ENERGY NEWS, December 4, 2001
- THE COUNCIL SEEKS PARTY STATUS IN TWO NEW CASES
- NIAGARA MOHAWK - NATIONAL GRID MERGER APPROVED BY PSC
- ASTORIA POWER PLANT RECEIVES ARTICLE X PERMIT
- UPDATE ON ARTICLE X PROJECTS
- INDEPENDENT SYSTEM OPERATOR NEWS
COUNCIL SEEKS PARTY STATUS IN TWO NEW CASES
The Business Council has applied for status as an "intervenor" in two more power-plant application cases pending before the state Siting Board. The Council has filed for status in an application by Wawayanda Energy Center to site a 540-megawatt natural gas-fired plant in Orange County, and in an application by Astoria Generating Company to site a 1,842-megawatt natural gas-fired plant in Queens.
The Business Council is seeking to join these proceedings to advance broad economic arguments about the need for adding electricity-generating capacity in New York State. Our goal is to ensure the continued reliability of New York's electricity system, and foster the competition needed to drive down New York's electricity costs.
Earlier this year, The Business Council sought and received intervenor status in two other cases: Brookhaven Energy's proposal for a 580-megawatt plant in Suffolk County, and PSEG Power New York's proposal for a 750-megawatt plant in Bethlehem. Since then, The Public Policy Institute, has published a report on the economic arguments on increasing capacity in New York, and submitted it as part of testimony in the Bethlehem case.
Article X of the state Public Service Law, which outlines how the state will approve or reject proposals to build new plants, allows interested parties to seek status as "intervenors." Intervenors become official parties in the Article X hearing process, and can submit testimony, analysis, and research in support of, or in opposition to, the proposed plants.
MOHAWK - NATIONAL GRID MERGER APPROVED BY PSC
The Public Service Commission (PSC), at their November 28th meeting, approved the merger of Niagara Mohawk Holdings, Inc., Niagara Mohawk Power Corporation, National Grid Group plc and National Grid USA. Under the merger, National Grid will purchase100% of Niagara Mohawk's common stock to form the ninth largest electric utility in the United States. The merger will result in a service territory of 29,450 square miles in four states serving 3.2 million customers. Its combined annual operating revenues will be $6.7 billion.
Specifics of the merger include:
- An 8 percent reduction in electricity delivery prices valued at $152 million per year.
- When those delivery savings are applied to a customer's entire electricity bill – which also includes the cost of electricity purchased – the net savings are projected to be about 5 percent.
- Price-stabilized electricity commodity service for residential and small commercial customers for several years through hedging contracts, providing those customers with significant protection from any major fluctuations in the generating marketplace.
- Delivery rates will be stabilized under the merger plan for 10 years, subject to limited re-openers and adjustments for external events such as changes in statutory, tax, or accounting requirements.
- A $12.5 million expansion of Niagara Mohawk's annual Upstate New York economic development efforts.
- A comprehensive service quality plan with defined customer service and reliability goals.
- Forgoing the collection of approximately $850 million in nuclear costs that otherwise would have been collected from customers.
- Extending by 16 months a multi-year gas rate settlement, resulting in gas delivery rates - unchanged since 1996 - remaining the same through December 2004.
- Extending the Low-Income Customer Assistance Program, which was expanded under Niagara Mohawk's existing regulatory agreement with the PSC, and the development of a special rate for eligible low-income customers.
- Environmental benefits such as interconnection assistance for wind power sources, support for "green" power marketing, and the continued sale of surplus land for preservation.
The agreement saw the participation of 36 different parties over an 8 month period. The merger still requires approval of the Securities and Exchange Commission under the Public Utility Holding Company Act.
POWER PLANT RECEIVES ARTICLE X PERMIT
On November 20th, The New York State Board on Electric Generation Siting and the Environment granted developer SCS Energy a permit to construct and operate a new 1,000 megawatt electric generating facility in Astoria, Queens County. SCS Energy filed its application to build the Astoria Energy project, under Article X of the Public Service Law, on June 19, 2000.
The plant will be a natural gas-fired combined-cycle generating facility located on a 26 acre oil terminal in Astoria. The project site is zoned for heavy manufacturing and has existing infrastructure that will be refurbished to provide the facility with approximately 12.6 million gallons of low sulfur distillate oil fuel. The plant will use oil as a backup fuel for electricity generation. The plant will sell its 1,000 megawatt output into New York's competitive wholesale market.
ON ARTICLE X PROJECTS
The permitting of Astoria brings the total number of plants permitted under the Article X process to five (5). The other four (4) projects, and projects sponsors, that have received permits and their estimated in service dates are:
- Athens (PG & E) - 1080 MW - on line by 3rd quarter 2003.
- East River Repowering (Con Ed) - 360 MW - on line 4th quarter 2004.
- Heritage (Sithe) - 800 MW - on line 4th quarter 2004.
- Ravenswood (KeySpan) - 250 - on line by 2003.
According to the records of the Public Service Commission (PSC) the following four (4) projects have received compliance determinations and are nearing certification and permitting. The projects are as follow:
- Bethlehem (PSEG) - 750 MW - decision by 3rd quarter 2002 (estimated).
- Bowline 3 (Mirant) - 750 MW - decision by 4th quarter 2001 (estimated).
- Poletti Station (NYPA) - 500 MW - decision by 2nd quarter 2002 (estimated).
- Ramapo (ANP) - 1100 MW - decision by 1st quarter 2002 (estimated).
The earliest in service date for the above referenced four (4) projects are in the 2nd and 3rd quarters of 2004.
Five (5) other projects have submitted applications under Article X and are beginning the process under the application phase:
- Brookhaven in Suffolk County by ANP
- Orion Astoria by Orion Power in Queens County
- Sunset Energy in Brooklyn by SEF
- Torne Valley in Rockland County by Sithe
- Wawayanda in Orange County by Calpine
There are also 9 in the stages prior to submitting an application.
SYSTEM OPERATOR NEWS
The New York State Independent System Operator has announced the implementation of its "virtual bidding". Under this program, companies with appropriate credit qualifications are allowed to "virtually" buy and sell energy. The ISO received FERC approval for the program on October 25, 2001. So far 20 companies have signed up to participate.
According to the ISO, the process works as follows; A company takes a position in the Day-Ahead market by buying or selling "virtual" energy, then must cover its transaction in the Real-Time market in order to settle up. The difference between the prices in the Day-Ahead and Real-Time markets dictate the gain or loss experienced by the company doing the virtual trading.
Virtual supply and virtual load transactions are financial transactions only and have no effect on Real-Time physical energy consumption. Further, the process does not compromise the physical commitment of energy resources for the purpose of system reliability. The process is designed to help even out price differences between markets as traders seek to arbitrage the price differences between markets. It also provides a means for existing market players to hedge themselves against risk.