ENERGY COMMITTEE NEWSLETTER, October 20, 2001Staff Contact:
- ENERGY PANEL AT ANNUAL MEETING
- PUBLIC SERVICE COMMISSION
- SYSTEMS BENEFIT CHARGES (SBC)
- ASSEMBLY MINORITY LEADER PROPOSES GRT PHASE-OUT BE ACCELERATED
- CON ED LAWSUIT OVER INDIAN POINT 2 LAW
The panel featured at this years Annual Meeting, Energy - Now and Into the Next Century, highlighted the changing face of the electricity market. Topics discussed ranged from the new wholesale electricity market to the need for additional generation.
Industry executives and representatives from both the state Public Service Commission (PSC) and the New York Independent System Operator (ISO) were unanimous in the belief that New York must develop more generating capacity within the next two to three years, or risk shortages.
The new competitive marketplace demands still more capacity to allow competition among providers and keep prices down. Speakers agreed that the state is likely to have adequate supplies of power to absorb increased demand through the summer of 2001. By the following year and 2003, though, peak loads might be too great for available generating and transmission capacity unless new facilities are online, many of the panelists said.
The dramatic increase in oil prices in recent months and other marketplace factors may make it difficult for producers of electricity to bring rates down in the near future, both in NewYork and elsewhere, speakers said. The need to reduce the heavy taxation included in electricity bills was also echoed by industry executives.
The panel included energy executives from a broad spectrum including large electricity producers operating in the state such as Sithe Industries and Entergy Nuclear Northeast. Sithe is currently trying to add additional power plants (one through expansion) in New York and Entergy recently purchased the New York Power Authoritys nuclear assets.
In addition to these power producers, the panel included the top executives from Orange and Rockland Utilities, KeySpan, and Rochester Gas and Electric and a representative from the PSC and the ISO. A summation of the conference is attached.
The PSC met on September 20, 2000 in New York City. The Commission made public its plan to have staff embark on consumer education plans regarding winter natural gas prices. The commission noted that the commodity price of natural gas was deregulated by Congress in 1978 and thus it is beyond the control of the PSC or local utilities. The delivery of natural gas is regulated by the PSC. With an estimated 3 million natural gas customers in New York State, the Commission is embarking on an educational effort to make customers aware of energy conservation measure and the availability bill-paying assistance programs.
The Commission also confirmed order 00E1380 which clarified the information and data to be shared between the PSC and the New York Independent Systems Operator. The ISO maintains the wholesale bulk electricity market.
Order 00E1343 Implementing Chapter 190 of the Laws of 2000" which legislatively forces Con Ed to rebate the cost of replacement power due to the shutdown of Indian Point 2 Nuclear Power Plant was also confirmed. More on this in the article on Con Ed below.
The PSC meet in Albany on October 11th. The Commission listed on its consent agenda the three items regarding Con Ed and its proposed merger with Northeast Utilities (00M0095, 99E1020, 96E0897). The merger plans have to be approved by the PSC as well as several federal regulatory bodies and regulators in Vermont and Connecticut. As part of the deal, Con Ed is promising rate reductions of over $1.4 billion through 2005. The process is subject to public hearings on October 25th and 26th in its service territories before it will be acted upon by the PSC.
On September 27th the PSC announced in the New York State Registry its proposal to expand the Systems Benefit Charge (SBC). The charge is an outgrowth of the settlement agreements and the demand-side management programs operated by the states investor owned utilities. The proposal would effectively expand the program for five years beginning on January 1, 2001 and increase its funding from $78 million per year to $139 million per year. The SBC is a charge per kilowatt hour which equates to .00078 cents. The funds are collected by the utilities and administered by the New York State Energy Research Development Authority (NYSERDA).
The SBC is designed to fund electric load reduction, outreach and education, energy efficiency, research and development, low income customer assistance, environmental disclosure, and individual utility public benefit programs.
The Business Council has opposed proposals to legislatively expand the SBC during the 2000 Legislative session. We will be carefully examining this proposal before the November 13th comment period expires.
The Minority Leader of the New York State Assembly, John Faso, proposed speeding up the repeal of the Gross Receipts Tax (GRT) on electricity in late September. Stating that the state would reap a $30 million tax windfall due to higher energy costs this winter, the 5-year phase out of the tax should be made immediately. He also advocated an immediate repeal of the state sales taxes on the transmission and distribution of natural gas and electricity which is not scheduled to expire until 2003.
The lawsuit initiated by Consolidated Edison of New York as a result of Chapter 190 of the Laws of 2000 was ruled on by a federal judge of the Northern District of New York. The judge ruled in favor of Con Ed by stating that the law was in violation of the equal protection clause of the 14th Amendment. Further, the law did not afford Con Ed the protection of a trial. Con Ed has maintained that they were singled out by the law. Under state law, a prudency hearing by the PSC determines whether or not the cost of replacement power can be passed along to customers.
The law, which was passed by the Legislature this session and signed into law by the Governor in August, required Con Ed to pay $162 million in refunds to customers. Under the law, Con Ed was forced to refund the costs of replacement power to its customers in New York City and Westchester County due to the shut-down of the Indian Point 2 Nuclear Power Plant. Con Ed stated they were pleased with the ruling. An appeal by the governors office may be pending.