Post-hearing briefs were filed Dec. 18 at the New York State Public Service Commission in a case where the commission is looking at whether to approve a grid reliability deal that would keep the 581-MW R.E. Ginna nuclear plant in operation for the time being.
Ginna Nuclear Power Plant LLC filed a brief in support of a joint proposal and accompanying amended reliability support services agreement (the called “Settlement RSSA”) filed by Rochester Gas and Electric (RG&E) with the commission in this proceeding concerning Ginna’s nuclear facility, which is located in RG&E’s service territory. The Ginna company last year opened this proceeding by saying that its plant was not economic to operate in the current, low-priced power market, and that it would have to be shut without outside help to keep it going.
The Joint Proposal is the negotiated product of the commission’s prior order determining that: the Ginna Facility is “needed for system reliability purposes”; Ginna’s notice of retirement was “satisfactory because it serves the purposes of the [Commission’s] generation retirement requirements and policies,”; Ginna “justified [the Commission] directing RG&E to commence negotiations” for a reliability support services agreement; and an RSSA is in the public interest.
Said Ginna Nuclear in its Dec. 18 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 necessary reliability support services to RG&E 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 is a fair settlement of the issues in this proceeding, satisfies the Commission’s Procedural Guidelines for Settlement (the “Settlement Guidelines”), and is in the public interest. Accordingly, Ginna respectfully requests that the Commission adopt the Joint Proposal in its entirety without modification or conditions.”
Ginna is a 581-MW, single-unit pressurized water reactor located in Ontario County, New York. Prior to expiration on June 30, 2014, the Ginna Facility operated under a purchase power agreement with RG&E for a majority of its energy and capacity. Upon expiration, the Ginna Facility became a fully-merchant generator in the wholesale markets.
Ginna Nuclear pointed out that under the Joint Proposal and at the request of multiple signatory parties, the term of the Settlement RSSA has been significantly reduced from the Initial RSSA. In a 2014 Reliability Study, the New York ISO determined that the Ginna Facility would need to remain in operation through at least Oct. 1, 2018, to maintain electric system reliability.For this reason, the term in the Initial RSSA ran from April 1, 2015, through Sept. 30, 2018. However, the term in the Settlement RSSA runs from April 1, 2015, through March 31, 2017, a reduction of 18 months. The term is now limited to the minimum amount of time necessary for RG&E to complete compensating transmission system upgrades.
Ginna Nuclear says this deal helps with governor’s goal to preserve nuclear
Ginna Nuclear pointed out that on Dec. 2, New York Gov. Andrew Cuomo directed the Department of Public Service (DPS) to design and enact a Clean Energy Standard mandating that 50% of all electricity consumed in New York by 2030 result from clean and renewable energy sources. As part of initiating this new program, the governor further directed the DPS to develop a process to “prevent the premature retirement of safe, upstate nuclear power plants” during the state’s energy system transition envisioned by the Reforming the Energy Vision and related proceedings. Specifically, the Governor stated that, “[a]s New York State continues to aggressively add new renewable resources, it cannot lose ground in the fight to reduce carbon pollution through the unnecessary retirement of safely operating nuclear power plants in Upstate New York.”
The Joint Proposal and Settlement RSSA are also consistent with the state’s social goals, Ginna Nuclear said. The Ginna Facility currently employs approximately 600 people during normal operations and an additional 800-1,000 people during refueling outages. Further, the Ginna Facility is the largest taxpayer in Wayne County, contributing more than $10 million in state and local property taxes in 2012. During the Settlement RSSA’s term, these significant social benefits will be preserved.
RG&E said in its own Dec. 18 brief: “The record demonstrates unequivocally that the Joint Proposal benefits customers in numerous ways that would not have been possible in a litigated proceeding; that the Joint Proposal strikes a fair balance between the interests of RG&E’s customers, the Company and other Signatory Parties; and that the Joint Proposal is in the public interest.
The Alliance for a Green Economy (AGREE) and Citizens’ Environmental Coalition (CEC), which are non-profit organizations intervening in this case from a public interest, environmental, and consumer perspective, said in their own Dec. 18 brief that they support part of the Joint Proposal, and oppose part of it.
“AGREE and CEC support certain terms of the Joint Proposal, not because we think these terms represent the best public interest outcome in this case, but because these terms significantly improve upon the originally proposed Reliability Support Service Agreement (‘RSSA’) proposed by RG&E and Ginna,” they wrote. “The terms we support include the 1.5-year reduction in the duration of the RSSA, the use of customer credits to offset bill impacts of the RSSA, and the reporting required of RG&E to keep parties and the Commission abreast of progress on the Ginna Retirement Transmission Alternative (‘GRTA’).
“That said, the Joint Proposal needs to be improved further before it should be accepted by the Commission. From our consumer and environmental interest vantage point, the Joint Proposal does not meet the Commission’s settlement guidelines. Those guidelines state that the Commission will consider whether (a) the settlement’s consistency with law and with the regulatory, economic, social, and environmental policies of the Commission and the State; (b) whether the result compares favorably with the likely result of full litigation and is within the range of reasonable outcomes; (c) whether the settlement strikes a fair balance among the interests of ratepayers and investors and the long-term soundness of the utility; (d) the existence of a rational basis for decision; (e) the completeness of the record; and (f) whether the settlement is contested. Specifically, the settlement is not fully consistent with the environmental policies of the Commission and the state, it does not strike a fair balance among the interests of ratepayers, investors and the utility, and it is contested.
“Further, this case has illuminated some potential serious shortfalls in New York’s energy planning process and utility regulations. Though Ginna filed its potential retirement notice in July 2014, it was known well in advance by anyone following the industry that Ginna’s financial situation was declining. Financial analysts began predicting Ginna’s early retirement in January 2013 and those predictions were covered in the trade press. Yet, no one within the utility or at any state agency seems to have been proactively planning for this eventuality. It is clear that state agencies and the utility did not prepare for Ginna’s retirement. RG&E customers can count themselves lucky that RG&E had a hoard of rate credits with which to offset the bill impacts of the RSSA. Otherwise, the bill impacts would have been severe for all classes, causing misery for low-income consumers, financial shortfalls for cash-strapped municipalities and school districts, and putting the economic squeeze on businesses small and large.
“We hope that as a result of this case the Commission will discuss how to avoid these impacts in the future. As New York’s energy system shifts and flexible, distributed, renewable resources are valued, many of New York’s legacy power plants will become uneconomical and head toward retirement. In order to preserve reliability as well as just and reasonable rates, it is essential that the Commission put new policies and plans into place to manage this transition.”
Ginna Nuclear is controlled by Exelon (NYSE: EXC). Notable is that operators returned R.E. Ginna to full power on Nov. 9 after successfully completing a refueling outage that began on Oct. 19. Ginna executes outages every 18-months to refuel the reactor and perform maintenance activities. So the plant is ready on that level to run at least another 18 months.