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New energy zone won’t be halted, but court battle rages on

By: Mark Lungariello |

A federal appeals court refused to delay the rollout of a new pricing plan expected to increase Hudson Valley electric bills by as much as 14 percent. Despite the decision, opponents are holding out hope they can convince the court to ultimately dismantle the plan.

A U.S Court of Appeals panel ruled Wednesday that it wouldn’t grant a stay of a regional electric capacity zone that went into effect May 1. Under the zone, power-generating companies such as Entergy Corp., the owner of Indian Point, can charge more to distributors within the zone like Con Edison. By compelling local utilities to purchase energy from suppliers within the zone, the Federal Energy Regulatory Commission, or FERC, is hoping to spur construction of new power plants in the region.

The appeals court’s decision not to grant a temporary stay on the implementation of the plan is not directly related to the merits of the case seeking to permanently stop the zone.

Rep. Sean Patrick Maloney, a Putnam County Democrat, called the FERC capacity zone a “reckless decision.”

“Every step of the way, I’ve been shocked by these Washington bureaucrats’ complete and utter disregard for hardworking families and businesses in the Hudson Valley – FERC’s plan to raise rates defies all common sense,” he said.

Central Hudson Gas & Electric Corp. and New York’s Public Service Commission, which regulates utilities in the state, launched the court action against the capacity zone. PSC Chairwoman Audrey Zibelman said although the plan looked to spur long-term infrastructure investment, “in the short term, this is beneficial only to existing generators in the region at the expense of consumers who pay while receiving no benefit.”

There are widely-varying estimates on how much the capacity zone will affect local electricity bills, depending on the area and the power distribution company. Most estimates say residential bills will increase by 6 percent and industrial rates will increase by 10 percent, but the PSC and others estimates some bills can increase by as much as 14 percent or more.

Orange County Executive Steve Neuhaus said the increase would burden residents who are already facing financial burdens as a result of the economic downturn of recent years.

“Simply stated, Orange County is Main Street and not Wall Street,” he said. “Our residents have not enjoyed a positive financial change over the past seven years.”

Critics have said a better option than the zone plan would be to improve transmitter technology to better distribute surplus energy from upstate suppliers to higher-demand regions downstate.

James P. Laurito, president of Central Hudson, said in a statement, “We believe the new capacity zone will not address the energy issues we face in lower New York state and in fact has already caused irreparable harm by costing our customers millions of dollars.”

The capacity zone also works against recent initiatives in the state to develop better wind and solar technology to generate electricity, according to opponents.

Dutchess and Orange counties have filed affidavits in support of the legal effort to stop or alter the capacity zone, which was initially proposed by the New York Independent System Operator. Orange County in a news release said it expected residents in that county would be paying an additional $10 per electricity bill due to the capacity zone.

The PSC said that even without the impact of the capacity zone, the futures market for electricity anticipates a 20 percent increase over last year’s June-through-September rates.

The new capacity zone is the fourth in the state. It affects ratepayers that are customers of Central Hudson, Con Edison, Goshen-based New York State Electric & Gas Corp. and the Orange and Rockland power company.