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Midwest wants to stop costly QF deals in future
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A NiMo statement asserted that New York state law took the mandatory purchase requirement of the Public Utility Regulatory Policies Act "a major step further" than permitted by federal law in requiring utilities to pay a minim u m of six cents a kilowatt-hour for purchased power. William E. Davis, NiMo chairman and chief executive officer, said NiMo customers would pay an estimated $560 million above avoided cost in 1995 alone for electricity from unregulated generators. n February NiMo had asked FERC to take another look at New York's six cent law in a case involving O&R. In asking for review of the O&R decision, it noted that the N e w York legislature had not repealed the six cent law so as to render it moot, as FERC believed, but amended it to exclude future contracts. Ironicall~ on the same day it tossed out the O&R challenge, FERC ruled in the CL&P case that states may not require utility purchases of power from QFs at a price that exceeds avoided cost (Elec. Daily, Jan. 12). But later, in a case involving NYSEG in which NiMo was also an intervenor, FERC restated its strong opposition to striking down existing contracts based on the six cent law, with commission Chair Betsy Moler saying that to do so would "cause chaos" in financial markets (Elec. Daily, April 13). FERC said the QF contracts were reasonable when entered into and noted the inconsistency of the utilities' position on pur-
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chased power with their demands for recovery of "stranded costs" for their own above-market generation. Aaron Breidenbaugh, of the Independent Power Producers of New York, said of the suit, "The utility can do all the forum shopping it wants--no court is going to end 15 years of settled law and, in the process, destroy an industry that has committed more than $16 billion and provided 30,000 jobs in N e w York. If NiMo wants to 'put an end to irreparable dam-
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age to its ratepayers' it should write off and close the two Nine Mile Point nuclear plants that together are costing its ratepayers $450 million more than they are worth each year."
Midwest Wants to Stop Costly QF Deals in Future idwest Power Systems has joined the growing parade of utilities that are trying to avoid high-cost purchased power contracts entered into under the auspices of the Public Utility Regulatory Policies Act and a parallel state law. On June 1, Midwest peti-
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tioned the Federal Energy Regulatory Commission for a declaratory order to protect it and its electricity customers from an Iowa law it said "would force them to buy electricity at a price that is more than double the current market rate" and asked FERC to find that the Iowa "alternate energy production law" and related regulations are not in compliance with federal law. In its petition, the Des Moinesbased holding company said Iowa law requires it to pay six cents per kilowatt-hour for electricity generated by alternate energy producers, while it claims that federal law ties the price to the market price of electricity, which is substantially less. "The mandatory Iowa price is more than twice the cost w e believe the federal law requires us to pay when we buy electricity from alternate energy producers. It is an additional cost paid by our customers," said Lynn Vorbrich, Midwest executive vice president and chief operating officer. The petition cited the favorable FERC decision in the Connecticut Light & Power case. But following the CL&P decision, FERC refused to consider petitions from utilities in New York and Pennsylvania which asked the commission to invalidate existing contracts with QFs. Midwest, which currently buys electricity from three alternate energy producers, says it is not asking FERC to invalidate any existing contracts. Rather, its petition asks FERC to find the Iowa law invalid and
The ElectricityJournal
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would only prohibit future contracts that exceed avoided cost. Midwest Power and the other three Iowa investor-owned electric utilities asked the Iowa legislature this year to enact legislation it said would make the Iowa law conform to federal law. The bill failed to receive final action.
