The federal regulator that approved a special pricing plan that sent Hudson Valley electric rates soaring in the spring has shown a “disdain for transparency and open government,” according to Dutchess County Executive Marcus J. Molinaro.
The Federal Energy Regulatory Commission, or FERC, approved a Hudson Valley “electric capacity zone” that went into effect May 1, despite opposition from elected officials, local municipalities and the state”™s own utilities regulator, the Public Service Commission. Electricity providers in the region said the zone translates to a 6 percent increase on residential bills and a 10 percent increase on industrial bills.
“As I have stated previously, I have never interacted with a less accessible, less accountable government entity, seemingly impervious to legislative and public scrutiny,” Molinaro, a Republican, said.
FERC will now have to give quarterly reports on the capacity zone that will include analyses of the effect on ratepayers. The new requirement was baked into the “cromnibus” $1.1 trillion federal spending bill that controversially passed through both houses of Congress last week.
Sen. Charles Schumer, a Democrat, announced the new provisions in a news release Monday. “We cannot let FERC make unilateral decisions that result in unwarranted rate hikes for already hard-hit Hudson Valley ratepayers,” he said.
The pushback against the zone has been led in the House by Rep. Chris Gibson, a Columbia County Republican, and Rep. Sean Patrick Maloney, a Putnam County Democrat, both of whom have sought to have the zone repealed altogether.
Maloney said, “Finally getting some accountability from FERC is an encouraging first step, but make no mistake, this fight continues.” Three state utilities are looking to eliminate the zone and reimburse customers for higher rates, but a federal appeals court has yet to make a decision.
The capacity zone was first proposed in 2011 by the New York Independent System Operator, which suggested designating a zone that makes energy produced in the lower part of the state more valuable as part of an effort to spur construction of new facilities in southeastern New York, which consumes a majority of the state”™s energy.
Dutchess-based Central Hudson Gas & Electric Corp. and Iberdrola USA subsidiaries New York State Electric & Gas Corp. and Rochester Gas & Electric Corp. said in court filings that the zone cost an additional $80 million in its first five months, most of which was paid by consumers and not the electric companies.
The System Operator, though, said the zone has been successful early on in encouraging investment into infrastructure. It had previously predicted that the state”™s electric system would not be able to meet demands by 2019, but it noted this month an improvement in the reliability of the grid.
Newburgh”™s Danskammer station was scheduled to close, but after the new zone went into effect the new owner of the facility, Danskammer Energy LLC, announced it would refurbish the building and return it to service. Several other companies are planning to return generating stations to service in the region.
Arthur “Jerry” Kremer is the chairman of New York Affordable Reliability Electricity Alliance, an industry advocacy group representing more than 150 businesses.
He said it was clear the reliability of the grid was improving as a result of the Hudson Valley zone attracting new sources of power. “At his time of the year when there is frigid cold and storms we are reminded that keeping the lights and power on is not just a matter of convenience but public safety,” he said.
The Hudson Valley capacity zone is one of four in the state. It affects some, but not all, customers of Central Hudson, Consolidated Edison, NYSEG and the Orange and Rockland power company.
