A new pricing plan that could up Hudson Valley electric bills by as much as 13 percent is heading to federal court, with opponents trying to zap out the plan altogether.
Under a new electric capacity zone that went into effect May 1, energy bills in the lower part of the state are expected to increase by roughly 6 percent for residential customers and 10 percent for industrial ratepayers.
The New York State Public Service Commission, which regulates utilities in the state, and Dutchess County-based Central Hudson Gas & Electric Corp. filed suit against the Federal Energy Regulatory Commission to delay, modify or cancel the zone altogether.
PSC Chairwoman Audrey Zibelman said the zones violated the Federal Power Act, which dictates that wholesale energy prices be “just and reasonable.”
“We have taken this unusual action of going to court because the FERC is taking an action that will result in consumers being financially harmed without any real remedy,” she said.
The capacity zone is a special-pricing plan proposed by the New York Independent System Operator, which said allowing power-generating companies to charge more to distributors like Con Edison during peak usage periods would eventually push those companies to build power plants and infrastructure in the region.
Central Hudson and other critics of the zone have said there are no guarantees the zones will spur generator development in the area and even if successful will cause a short-term burden of as much as $280 million in new costs over the next year alone. The company and others say a better solution is investing in transmitter technology that would help better distribute surplus energy from upstate down to higher-demand regions in New York City and the downstate region.
There is an existing “bottleneck” in the Albany region, opponents say, that prevents the ample generators upstate from adequately siphoning electricity to the usage-intense downstate area, particularly during high-need times such as the hottest days of summer.
During the FERC hearing period, PSC and Central Hudson each petitioned for a phase-in period that would spread out the impact of any rate increases over several years. The FERC denied those requests and the petitioning entities appealed ”“ but the federal agency hasn”™t ruled on the appeal while auctions that will determine future rates are expected next month. In the lawsuits filed, opponents of the zone call for a stay on auctions.
James P. Laurito, president of Central Hudson, said in a statement that the company was forced to pursue legal action May 12 when its previous petitions to the FERC to rehear the rulings on the new zone went unanswered.
“We believe the new capacity zone will not address the energy issues we face in lower New York state, and in fact has already caused irreparable harm by costing our customers millions of dollars,” he said.
The new capacity zone is the fourth in the state, according to the PSC. The new zone affects ratepayers that are customers of Central Hudson, Con Edison in Westchester, Goshen-based NYSEG Corp. and the Orange and Rockland power company.
The capacity zone has gone into effect after a rough winter, when high demand and a spike in the cost of natural gas caused electricity bill increases of 44 percent to as much as 130 percent, according to PSC figures.
The PSC anticipates higher-than-normal prices for consumers this summer regardless of the burden of the new capacity zone, with the futures market for electricity showing a 20 percent hike over last year”™s June through September costs, the commission said.
The U.S. Court of Appeals for the Second Circuit has responded to the suits by setting a schedule for the FERC to reply later this month. The court will then hear motions and petitions June 3 at the Thurgood Marshall U.S. Courthouse in Manhattan.
