By Rich Heidorn Jr.
ALBANY, N.Y. — At FERC’s technical conference May 1 and 2, several commenters observed that it is easier to coordinate state policy with wholesale markets when the market is a single state, as in NYISO.
But there was no groupthink on display at the Independent Power Producers of New York’s 31st Annual Spring Conference last week, where industry stakeholders and state and ISO officials debated carbon policy, zero-emission credits for nuclear plants, the closure of the Indian Point nuclear plant and the Champlain-Hudson transmission line.
In particular, the conference highlighted the differences between the administration of Democratic Gov. Andrew Cuomo and the Republican-controlled State Senate, the ISO and IPPNY itself.
Arguably, no state officials are pushing more ambitious changes for the electric industry than New York’s — with the Reforming the Energy Vision initiative — for transitioning to a less centralized, more renewable-based future.
Richard Kauffman, chairman of the New York State Energy Research and Development Authority and Cuomo’s top energy official, began his speech to IPPNY by acknowledging the tensions.
“That was quite a pointed introduction,” he joked when IPPNY CEO Gavin Donohue welcomed him to the podium after laying out the organization’s complaints over the state’s “out-of-market” policies.
‘Love Letter’ to ISO
Kauffman also acknowledged that “It’s no secret that we haven’t been in very good alignment with the NYISO.”
“I’m sure that Brad Jones keeps a copy of my love letter to him on his dartboard,” he said, referring to the missive he sent last July in response to comments the ISO filed with the Public Service Commission on the state’s Clean Energy Standard.
The letter dismissed NYISO’s filing as “misleading, incomplete and grossly inaccurate” and lectured the ISO on the need to combat climate change. Kauffman also accused the ISO of being “held captive” by stakeholders representing “status quo interest that are threatened by the renewable future” — singling out IPPNY by name.
At the conference, Kauffman declined to offer an opinion on the ISO’s carbon adder plan, saying officials of NYSERDA and the Department of Public Service had just begun to review it. (See related story, NYISO Carbon Adder to Test FERC’s Independence, IPPNY Panelists Say.)
But he made it clear any ISO plan would have to “harmonize” with REV and insisted the state’s actions were justified responses to market imperfections.
“We recognize the valuable role the federal wholesale markets can play,” he said. “But the truth is in our view those wholesale markets are not living up to their potential because of a failure to effectively harmonize with the states’ public policy. … Given the uncertainty in Washington, the state will not cede what it considers its role in energy and environmental policy.”
He said REV’s objective is to provide market-based incentives for private capital to build “the 21st century grid” with “a mix of central station production and distribution with distributed nodes; where supply and demand are dynamic and electrons can flow in more than one direction.”
The new grid must be “both more energy and capital efficient,” he said. “Fifty-four percent average capacity utilization — which is what our entire system is in New York state, a number which is declining — is a low number in terms of capital efficiency.
“We can’t achieve the governor’s mandate of 50% renewables by 2030 by doing things the same way. … We’ve been bolting things onto a system that it wasn’t designed for. Those things include renewables and [distributed energy resources]. … And the same way we’ve been physically bolting renewables and DER onto the grid never intended for these resources, we’ve recognized that we can’t keep bolting on policies onto a policy regime that was not intended for that purpose either.”
Kauffman said he would not answer questions about ZECs because of the suit filed by IPPNY members Dynegy, Eastern Generation and NRG Energy claiming the ZECs intrude on FERC’s jurisdiction. He said only that “the governor did not want to lose ground in carbon emissions by the upstate plants closing.” (See Federal Suit Challenges NY Nuclear Subsidies.)
Donohue concluded Kauffman’s session by imploring him, Jones and Scott Weiner, the DPS’ deputy for markets and innovation, to “keep working to come up with this market fix so that Chairwoman [Cheryl] LaFleur … can help us implement something to save our markets in New York.”
Cuomo vs. Legislature
The Cuomo administration’s differences with the State Legislature were also on display as State Sen. Joseph Griffo (R), chairman of the Senate Committee on Energy and Telecommunications, told the conference that the Senate will “carefully vet” Cuomo’s nominees to the PSC. “It’s not going to be a pro forma type of submission,” he said. (See related story, Cuomo Names NYSERDA CEO as PSC Chair.)
New York State Assemblywoman Amy Paulin (D), chair of the Committee on Energy, outlined her objections to the statewide cost allocation of the ZEC subsidies, saying the costs for the upstate generators should not be imposed on her Westchester County constituents. Assembly members were left fuming in March when the PSC and NYSERDA declined to send witnesses to a hearing on the program and Exelon sent no senior executive with knowledge of the subsidy negotiations. (See NY Legislators Frustrated by Lack of Answers at ZEC Hearing.)
Some legislators are also upset with Cuomo’s deal to shut down the Indian Point nuclear plant by 2021. The governor has long opposed the plant because of its proximity to New York City.
In March, ISO and PSC officials told a joint hearing chaired by Paulin and Griffo that they are not concerned about replacing the capacity of the 2,069-MW plant, saying energy efficiency, transmission upgrades and the ISO’s wholesale market will ensure reliability.
IPPNY Chair John Reese, senior vice president of Eastern Generation, indicated in remarks to the conference that he is not satisfied with those assurances. “What does the future look like? We have no idea,” he said.
Reese said the ISO should begin an impact study on the retirement immediately rather than waiting for a formal retirement notice, which might not come until 2020 or later. “It takes a minimum of four to six years to build infrastructure in N.Y. If Indian Point presents an issue on [power] supply, we need to know now.”
Champlain-Hudson Transmission Line
“What should definitely be off the table [among potential Indian Point replacements] is the remarkably uneconomic Champlain-Hudson [Power] Express transmission line,” Donohue said.
Earlier this year, Paulin and Griffo introduced what Paulin called an IPPNY “priority bill” that would prohibit the New York Power Authority from purchasing energy from the proposed line (A07685, S05126.)
IPPNY claims the project — which would transmit 1,000 MW of Canadian hydropower to the New York metro area — could not be built without direct or indirect subsidies, such as “extra-market contracts” with a state entity. The project was proposed by Transmission Developers Inc., which claims the $2.2 billion project would be one of the largest investments in New York state history.
“The state’s view has not changed,” Kauffman said. “TDI is a merchant line. This means a customer or customers need to sign up for the power. … The cost of the transmission line will not be passed along to any ratepayers.”