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FOR IMMEDIATE RELEASE: November 7, 2013

SCHUMER: FERC PLAN FOR REZONING HUDSON VALLEY POWER GRID WOULD UNFAIRLY HIKE RATES BEFORE IN- PROGRESS TRANSMISSION UPGRADES ARE FINISHED – SENATOR URGES FERC TO DELAY NEW ZONE AND RESULTING RATE HIKES UNTIL THREE ENERGY HIGHWAY INITIATIVES ARE COMPLETED


NYS “Energy Highway” Initiatives, Due For Completion In 2016, May Alleviate Power Constraints on Hudson Valley– Schumer joins PSC and Others to Urge Fed. Energy Regulation Commission to Delay New ‘Capacity Zone’ until Upgrades Can Be Quantified and Assessed

FERC’s Proposed New Zone Would Raise Prices Between 6 and 15% for Ratepayers in the Hudson Valley, Cost Over $350 Million Annually

Schumer to FERC: Changing the Power Grid Now is Jumping the Gun – Wait for Transmission Upgrades to Be Completed Before Making Any Zoning Changes

Today, U.S. Senator Charles E. Schumer urged the Federal Energy Regulatory Commission (FERC) to delay their order to implement a new capacity zone that covers a significant portion of the Hudson Valley power grid – a move which could result in a rate increase of between 6 and 15 percent for Hudson Valley ratepayers, or over $350 million annually – until they can assess the impact of in-progress transmission upgrades.  FERC and the New York State Independent System Operator (NYSIO), which operates the state power grid, have proposed a new capacity zone in the grid which includes Orange, Ulster, Rockland, and Sullivan Counties in an attempt to alleviate power constraints in the area by increasing prices to attract new power generation capacity. 

 

Schumer today joined the NYS Public Service Commission (PSC) and the New York Power Authority (NYPA), among others, to call for a delay in the new zone until transmission upgrades recently approved as part of New York State’s Energy Highway Project could be realized and assessed. Schumer explained that three transmission projects approved by the PSC are set to be completed in 2016, and are projected to create upwards of 600 megawatts of power by moving energy more efficiently to the Hudson Valley and New York City.  Schumer said that FERC’s new zone would preliminarily jack-up the prices for ratepayers in advance of the completion of these projects that will help relieve the initial problem, and perhaps eliminate the need for a new zone. 

“While we need to find better and more creative ways to alleviate the power constraints on the Hudson Valley and New York City, FERC’s proposal for a new zone is jumping the gun – it would increase the burden on ratepayers before other efforts to solve the problem can be completed,” said Schumer.  “That’s why I’m asking FERC to delay their implementation of a new capacity zone until at least 2017, when we can properly assess the impact of in-progress transmission upgrades. These upgrades may lead us to a solution that doesn’t include a proposal that would, in the short-term, line the pockets of existing power generators without a substantive increase in power generation.”

 

The FERC and NYISO order would create a new capacity zone in the power grid that stretches from New York City to Albany in an attempt to alleviate a transmission bottleneck.  Currently, there is a surplus of cheaper power generated Upstate that does not reach energy-needy areas in the Hudson Valley and New York City in an efficient manner.  The new zone is designed to increase electricity prices to attract new power plants to the region; estimates by the New York Dept. of Public Service (NYDPS) put the annual increase of cost at $350 million.  Orange and Rockland Utilities customers may face a 6 to 10% increase in prices, residents in Central Hudson’s area could see a 10% increase, and large industrial ratepayers could see as much as a 15% increase in energy prices.  Schumer noted that although he supported finding new energy sources for Hudson Valley residents, he does not support doing so on the backs of ratepayers if, as in this case, other options exist to deliver the needed power more efficiently and cheaply.  Schumer expressed concern these large rate hikes could have on small businesses and employers throughout the Hudson Valley. For many companies, such a large spike in energy costs could decrease job creation and expansion efforts at a time when the local economy is on the track for economic growth.