Annals of Competition
Suffolk Co., Others, Try to Escape LILCO's High Costs dd Suffolk County, N.Y., to the ocal jursidictions that are trying to lower the cost of electricity to their businesses and residents. Suffolk County is preparing a request for proposals to supply its small municipal utility with power in a move to compete with Long Island Lighting Co., according to Washington attorney Christine Ryan. Should LILCO refuse to transmit competitive power to the count, Ryan said Suffolk might file a transmission access complaint at the Federal
Energy Regulatory Commission. "We are working on a plan for rate relief for Suffolk County," Ryan told The Electricity Journal. "We hope to have an RFP out within a couple of weeks. It certainly won't take much to beat LILCO's prices, so we expect to be able to come up with significant savings for the county." LILCO has among the highest electrical rates in the countr~ Suffolk County has a small public power agency that was formed
July 1995
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in 1983 to take the county's small share of New York Power Authority hydro. The county electric agency also buys 5 MW of power from NYPA's FitzPatrick nuclear plant for distribution to some industrial customers. According to Ryan, the variable amounts of NYPA hydropower are sold to all customer classes through LILCO's distribution system under a billing credit arrangement with the utili~. Wouldn't Suffolk County's plans fit into the "sham muni"
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said, "but that is available to us if we need it." LILCO is facing a number of competitive threats, in spite of CEO William Catacosinos's boast to security analysts last year that the company was effectivelyinsulated from competition by Long Island Sound. In addition to the county's initiatives, five Suffolk County municipalities-Southampton, East Hampton, Riverhead, Shelter Island and Southoldm are looking at municipalization. Also, a number of large industrial customers called
the Hauppage Industrial Association are looking at getting a break in electric rates, either through LILCO discounts or retail wheel-
ins. FERC Hits Pools on Access ~ C e Federal Energy Regulatory ommission continued to add provisions of the 1992 Energy Policy Act? Not at all, says Ryan, with the Washington firm of Brickfield, Burchette and Ritts. "One of the exceptions to the sham provisions," she says, "is if you were in operation as of the date of passage." Suffolk County's electric agency meets that criterion. Should LILCO refuse to transmit competing power to the count, the county would be in a position to file a complaint at FERC under Section 211 of the Federal Power Act. "We don't anticipate filing a 211 case," Ryan
flesh to its policies on open transmission access on May 16, ruling that the commission can order power pools to provide access to third parties. FERC told the Penn-
sylvania-New Jersey-Maryland Interconnection that its members must negotiate jointly with Duquesne Light Co. for transmission services for up to 300 MW of power the Pittsburgh-based utility wants to market to the east. But FERC rejected Duquesne's request that FERC order PJM to provide a single, system-wide rate, rather than a series of pancaked rates piled on by each of the PJM members. FERC said PJM must provide access to
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A NiMo statement asserted that New York state law took the mandatory purchase requirement of the Public Utility Regulatory Policies Act "a major step further" than permitted by federal law in requiring utilities to pay a minim u m of six cents a kilowatt-hour for purchased power. William E. Davis, NiMo chairman and chief executive officer, said NiMo customers would pay an estimated $560 million above avoided cost in 1995 alone for electricity from unregulated generators. n February NiMo had asked FERC to take another look at New York's six cent law in a case involving O&R. In asking for review of the O&R decision, it noted that the N e w York legislature had not repealed the six cent law so as to render it moot, as FERC believed, but amended it to exclude future contracts. Ironicall~ on the same day it tossed out the O&R challenge, FERC ruled in the CL&P case that states may not require utility purchases of power from QFs at a price that exceeds avoided cost (Elec. Daily, Jan. 12). But later, in a case involving NYSEG in which NiMo was also an intervenor, FERC restated its strong opposition to striking down existing contracts based on the six cent law, with commission Chair Betsy Moler saying that to do so would "cause chaos" in financial markets (Elec. Daily, April 13). FERC said the QF contracts were reasonable when entered into and noted the inconsistency of the utilities' position on pur-
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chased power with their demands for recovery of "stranded costs" for their own above-market generation. Aaron Breidenbaugh, of the Independent Power Producers of New York, said of the suit, "The utility can do all the forum shopping it wants--no court is going to end 15 years of settled law and, in the process, destroy an industry that has committed more than $16 billion and provided 30,000 jobs in N e w York. If NiMo wants to 'put an end to irreparable dam-
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age to its ratepayers' it should write off and close the two Nine Mile Point nuclear plants that together are costing its ratepayers $450 million more than they are worth each year."
