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FERC critics: No deference needed in power case

By: Craig Wolf |

It’s a battle over power.

In the latest shots in court, utility companies and state agencies say that the federal authority that raised Hudson Valley electricity prices failed to follow its own standards and focused on the wrong factors rather than on consumers.

Titans of the electrical world are contesting whose plan will prevail in an effort to pull bulk power prices down in the mid- and lower Hudson Valley region.

The case is in the U.S. Court of Appeals, where the local utilities and the state’s Public Service Commission argue that transmission improvements are the best way. The Federal Energy Regulatory Commission argues that its imposition of a “new capacity zone” is best. Even though it adds to the costs in the short run, it will incentivize generators to build more capacity that will reduce prices in the long run, FERC holds.

FERC’s zone boosts consumer prices by about 6 percent for residential and 10 percent for industrial, Central Hudson Gas & Electric Corp. figures.

The case was started by Central Hudson, joined by New York State Electric & Gas Corp., Rochester Gas & Electric Corp. and the New York Power Authority. The state’s Public Service Commission filed a separate brief on the same side.

Both are involved in trying to upgrade big power lines to bring more electricity into the region. FERC and its allies are trying to solve the issue by getting more generation built in the region.

The latest “reply briefs” answer FERC’s arguments filed earlier. Next comes oral arguments before a three-judge panel in Manhattan on Sept. 12.

FERC has argued that courts should defer to it on technical details and judgments, a common defense when someone takes a federal agency to court. It said the zone is actually working, citing plans by new owners of the shuttered Danskammer plant in Newburgh to restart it.

FERC imposed the zone on advice from the New York Independent System Operator. Joining its side are generators, including Entergy Nuclear Power Marketing, several other generating companies and their trade group, the Independent Power Producers of New York.

Central Hudson and its allies argue that the court “owes FERC no deference” when FERC “failed to apply its own standard to consider the evidence and arguments showing that NYISO overstated the need for capacity in the new zone.”

They say no deference is needed when FERC “failed to explain” how its zone can send incentive price signals “when the transmission constraint that justified the zone is eliminated.”

Central Hudson criticized FERC for touting system reliability “when FERC, by its own admission, refused to allow reliability to be a standard for determining whether a new zone was needed.” It adds, “FERC made no effort to assess whether NYISO’s plan for the lower Hudson Valley zone will produce capacity prices that are just and reasonable – meaning that the right customers are charged appropriate prices for the service.”

Central Hudson says FERC refused to set rules for sunset of the zone. And, it offered evidence that its proposed deal with Danskammer is priced “far less” than prices set in the new zone, thus refuting FERC’s claim that Danskammer shows the zone works.

Dutchess County Executive Marc Molinaro wrote to FERC saying that despite widespread local opposition, including that of two Congress members, the agency has shown “total disregard.”

Dutchess ratepayers must fork over an added $13.5 million yearly “with no corresponding benefit,” he said.