Several parties on Nov. 19 filed arguments with the New York State Public Service Commission in support of an Oct. 21 deal, called the “Joint Proposal,” worked out to extend the life of the Ginna nuclear plant temporarily through a grid reliability deal.
R.E. Ginna Nuclear Power Plant LLC was one of the parties filing a statement in support of the Joint Proposal filed by Rochester Gas and Electric (RG&E) providing for the continued operation of Ginna’s nuclear facility, which is located in RG&E’s service territory. The parties to the Joint Proposal are RG&E, Ginna, Department of Public Service Staff (DPS Staff), the Department of State Utility Intervention Unit (UIU), and an umbrella group called “Multiple Intervenors” (MI).
The Joint Proposal is the negotiated product of the commission’s prior order determining that:
- the Ginna Facility is needed for system reliability;
- Ginna’s 2014 notice of retirement was satisfactory because it serves the purposes of the commission’s generation retirement requirements;
- Ginna justified the commission directing RG&E to commence negotiations for a reliability support services agreement (RSSA); and
- an RSSA is in the public interest.
Ginna wrote in the Nov. 19 brief: “The Joint Proposal resolves all of the remaining issues in this proceeding among normally-adversarial parties and ensures that the Ginna Facility will be available to provide the necessary reliability support services and that Ginna will be compensated for providing such services for the minimum amount of time required for RG&E to complete certain transmission reinforcements. For these reasons and as detailed below, the Joint Proposal represents a fair settlement of the issues in this proceeding and satisfies the Commission’s Procedural Guidelines for Settlement (‘Settlement Guidelines’).”
The Ginna Facility is a 581-MW single-unit pressurized water reactor located in Ontario County, New York. Prior to expiration on June 30, 2014, Ginna operated under a purchase power agreement (PPA) with RG&E for a majority of its energy and capacity. Upon expiration of that PPA, Ginna became a fully-merchant generator, with Ginna saying that current low market prices do not support the continued operation of the plant. That triggered the need for a contentious RSSA process at both the New York PSC and the Federal Energy Regulatory Commission.
Rochester says this deal meets its short-term needs
RG&E noted in its own Nov. 19 brief Ginna submitted an independent Reliability Study conducted by the New York Independent System Operator (NYISO) which indicated that the retirement of the Ginna Facility would create a reliability need at least through Oct. 1, 2018. The NYISO, jointly with RG&E at the request of Ginna parent Exelon Corp. (NYSE: EXC), conducted an Additional Reliability Study (ARS) to evaluate the impact of the retirement of the Ginna Facility on the reliability of the New York State Transmission System for the years 2015 and 2018.
Said the utility: “RG&E’s analysis conducted as part of the ARS confirmed the local electric reliability need in its service territory. Specifically, the RG&E reliability study found reliability violations based on retirement of the Ginna Facility on the local non-Bulk Power Transmission Facilities (‘BPTF’) system. Starting with the summer 2015 and summer 2018 cases provided by the NYISO, RG&E adjusted the Rochester area load to RG&E’s forecast levels (1857 MW for 2015 and 1955 MW for 2018). RG&E made no changes to other zonal loads or the available generation dispatch levels. RG&E then conducted a load flow analysis of the non-BPTF for pre-contingency and N-1 contingency conditions with the Ginna Facility modeled in-service and out-of-service. RG&E’s results corroborated the NYISO findings with respect to both pre-contingency and N-1 overloads of the Pannell Road 345/115 kV transformers and other 115 kV elements with the Ginna Facility out-of-service in both the 2015 and 2018 cases. RG&E also noted voltage violations in the base case and under contingency in its 34.5 kV and lower voltagec systems for both study year cases.”
