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Feds won’t consider tweaks to electricity pricing zone

By: Jessica DiNapoli |

On Tuesday, the Federal Energy Regulatory Commission denied requests to fully reconsider a new electricity pricing zone that went into effect this month and will hit utility bills in June.

FERC said it would not reconsider tweaks to the zone, such as a multi-year phase-in, because there has been public notice about the zone since at least 2006.

“The reality is that, in the short run, consumers may pay more,” a necessary step to entice developers into building power plants in the lower Hudson Valley, FERC states. The zone specifically bumps up prices for capacity, or the availability of electricity, to attract new generation to the region. The capacity hikes translate into increases of 5 to 6 percent for residential electricity bills.

The new power plants the zone is supposed to bring to the Hudson Valley will make up for an energy shortfall south of Albany. Despite the shortfall, FERC states that consumers “fortunately” have not yet seen their energy needs unmet.

Cheryl LaFleur, acting chairman of FERC, said in a prepared statement that the decision to deny rehearing on the capacity zone was a “difficult one,” but that the zone is “essential to ensuring current and future reliability in the lower Hudson Valley.”

Fighting the capacity zone

In defending its decision, FERC also points out that transmission between upstate New York and the lower Hudson Valley has been overloaded since 2008. It acknowledges transmission projects the state Public Service Commission is reviewing as part of the Energy Highway Initiative, but says there is “no assurance” any will be completed in a certain time frame.

The PSC said in a statement that it will continue to fight the capacity zone: “FERC is ignoring consumer impacts, and its decision is an unnecessary transfer of wealth from consumers who are already reeling from last (winter’s) price increases.”

Central Hudson Gas & Electric and the PSC filed lawsuits over the pricing zone this month with the U.S. Court of Appeals in New York City. Tuesday was the deadline for FERC to respond to the lawsuits.

On June 3, a judge will hear arguments on another issue in the lawsuits, a request to temporarily halt auctions for capacity under the new higher prices. FERC states in another filing that a temporary halt would have the same effect as a phase-in, which it does not support, and asks a judge to reject that request.