N.Y. Power Authority and NYC Governmental Customers Ask Federal Energy Regulatory Commission to Reconsider Order That Would Result in Higher Electricity Costs

Michael Saltzman
(914) 390-8181

October 11, 2012


WHITE PLAINS—The New York Power Authority (NYPA) Wednesday filed a Petition for Rehearing of a September order by the Federal Energy Regulatory Commission (FERC) that would penalize New York State electricity ratepayers by up to $400 million to $500 million in 2013 and continue to have financial impacts until the electricity supply and demand dynamics change in New York City. The FERC decision will also undermine the modernization, or repowering, of older power plants and measures to make them cleaner and more efficient. 

NYPA was joined in the Petition for Rehearing by the City of New York and other governmental customers that it serves in in New York City.  The petition can be viewed on the NYPA website at 

The parties are requesting that FERC reconsider its order in a complaint previously filed against the New York Independent System Operator (NYISO), which administers New York’s competitive wholesale electricity markets. The complaint, by two New York City-based power plant owners, alleges that the NYISO improperly implemented market power rules with respect to a new clean natural gas-fueled power plant in Queens—the Astoria Energy II (AE II) plant—as well as another clean power plant that is currently operating in Bayonne, N.J., and serving New York City.

“The FERC order results in the unwarranted transfer of wealth from local and state governments and consumers to existing power plant owners,” said Gil C. Quiniones, NYPA president and chief executive officer.  “If the order is allowed to stand, it will discourage the upgrade and modernization of aging, inefficient power plants.  This would reduce the opportunities for economic development from new clean generation and impinge on efforts to shift away from older, less efficient generating facilities, including those in environmental justice communities seeking to improve neighborhood air quality.”

At issue is a market pricing test, or standard, that the NYISO applied to the 550-megawatt (MW) AE II plant, which was brought into service in July 2011 through a contract with NYPA for an additional source of power for the electricity requirements of NYPA’s governmental customers in New York City. Their essential public facilities and services include schools, hospitals, municipal buildings and the subways and commuter trains.      

On the basis of the complaint filed by US Power Generating affiliate Astoria Generating Co. and TransCanada TC Ravenswood, FERC directed the NYISO to rerun the market test for AE II with several modifications that would adversely impact the plant’s ability to participate in a segment of the NYISO marketplace in which power generators are paid for their capacity to produce electricity. 

FERC’s September decision would impact NYPA’s capacity purchases from the AE II plant on behalf of the New York City governmental customers. The absence of AE II from the market would result in a spike in costs for not only the governmental customers but all ratepayers throughout the state.

NYPA purchases the entire output of the AE II plant under a 20-year contract.  It selected AE II as a result of a competitive procurement process to replace the Charles Poletti power plant in Queens, an 885-MW facility that NYPA retired in 2010. 

The new AE II plant utilizes advanced technologies that are more efficient and cleaner than conventional facilities.  In addition to replacing a more than three-decade-old power plant, the new facility was constructed in anticipation of future electricity demand growth of the New York City governmental customers and to achieve public policy objectives  that NYPA and other agencies are helping to carry out for clean, safe, reliable and affordable energy supply for the state.

About NYPA:

■The New York Power Authority uses no tax money or state credit. It finances its operations through the sale of bonds and revenues earned in large part through sales of electricity. ■NYPA is a leader in promoting energy efficiency, new energy technologies and electric transportation initiatives.■It is the nation's largest state public power organization, with 17 generating facilities in various parts of New York State and more than 1,400 circuit-miles of transmission lines. ■Approximately 80 percent of the electricity it produces is clean renewable hydropower. Its lower-cost power production and electricity purchases support hundreds of thousands of jobs throughout the state.■For more information,

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