A coalition of electric utilities filed a lawsuit Wednesday against the New York Public Service Commission in an attempt to reverse approval of Gov. Andrew Cuomo’s Clean Energy Standard, which is projected to pay upstate nuclear power plant operators nearly $8 billion in energy subsidies over the program’s lifetime.
The coalition argues that Cuomo’s zero-emission-credit program unlawfully intrudes on the Federal Energy Regulatory Commission’s authority over New York’s electricity market.
The PSC approved the program in August, with Cuomo pitching it as a safety net for struggling upstate nuclear power plants. At the time, Entergy’s James A. FitzPatrick Nuclear Power Plant and Exelon’s R.E. Ginna Nuclear Power Plant and Nine Mile Point Nuclear Station were either scheduled or expected to close. Entergy has since reached a $110 million agreement to sell FitzPatrick to fellow power provider Exelon, which would own all upstate nuclear plants and stand to reap billions in energy subsidies.
“Unless enjoined or eliminated, these credits will result in New York’s captive ratepayers paying the owners an estimated $7.6 billion over twelve years to the owners of these plants,” states the lawsuit, filed in U.S. District Court in New York City. “Indeed, it appears that 100% of the ratepayer subsidies will go to a single company, which will own all of the subsidized plants.”
The Coalition for Competitive Electricity, Dynegy, Eastern Generation LLC, the Electric Power Supply Association, NRG Energy, Roseton Generating, and Selkirk Cogen Partners have signed onto the lawsuit.
The groups argue that the program’s impact on the three nuclear plants has prevented New York’s energy market from reaching “efficient market equilibrium” that FERC-approved wholesale prices would have otherwise produced.
The Public Service Commission in a statement Friday pointed to findings that the financial impact is projected to be less than $2 per month for a typical residential customer, and “the cost of the program may be far less than some are forecasting.”
“The frivolous lawsuit is right out of fossil fuel industry’s playbook to deny and thwart actions to combat climate change,” commission Chairwoman Audrey Zibelman said in the statement. “The Supreme Court has repeatedly upheld the rights of states to protect their environment for the welfare to citizens. This challenge to New York’s authority is a challenge to the 29 states that have taken similar actions to encourage renewable energy development.”
Exelon, Entergy Ask FERC to Deny Public Citizen Protest
FERC should reject a recent protest against Entergy’s application to sell the FitzPatrick plant to Exelon and approve the deal, the two companies argued in a separate filing with the commission Wednesday.
Consumer rights group Public Citizen last week asked FERC to reject the application on the grounds that the utilities failed to address the impact the $110 million deal would have on New York state’s power market. Public Citizen objected to the zero-emission-credit (ZEC) program’s passage in August.
Exelon and Entergy argued Wednesday that Public Citizen’s protest is outside the scope of the commission’s application review.
“Public Citizen’s assertions regarding the potential impact of the ZEC on (the New York Independent System Operator’s) energy and capacity markets are at best speculative and not supported by evidence,” the utilities argued in their filing. “Public Citizen will not be deprived of the opportunity to address issues with the ZEC program in other proceedings or forums if the Commission, consistent with its precedents, denies the Protest here.”
The companies also requested that FERC authorize the transaction “as consistent with public interest” before Nov. 17.
Public Citizen, in its own response filed Thursday, disagreed that the original challenge is outside the scope of the FERC review.
“The Commission must consider the proposed transaction’s impact on competition and rates, and the Applicants have stated plainly in other contexts that the ZEC is so economically significant that Exelon would have no interest in the proposed transaction without it,” the response reads. “They offer no basis for the puzzling claim that a colossal government subsidy, which they admit is critical to the proposed transaction, has no relevance to a market analysis of the deal. The Application’s failure to include an analysis of the ZEC’s impact on competition and rates renders it deficient and incomplete.”
Public Citizen has questioned whether Cuomo’s zero-emission credits violate FERC rules, while also demanding that Entergy and Exelon redo their market power analysis and resubmit results to FERC. The consumer rights group argued that the ZEC program will “significantly distort” the New York Independent System Operator Inc.’s energy and capacity markets, or may conflict with elements of the NYISO tariff.
Exelon and Entergy argued that when determining whether a transaction is consistent with the public interest, FERC considers the effect on competition, rates, and regulation. FERC routinely dismisses issues raised outside that scope, the companies said.
“The issues raised in the Protest about the ZEC program bear no relationship to these factors as they relate to the proposed Transaction, and no separate analysis of the ZEC is necessary, much less required, under the Commission’s regulations and precedent,” the Exelon-Entergy filing reads.
The Nuclear Regulatory Commission accepted Entergy and Exelon’s joint transfer application for the plant earlier this month, allowing NRC staff to move forward with its own review. The transaction was originally expected to close in the second quarter of 2017.
Surrounding Jurisdictions Support FitzPatrick Sale
Various government bodies and groups in upstate New York are voicing support for the FitzPatrick sale.
The Oswego County Legislature, the city of Oswego, the town of Scriba, and the Oswego County Industrial Development Agency have all recently filed letters of support with the Nuclear Regulatory Commission, following the federal challenge last week from Public Citizen. The Oswego County Legislature described FitzPatrick as “an irreplaceable and significant economic driver in the region,” citing the plant’s 600 jobs and 838 megawatts of electricity production. Scriba officials cited $500 million in annual regional economic activity, $74 million in payroll, over $17 million in real property taxes to local municipalities, and a school district that derives 25 percent of its budget from plant taxes.
“The tax base supported by this facility is of nearly immeasurable benefit to the city, the county, the state, and, indeed, the nation,” city of Oswego officials wrote in a Monday letter to the NRC. “It cannot be underscored enough what the continued operation of JAF means for all of the constituents of the city of Oswego that derive a benefit from continued employment, or the support services that have multiplied as a result of this business and its 615 employees, of the many millions of dollars in tax payments made to local governments and school districts.”
The city added that Oswego is in the middle of a revitalization effort that has not been seen “in decades, probably since the early years during the construction of our three local nuclear plants.” The city will take a major step back without continued operation at FitzPatrick, according to its letter.
