FERC OKs ICAP Rebates for Utilities Serving NYC
The Federal Energy Regulatory Commission last week handed
load-serving entities (mostly electric utilities) that supply the
New York City power market a present --- a targeted rebate of $3.75
per kilowatt month.
By a vote of 3-1, with Commissioner Curt Hebert Jr. dissenting,
the Commission agreed certain utilities serving the market should
be reimbursed for the penalties they were charged for falling short
of their installed capacity (ICAP) obligation this summer. The
ICAP deficiency penalties were unfair, it ruled, given that the
supply of available ICAP in the New York City market was very tight
during the summer [ER00-3462].
The current mechanism in the New York Independent System
Operator (NYISO) tariff "penalizes the New York City load-serving
entities essentially for failing to achieve the impossible - and
that is, for failing to obtain ICAP when none was available," said
Commissioner William Massey.
Chairman James J. Hoecker was more than happy to return money to
the electric market. ".There are a lot of people out there who have
been imploring us to give money back. And frankly I'm not going to
pass up the opportunity to do it, especially when there are no
legal impediments," he said. ".New York City is the only part of
the state that was paying higher rates this summer. So I'm happy to
give them a break."
The New York ISO sought the rebates from FERC, fearing that
without them retail electric competition could be seriously
impaired in the New York market - either load-serving entities
would flee the market or new entrants would be discouraged from
Hebert dissented from the majority's decision, essentially
saying the rebates amounted to nothing more than a Band-Aid for New
York City. "Instead of offering rebates to load-serving entities
that are unable to [secure] sufficient installed capacity in the
New York City area, I would act now to ensure additional supply of
installed capacity. I would do this by lifting the price cap [on
ICAP] and promoting the entry of new generation."
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