Central Hudson Gas & Electric and Iberdrola USA subsidiaries New York State Electric & Gas and Rochester Gas and Electric provided oral argument Sept. 12 in the U.S. Second Circuit Court of Appeals over the Federal Energy Regulatory Commission's decision to assess "unnecessarily high prices" in a new capacity zone in the lower Hudson Valley.
Also joining the three utilities in the oral argument were the New York Power Authority and New York State Public Service Commission.
"We oppose FERC's implementation of the new capacity zone because it increases electricity costs for our customers without a corresponding benefit," James Laurito, President of Central Hudson, in a Sept. 12 statement. "We believe electric transmission development is a far better solution, as this will alleviate power concerns without the high cost of a new capacity zone."
In their argument, the three utilities urged the court to order FERC to revisit and revise its decisions relating to pricing in the new capacity zone, termination of the new capacity zone and to compensate customers for the higher resulting electric supply costs.
The utilities estimate that the new capacity zone will increase residential bills by nearly 6% and industrial customer bills by up to 10% while providing no customer benefits, and requested that FERC allow time for the transmission solutions to take place.
"We believe the new capacity zone will not address the energy issues we face in lower New York State, and in fact already has caused irreparable harm by costing our customers millions of dollars needlessly," said Mark Lynch, president and CEO of NYSEG and RG&E.
Capacity charges are required to ensure generators are available in the event of unforeseen circumstances, for example sudden increases in demand, and the new capacity zone changes the way utilities in lower New York must purchase capacity. The three utilities estimate capacity prices in the lower Hudson Valley have increased by approximately $80m since the new capacity zone was implemented on May 1, 2014 - with their customers paying the brunt of it.
Central Hudson Gas & Electric, a subsidiary of Fortis Inc., is a regulated transmission and distribution utility serving approximately 378,000 customers in eight counties of New York State's Mid-Hudson River Valley, and delivering natural gas and electricity in a 2,600-square-mile service territory that extends north from the suburbs of metropolitan New York City to the Capital District at Albany.
Iberdrola USA is the U.S. subsidiary of global energy leader Iberdrola S.A. The Iberdrola USA companies employ about 5,000 people with operations in 24 states from New England to the West Coast, providing electricity generation, transmission and distribution, natural gas storage and distribution, and energy services.
This article was republished with permission from GenerationHub.