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NY ESCO Seeks Rehearing Of ZEC Program, Saying Use of Older Data In Determining Each LSE's Obligation Results in ESCO Subsidizing Competitors' ZEC Obligations

December 20, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Liberty Power Holdings LLC ("Liberty") has sought clarification and/or rehearing on the New York PSC's Zero Emissions Credit (ZEC) order with respect to implementation of the calculation of ZEC obligations for individual LSEs, saying a "material" drop in Liberty Power Holdings LLC's load in New York will result in the company subsidizing the compliance obligations of its competitors.

In the ZEC order, the PSC ruled that each LSE’s requirement will be determined based on data provided by NYGATS regarding the load served by the LSE during the previous 12 months.

Liberty said that it was informed by NYSERDA that its required payment for ZECs during the period from April 1, 2017 to March 31, 2018 would be based on Liberty’s sales during the period from April 1, 2015 to March 31, 2016.

"Unfortunately, Liberty has experienced a material drop in its retail load in New York State since April of 2016. As a result, the payments that Liberty will be required to make to NYSERDA pursuant to the November 17 Order will exceed its actual ZEC obligations for the twelve-month period ending March 31, 2018, by more than a million dollars," Liberty said

"While Liberty recognizes that this over-payment will ultimately be refunded, this over-payment requirement represents a substantial burden to a competitive LSE, which by definition has no captive customers from whom to recover these costs in the interim. The expected over-payments will create actual interest expense to Liberty that will not be recoverable, and similarly the overpayments represents a zero-interest loan subsidy that benefits other LSEs," Liberty said

Liberty offered two alternatives to make the ZEC obligations of individual LSEs more closely aligned with their current load

"One option would be to base the estimated ZEC payments for April 1, 2017 to March 31, 2018, on the most recent 12-month history of LSE deliveries, as reported by the NYISO and including only such months where v2 settlement data or better is available, i.e. as of the date of this petition October 1, 2015 through September 30, 2016. This approach is reasonable in that it is recent and relies on the same source data that NYSERDA will use for final settlement (i.e. settlement data from NYISO). An alternative approach might be to keep the current estimation method, using the April 1, 2015 to March 31, 2016 settlement data, but only until settlement data for April 1, 2016 to March 31, 2017 is available, and then update the balance of period payments including a true-up for any estimated overpayments made prior to that update. Either of these clarifications will minimize the burdens of the Commission’s ZEC program on all LSEs, without interfering in any way with NYSERDA’s ability to administer that program," Liberty said

Liberty said that absent changes to its allocation of ZEC obligations, "[t]hose charges are unjust and unreasonable as applied to Liberty, in that they bear no relation to the number of ZECs reasonably required to satisfy Liberty’s responsibility under the Commission’s Clean Energy Standard with respect to its actual retail load in New York State and create actual, material financial costs and burdens on Liberty without reasonable compensation."

"Those charges are unduly discriminatory in that as a result of the over-collection of ZEC costs from Liberty, other LSEs with whom Liberty must compete to sell electricity will have their payment obligations for ZEC costs unfairly reduced," Liberty said

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