Utilities in appeals court over electric capacity zone
State utilities have taken to a federal appeals court to repeal an “electric capacity zone” designation that sent Hudson Valley electricity bills soaring starting in the spring.
The zone went into effect May 1 after a vote from the Federal Energy Regulatory Commission, despite opposition from elected officials, local municipalities and the state”™s utilities regulator, the Public Service Commission, or PSC.
Three electricity providers in the region said the capacity zone translates to a 6 percent increase for residential electric bills and 10 percent for industrial bills. Those companies provided oral arguments Sept. 12 to the federal appeals court in New York City, asking for a termination of the zone and compensation for customers paying the higher electric rates.
“We oppose FERC”™s implementation of the new capacity zone because it increases electricity costs for our customers without a corresponding benefit,” James P. Laurito, president of Central Hudson Gas & Electric Corp., said. Dutchess County-based Central Hudson was joined in its legal action with New York State Electric & Gas Corp. and Rochester Gas & Electric Corp., which are Iberdrola USA subsidiaries. The state PSC and New York Power Authority appeared in court along with the utilities.
The Hudson Valley capacity zone, stretching from New York City through the lower part of the state, is a special pricing plan first proposed by the New York Independent System Operator. It allows power-generating companies such as Entergy Corp., the owner of Indian Point Energy Center in Buchanan, to charge more to distributors like Consolidated Edison Inc. and Central Hudson during peak usage periods. The hope is that the increased-pricing periods would eventually push companies to build power plants and infrastructure in the region.
The zone was proposed due to the inequity between energy generation and energy consumption that is straining the grid during high-usage periods. The downstate region consumes most of the energy in the state, but there is a limited and declining amount of power producers in the area.
The utilities said energy prices have increased $80 million in the Hudson Valley since the zone went into effect ”“ most of which was paid by ratepayers and not the companies.
Mark S. Lynch, president and CEO of both Iberdrola USA subsidiaries, said, “We believe the new capacity zone will not address the energy issues we face in lower New York state, and in fact already has caused irreparable harm by costing our customers millions of dollars needlessly.”
Critics of the zone have said repairing an infrastructure bottleneck near Albany and updating transmission equipment in the Hudson Valley would be better alternatives.
U.S. Rep. Sean Patrick Maloney, a Putnam County Democrat, co-sponsored a capacity zone repeal bill with Columbia County Republican Rep. Chris Gibson that passed the House but hasn”™t come to vote in the Senate. Sen. Charles Schumer, a Democrat, has been an outspoken critic of the zone and is expected to sponsor the bill in that chamber, though the Senate may not take up the bill or a similar proposal until later in the fall. If approved, the bill would then need to be signed into law by President Barack Obama.
Maloney said he sent a letter to the court asking for reimbursement for the increased rates.
“With freezing temperatures soon coming to the Hudson Valley, I firmly believe our constituents should not have to pay a penny more than they need to during these harsh winter months,” he wrote.
The Hudson Valley capacity zone is one of four in the state. It affects some, but not all, customers of Central Hudson, Con Edison, NYSEG and the Orange and Rockland power company.