RG&E added: “The NYISO-RG&E joint ARS results indicated that, for the system as modeled, the retirement of the Ginna Facility would result in bulk and non-bulk reliability criteria violations in years 2015 and 2018. A mitigation solution equivalent to the impact of the full output of the Ginna Facility would be necessary to maintain reliability in the Rochester area. On October 6, 2014, RG&E issued a Request for Proposals (‘RFP’) soliciting alternatives to meet the reliability need that would result from the potential retirement of the Ginna Facility. On November 14, 2014, the Commission issued an Order Directing Negotiation of a Reliability Support Service Agreement (‘RSSA’) and Making Related Findings in which the Commission ruled that Ginna and RG&E had demonstrated that the continued operation of the Ginna Facility is required to maintain electric system reliability. The Commission directed RG&E to negotiate an RSSA with Ginna and file it with the Commission.
“The Commission found that an RSSA was in the public interest and noted that the negotiations ‘shall conclude with the filing of an RSSA…’ RG&E received six responses to its RFP, each of which was submitted to the Commission. RG&E also submitted its analysis of the RFP responses to the Commission on December 23, 2014, indicating that in the short-term there are no alternatives to the RSSA. No party filed another alternative. The Company entered into arm’s length negotiations with Ginna, which ultimately resulted in the execution of an RSSA. The executed RSSA was filed with the Commission and the Federal Energy Regulatory Commission (‘FERC’) on February 13, 2015. RG&E requested that the Commission accept the RSSA without modification and approve RG&E’s implementation of a surcharge to allow for full and immediate recovery of costs incurred pursuant to the RSSA.
“On March 12, 2015, the presiding Administrative Law Judges issued a Ruling on Process and Adopting Protective Order which established a comment period regarding material issues of fact requiring hearing. In response to that ruling, several parties filed comments which opposed the RSSA either in whole or in part.
“On June 4, 2015, RG&E filed a petition asking the Commission to establish a temporary rate surcharge that would begin recovery of the RSSA related costs, subject to refund, pending a final Commission decision on the February 13, 2015 RSSA petition. In response, the Commission determined that the public interest required that a temporary surcharge be established, subject to refund.
“Consistent with the Commission’s Settlement Guidelines and Section 3.9 of the Commission’s regulations, the Company filed with the Commission and served on all parties a Notice of Impending Settlement Negotiations on May 5, 2015. Settlement negotiations began on May 11, 2015 and continued on numerous dates both in person and via teleconference through September. The parties’ settlement negotiations were successful and resulted in the filing of the Joint Proposal on October 21, 2015.”
This deal cuts the firm third year out of the RSSA
Under the Joint Proposal and Amended RSSA, Ginna will continue to provide customers with RSSA reliability support through March 31, 2017.
Said DPS staff in a Nov. 19 brief: “Following the petition, the parties conducted extensive discovery and negotiations resulting in a Joint Proposal containing terms for the continued operation of the Facility. The terms of the Joint Proposal support Commission policies and strike a balance between the interests of customers and investors. Additionally, the terms of the Joint Proposal compare favorably with the likely outcome of litigation. Accordingly, the Joint Proposal meets the Commission’s criteria for settlements; it is therefore just, reasonable, and in the public interest. As a result, it should be recommended that the Commission adopt the Joint Proposal.”
The Joint Proposal modifies the RSSA that was filed with the commission and FERC on May 14. Among the changes made, this new deal recommends that the state commission adopt a two-year RSSA with procedures for negotiating a new RSSA should one be necessary, thereby modifying the original RSSA’s three-year term. The modified term addresses the ratepayers’ concern that the original RSSA may have required them to pay unnecessary costs due to its length. Based upon a Reliability Study and RG&E’s grid upgrade efforts, the need for the continued service of the facility could cease nearly a year before the original term of the RSSA expired, staff noted.
The two-year term is designed to address the immediate reliability need, terminating at the initiation of an RG&E transmission system reliability project known as the Ginna Retirement Transmission Alternative (GRTA). However, to address the possibility that a reliability need might continue past the expiration of the RSSA’s two-year term, the amended RSSA sets forth a process for determining if an alternative beyond the two years is necessary, and the terms under which such alternative would be implemented.
Exelon is hoping that power market prices rebound in the next couple of years, allowing the Ginna plant to continue operating beyond the end of the RSSA.