 

Furthermore, he pointed out that transmission upgrades proposed by the New York State Energy Highway program, which are approved by the PSC and set to go online in 2016, are specifically designed to deliver power around the bottleneck to Hudson Valley customers.  One such project is an $11 million investment in transmission upgrades running from Central Hudson’s Rock Tavern substation to Con Edison’s Ramapo substation in Rockland County.  Schumer explained that it made no sense to jack-up the rates on residents now, before such efforts could be completed.

 

Schumer argued that the current proposal would undermine statewide efforts to increase the efficiency of transmission and delivery systems, and unfairly hike rates before any new power generation could be achieved.  Schumer said that, at the very least, in the event the new zone moves forward, rate hikes should be delayed or phased-in.  As it stands, Hudson Valley consumers would see skyrocketing rates even before prospective energy developers could move-in and help increase power generation.

 

The new capacity zone is set to take effect in May of 2014, and Schumer is seeking a delay until 2017 at minimum, or until the transmission upgrades from the Energy Highway initiatives can be properly assessed.

 

A copy of Schumer’s letter to FERC Chariman Jon Wellinghoff is below:

Dear Chairman Wellinghoff,

 

I write to urge the Federal Regulatory Commission (FERC) to delay the New York Independent System Operator’s (NYISO) proposed tariff revisions to establish a new capacity zone (NCZ) until at least 2017. As it stands, the NYISO plans to implement the NCS by May 1, 2014 to coincide with the start of the 2014/2015 capability year. Though the stated purpose of this NCZ is to increase electricity prices as a means to attract more investment in power generation to address reliability constraints in the region, the capacity zone does not account for new transmission initiatives underway that form part of New York State’s Energy Highway Blueprint that will address the deliverability constraint identified by NYISO.  The State of New York’s plan to build major transmission facilities by the summer of 2016 will have a material impact on bulk power capacity in the corridor has identified as congested and will eliminate the need for price increases for ratepayers that may be upwards of $350 million per year.

 

I strongly believe that FERC should direct the NYISO to analyze the long-term price signals that will result from the New York Public Service Commission’s (NYPSC) initiatives prior to moving forward with the new capacity zone. The NYPSC is carrying out several initiatives that will address the deliverability constraint associated with the NCZ. On October 17th, 2013, the NYPSC approved a suite of three transmission projects valued at more than $500 million that will enter into service by mid - 2016. These transmission projects, which are capable of reducing capacity needs by upwards of 600 MW, will contribute to improved reliability throughout New York State and reduce costs to electric rate payers. Two of the transmission projects would increase the import capability into southeastern New York by reducing the constraint on the upstate New York/Southeast New York interface. As a result, underutilized upstate capacity would be able to provide increased levels of energy downstate and improve reliability. The transmission projects approved by the NYPSC are as follows:

 

·         Create a second 27-mile 345 kV transmission li ne from Central Hudson’s Rock Tavern substation in Orange County to Con Edison’s Ramapo substation in Rockland County which would increase power transfer from upstate generators to downstate load

 

·         Improve the efficiency of the Marcy South power lines and re-conductor a 22-mile section of the existing NYSEG 345 kV transmission line between Fraser substation in Delaware County to Coopers Corners substation in Sullivan County, which will increase transfer capability into Southeastern New York, including New York City.

 

·         Reconfigure transmission substations in Linden, NJ and Goethals, Staten Island to mitigate system contingencies; provide enhanced cooling of underground transmission circuits running between Con Edison’s Goethals, Gowanus (Brooklyn) and Farragut (Brooklyn) transmission substations to increase power transfer capability to un-bottle existing generation resources on Staten Island.

 

These significant transmission initiatives will have a tangible impact on the corridor NYISO has identified as congested and FERC must consider these imminent “on the ground” changes before moving forward with any price hikes that will have a considerable impact on ratepayers. The NYSPC’s transmission should be viewed as supportive of FERC’s goals of addressing deliverability challenges in NYISO load zones G, H, I, and J. I strongly believe FERC should hold off on price spikes that will require ratepayers to pay hundreds of millions of dollars in unjust increased capacity costs until we are able to analyze if the NYPSC’s transmission initiatives will deem the capacity zone unnecessary.

 

Thank you for your attention to this matter. Should you have any questions please do not hesitate to contact me or my staff.

 

Sincerely,

 

Charles E. Schumer

U.S. Senator

 

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