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Increased electricity prices begin in 10 days

By: Craig Wolf |

Ten days from now, another increase in electricity prices will begin to flow into your future power bills, unless pleadings in Washington, D.C., can pull back this plan.

It’s not the utility company that’s doing it. Rather, it’s the New York Independent System Operator, or NYISO, the entity that runs the grid, and the Federal Energy Regulatory Commission, or FERC, the agency that oversees U.S. energy practices.

It will mean a rise in prices on top of what’s normal, starting May 1. It won’t show up immediately, but the added charge would eventually impact bills customers receive starting this summer.

“Assuming the new capacity zone is implemented as it now stands, we expect an increase to residential bills of about 6 percent,” said John Maserjian, spokesman for Central Hudson Gas & Electric Corp., which opposes the plan. That boost would be above normal level, “that is, prices before the winter bills we’ve seen this season.” For industrial customers, the increase would be about 10 percent.

Central Hudson has fought against the plan in FERC proceedings, saying it will raise prices in its area and would give an unfair subsidy to certain customers of Consolidated Edison and the Long Island Power Authority. Municipalities, public officials and others have taken positions against it.

The New Paltz Town Board, for one, sent a resolution calling on FERC to indefinitely postpone the plan and let transmission plans achieve the same goals and avoid “unjust and unreasonable electricity rates.”

Julius Jones of Staatsburg said, “I can afford the 6 percent, but I know a number of people who cannot.” He said this year’s very high winter utility bills came as a shock. “My wife got the bill; she flipped out.

Some opponents launched a petition urging a rehearing by FERC of its plans. A spokeswoman for FERC on Friday said its stance is the same: The petition is still pending. They don’t comment on pending matters.

Why do NYISO and FERC want this? It’s one way to get more power into the lower Hudson Valley, including the New York metropolitan area and north through the mid-Hudson. The idea is to make power prices high enough to send a “price signal” that it’s time to build more power plants.

This plan is called the “new capacity zone” because it promotes development of new generating capacity. Analysis by NYISO has led that agency to deem the New York City area in particular and the lower parts of the Hudson Valley in general to be in danger of not having enough power to meet their safe margin standards, particularly when “peaking power” is needed during heavy demand times.

Ken Klapp, a spokesman for NYISO, offered a statement: “The NYISO is committed to working with the state, its regulators and market participants to drive consumer value through a reliable bulk power system and competitive markets that shift generation investment risks away from ratepayers,” he said.

“The NYISO believes its proposed phase-in of the new zone will provide the right investment signal to retain critical existing resources and allow time for the development of new transmission, generation, demand response and energy efficiency resources that would mitigate future cost impacts to consumers, ” Klapp said.

The state Public Service Commission, however, does not like the plan and has pressed against it. The commission has its own plan, which involves getting more power transmission capacity in a north-to-south pattern. It’s working with four transmission builders that have made proposals they’re now taking back to the drawing boards. Central Hudson is part of one of the groups making transmission proposals.

Last week, U.S. Sen. Charles Schumer, D-N.Y., said he was “cautiously optimistic” that the plan could be reversed. He had met with key officials at FERC and NYISO to argue against the new capacity zone. He had separate in-person meetings with Cheryl Lafleur, acting commission chairwoman at FERC, and NYISO Chairman Robert Hiney and Executive Director Steven Whitley.

NYISO spokesman Ken Klapp has pointed to transmission constraints and “significant loss of generation due to retirements or mothballing of generating units” among reasons for the agency’s stance.

Central Hudson says the new owner of the closed Danskammer power plant north of Newburgh, Helios Power Capital, is considering restarting it as a peaking plant that could cut in half the expected price hike from the new capacity zone plan.

“The plant’s availability would reduce the impact of the new capacity zone by up to $100 million for the greater Hudson Valley region; of that, 25 percent would benefit Central Hudson’s service area,” Maserjian said.

The new owners, who bought the bankrupt plant, filed an application April 1 to restart it, claiming it would mainly burn natural gas but also oil or coal. Environmental groups oppose the plan, saying in part coal is a dirty fuel and Danskammer’s history is marked by heavy pollution.

The Independent Power Producers of New York, an industry advocate, opposed the plan, saying that the application seemed to lead to above-market rate service that could harm the power market. The power producers group said if Central Hudson signs a deal with Danskammer owners, it could mean that “Central Hudson’s captive ratepayers will face higher costs over the long run.”

The Public Service Commission has not ruled on Helios’ application.