New York seeks delay of costly FERC power capacity zone decision

Thu Sep 26, 2013 12:23pm EDT
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Sept 26 (Reuters) - New York utility regulators and some of the state's power companies asked federal energy regulators to reverse a recent decision that the New York parties say could increase electric bills in the Lower Hudson Valley by $350 million a year.

The New York State Public Service Commission (PSC) and the state-owned New York Power Authority (NYPA) said in a press release on Wednesday that the proposed new capacity zone in the Lower Hudson Valley could result in the construction of unnecessary new power projects.

The PSC, NYPA and other New York utilities asked the U.S. Federal Energy Regulatory Commission (FERC) to reconsider its August decision allowing the state's power grid operator, the New York Independent System Operator (NYISO), to create a new capacity zone in the Lower Hudson Valley that includes New York City.

The NYISO has said it designed the new capacity zone to maintain system reliability and attract investments in new and existing generation and demand response resources.

In basic terms, capacity markets pay generators to help keep existing power plants in service and build new units in order to maintain system reliability. Demand response providers who agree to reduce power usage when needed can also participate in capacity markets.

The new zone will include the current NYISO zones G, H and I in the Lower Hudson Valley and zone J in New York City.

The PSC and NYPA said the state is already working on New York Governor Andrew Cuomo's so-called Energy Highway initiative to expand the state's transmission resources to bring more power from upstate New York to the Lower Hudson Valley and New York City area.

The PSC and NYPA said the Energy Highway could negate the need for FERC to offer financial incentives to build more power plants downstate.

"We strongly urged FERC to reconsider its decision to create a new capacity zone in New York, which it says is needed to build more power plants downstate to alleviate demand for electricity," PSC Chairwoman Audrey Zibelman said in the release.   Continued...