Midwest Wants to Stop Costly QF Deals in Future idwest Power Systems has joined the growing parade of utilities that are trying to avoid high-cost purchased power contracts entered into under the auspices of the Public Utility Regulatory Policies Act and a parallel state law. On June 1, Midwest peti-
M
O
C
U
S
tioned the Federal Energy Regulatory Commission for a declaratory order to protect it and its electricity customers from an Iowa law it said "would force them to buy electricity at a price that is more than double the current market rate" and asked FERC to find that the Iowa "alternate energy production law" and related regulations are not in compliance with federal law. In its petition, the Des Moinesbased holding company said Iowa law requires it to pay six cents per kilowatt-hour for electricity generated by alternate energy producers, while it claims that federal law ties the price to the market price of electricity, which is substantially less. "The mandatory Iowa price is more than twice the cost w e believe the federal law requires us to pay when we buy electricity from alternate energy producers. It is an additional cost paid by our customers," said Lynn Vorbrich, Midwest executive vice president and chief operating officer. The petition cited the favorable FERC decision in the Connecticut Light & Power case. But following the CL&P decision, FERC refused to consider petitions from utilities in New York and Pennsylvania which asked the commission to invalidate existing contracts with QFs. Midwest, which currently buys electricity from three alternate energy producers, says it is not asking FERC to invalidate any existing contracts. Rather, its petition asks FERC to find the Iowa law invalid and
The ElectricityJournal
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would only prohibit future contracts that exceed avoided cost. Midwest Power and the other three Iowa investor-owned electric utilities asked the Iowa legislature this year to enact legislation it said would make the Iowa law conform to federal law. The bill failed to receive final action.
Annals of Competition
Suffolk Co., Others, Try to Escape LILCO's High Costs dd Suffolk County, N.Y., to the ocal jursidictions that are trying to lower the cost of electricity to their businesses and residents. Suffolk County is preparing a request for proposals to supply its small municipal utility with power in a move to compete with Long Island Lighting Co., according to Washington attorney Christine Ryan. Should LILCO refuse to transmit competitive power to the count, Ryan said Suffolk might file a transmission access complaint at the Federal
Energy Regulatory Commission. "We are working on a plan for rate relief for Suffolk County," Ryan told The Electricity Journal. "We hope to have an RFP out within a couple of weeks. It certainly won't take much to beat LILCO's prices, so we expect to be able to come up with significant savings for the county." LILCO has among the highest electrical rates in the countr~ Suffolk County has a small public power agency that was formed
July 1995
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in 1983 to take the county's small share of New York Power Authority hydro. The county electric agency also buys 5 MW of power from NYPA's FitzPatrick nuclear plant for distribution to some industrial customers. According to Ryan, the variable amounts of NYPA hydropower are sold to all customer classes through LILCO's distribution system under a billing credit arrangement with the utili~. Wouldn't Suffolk County's plans fit into the "sham muni"
O
C
U
S
said, "but that is available to us if we need it." LILCO is facing a number of competitive threats, in spite of CEO William Catacosinos's boast to security analysts last year that the company was effectivelyinsulated from competition by Long Island Sound. In addition to the county's initiatives, five Suffolk County municipalities-Southampton, East Hampton, Riverhead, Shelter Island and Southoldm are looking at municipalization. Also, a number of large industrial customers called
the Hauppage Industrial Association are looking at getting a break in electric rates, either through LILCO discounts or retail wheel-
ins. FERC Hits Pools on Access ~ C e Federal Energy Regulatory ommission continued to add provisions of the 1992 Energy Policy Act? Not at all, says Ryan, with the Washington firm of Brickfield, Burchette and Ritts. "One of the exceptions to the sham provisions," she says, "is if you were in operation as of the date of passage." Suffolk County's electric agency meets that criterion. Should LILCO refuse to transmit competing power to the count, the county would be in a position to file a complaint at FERC under Section 211 of the Federal Power Act. "We don't anticipate filing a 211 case," Ryan
flesh to its policies on open transmission access on May 16, ruling that the commission can order power pools to provide access to third parties. FERC told the Penn-
sylvania-New Jersey-Maryland Interconnection that its members must negotiate jointly with Duquesne Light Co. for transmission services for up to 300 MW of power the Pittsburgh-based utility wants to market to the east. But FERC rejected Duquesne's request that FERC order PJM to provide a single, system-wide rate, rather than a series of pancaked rates piled on by each of the PJM members. FERC said PJM must provide access to
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