nuclear-news

The U.S. Supreme Court cast a long shadow as New York regulators drafted the Clean Energy Standard and its incentives to preserve upstate nuclear power plants.

Audrey Zibelman, chair of the state Public Service Commission, said that the order adopted last week was drafted to avoid legal challenges that could jeopardize the standard’s goal of generating 50% of the state’s power from renewable resources by 2030. PSC lawyers feared challenges to the zero-emission credit (ZEC) program for nuclear plants and the way in which renewable energy development is encouraged. (See New York Adopts Clean Energy Standard, Nuclear Subsidy.)……

ZEC Pricing

New York has priced ZECs based on EPA’s social cost of carbon, minus prices for carbon allowances sold under the nine-state Regional Greenhouse Gas Initiative, in which New York participates. Load-serving entities must purchase ZECs, which recognize the carbon-free attribute of nuclear power, proportionate to their annual energy sales.

Although it was designed to be similar to the REC procurement, the ZEC program may face a legal challenge that the mandate would suppress energy and capacity prices.

A group of power generators advanced that argument during the public comment period last month.

The comments were “a dry run driving right at the heart of ZEC,” said David Appelbaum, an attorney for the New York Power Authority. “They’re going to try to derail this. I don’t know if they’re going to be successful.”

The suppliers, 11 power generators and marketers, say the ZEC proposal violates the Federal Power Act and impinges on FERC jurisdiction over wholesale markets. “It conflicts with FERC’s policy that the NYISO’s capacity market provide the necessary price signals to encourage maintenance of existing, and development of new, facilities to meet reliability needs,” the suppliers contend. “But for the artificial price suppression, prospective new generators that may have been economic may forego entry, and existing generators that may have been economic may prematurely retire.”

The PSC order sought to head off this line of attack. The proposal “does not establish wholesale energy or capacity prices; it only establishes pricing for attributes completely outside of the wholesale commodity markets administered by NYISO,” the order states. “To the contrary, it addresses a well recognized externality that otherwise would lead to economic inefficiencies with respect to the costs incurred due to environmental damage, in particular, climate change.”

John Reese, the senior vice president of Eastern Generation, one of the suppliers, told RTO Insider on Monday that no decisions on any appeal have been made.

“We continue to look at all of the options, so we are in the process of deciding what is the best action to take,” he said. http://www.rtoinsider.com/new-york-clean-energy-standard-30101/