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Hudson Valley News

FERC Denies Rehearing On Capacity Zone Request


The Federal Energy Regulatory Commission issued an order relating to a newly-implemented energy capacity zone that is already raising electric rates.  The order came one week before a scheduled day in court.

The Federal Energy Regulatory Commission issued an order May 27 denying a rehearing to phase in a new capacity zone. The order came after Poughkeepsie-based Central Hudson and the New York State Public Service Commission sued FERC. In their filings with the U.S. Court of Appeals for the Second Circuit, they say FERC failed to conclude their appeal matter on the rehearing within a reasonable amount of time --the new capacity zone having been implemented May 1.

The Court panel June 3 is slated to hear arguments on Central Hudson’s and the PSC’s motion to stay or cancel further auctions under the new capacity zone. Democratic Congressman Sean Patrick Maloney says the FERC order on the rehearing is another step in the process.

“It’s an important step because we wanted to smoke out the agency which could be hiding behind their failure to make a final decision,” says Maloney.

FERC Acting Chairman Cheryl LaFleur issued a statement saying, quote, "The decision to deny rehearing in the New York capacity zone cases was a difficult one.” LaFleur said FERC had carefully considered all arguments and concerns, but that it ultimately decided by unanimous vote to implement the new zone. The new zone, the LaFleur’s statement said, “is essential to ensuring current and future reliability in the Lower Hudson Valley.” Again, Maloney.

“This fight if far from over,” Maloney says. “It may be an uphill fight but we’re going to stick at it. And I’ll tell you what, we are not done, working with other members of Congress on other avenues to attack this thing.”

Earlier this year, Maloney sponsored legislation that would prohibit FERC from approving a new capacity zone that would raise rates for consumers. Republican Congressman Chris Gibson is a co-sponsor. In a statement, Gibson says the heads of FERC are apparently unwilling to listen to the people they work for. He adds that FERC is given the responsibility to weigh the costs and potential benefits and, in this case, the commission’s decision to ignore the concerns of ratepayers and their elected representatives shows flawed judgment and a broken process in need of reform. Maloney talks about one avenue they’re considering.

“FERC only exists because the Congress appropriates its funds,” Maloney says. “And we are going to go through an appropriations process here very shortly where we can make clear how we feel about the actions of this unaccountable federal entity.”

In its order, FERC writes that there is no simple solution to address the problems caused by the constraint between upstate New York and the Lower Hudson Valley, and the reality is that, in the short run, consumers may pay more. FERC maintains that doing so is necessary to provide the appropriate price signals to incentivize developers to build or restore capacity. FERC adds that it hopes to emphasize that decision-making based only on avoiding price increases in the short term could threaten reliability and price stability in the long term.

Again, Maloney.

“I think it’s very important that we continue to send a message in a bipartisan way at all levels of government, local and federal, that this is wrong. It is a solution in search of a problem. It is a Washington bureaucrat looking at numbers on a page who knows nothing about what’s going on in the Hudson Valley,” Maloney says. “There needs to be more local input. This thing should stop in its tracks and we should take a hard look at the other alternatives that are out there to avoid this step which is going to hurt regular families in the Hudson Valley.”

FERC, in its order, notes that Helios Power Capital is seeking permission to restore to operational status the Danskammer generating plant in Newburgh due to the creation of the new capacity zone.

In a statement responding to FERC’s order, a PSC spokesman says the PSC is pressing on with the courts, and will continue to pressure FERC to work with, not against, the state and its consumers. The PSC statement also says the PSC is disappointed and frustrated because FERC has been dismissive of the PSC’s ongoing proceedings regarding proposed projects to develop at least 1,000 megawatts of new transmission capacity.

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