By William Opalka

The Federal Energy Regulatory Commission reaffirmed its authority Monday to regulate New York reliability support services agreements, rejecting a rehearing petition filed by the state Public Service Commission challenging its jurisdiction (ER15-1047).

The NYPSC had argued that it had sole jurisdiction over the rates and terms of an RSSA it had ordered between Exelon’s troubled R.E. Ginna nuclear plant and Rochester Gas & Electric. (See NYPSC Challenges FERC Jurisdiction over Ginna.) FERC in April rejected the proposed rate schedule in the agreement and ordered hearing and settlement proceedings.

FERC rejected the contention that it would be setting retail rates, asserting that it was properly exercising its authority under the Federal Power Act to regulate wholesale markets.

“Preventing the exercise of market power through [reliability-must-run] agreements is important to ensure that wholesale rates are just and reasonable,” FERC said. “Therefore, finding that the commission does not have authority to regulate such agreements — which keep RMR resources online, provide them out-of-market compensation and remedy a potential opportunity to exercise market power — would be inconsistent with the congressional intent behind the FPA.”

The agreement, set to be retroactive to April 1 once approved, would cost about $175 million a year and be effective through late 2018. Ginna says it lost more than $150 million between 2011 and 2013.

FERC did, however, reverse its stance from April when it said it would not consider the issue of Ginna “toggling” between the RSSA and NYISO. In its original order, the commission said it would only reconsider how much Ginna would have to repay in the event the plant returned to the market after the agreement’s expiration — saying that this provision was “a sufficient disincentive” to prevent toggling. (See FERC Rejects Ginna Rates, Orders Settlement Proceeding.)

“We find that the pleadings raise disputed issues of material fact concerning Ginna’s incentive to toggle between RSSA compensation and the NYISO markets,” FERC said. That issue has been added to the roster of items to be decided in the ongoing proceeding before a FERC administrative law judge.

In Monday’s order, FERC also rejected rehearing requests from several parties that challenged several aspects of the agreement. The commission

• Again accepted the NYISO Ginna Reliability Study that justified the RSSA;
• Upheld the September 2018 end date for the RSSA, saying early termination clauses in the contract are consistent with FERC policy to keep RMRs of limited duration; and
• Reiterated its stance that consideration of the “price-suppressive” effects Ginna’s contract would have on the capacity market is beyond the scope of the proceeding.

Meanwhile …

In the concurrent proceeding before the administrative law judges of the NYPSC, RG&E last month requested a temporary rate surcharge to avoid rate compression over a shorter duration of the RSSA. Whatever rate increases it will eventually collect are being held in abeyance until the RSSA is approved by state and federal regulators.

RG&E estimates that its deferred collection will reach approximately $25 million from the effective date of the RSSA through July and will continue to grow, with interest. “By authorizing a temporary rate surcharge, the bill impacts resulting from the deferred collection amount would be mitigated,” it wrote.

In a brief filed Monday, RG&E said the commission “should find that the company’s proposed temporary rate surcharge tariffs are in the public interest and authorize the company to immediately implement the surcharges, subject to refund.”

PSC staff filed a brief Monday that supports the move, proposing Sept. 1 as the effective date.

The Utility Intervention Unit of the state Division of Consumer Protection, a coalition of consumer and clean energy advocates and commercial and industrial users, opposed the move, calling the dollar amounts RG&E cites as “hypothetical.”

“The RSSA is not in effect,” the state consumer advocate wrote. “Neither the commission nor FERC have reached a final conclusion to accept the RSSA, so RG&E has not, and might never, incur any financial obligations to Ginna under the RSSA.”

The administrative law judges said they will set a schedule to recommend a decision once reply briefs due July 20 are filed.