York Independent System Operator. All of the output of the Somerset Facility is sold into the NYISO market.
  • Cayuga owns and operates the Cayuga Facility, which is a coal-fired station consisting of two generating units with a combined summer rating of 312 MW located near the town of Lansing, New York, including related interconnection facilities, all of which are located in the NYISO balancing authority area. All of the output of the Cayuga Facility is sold into the NYISO market.
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.