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ESCOs Seeks Delay of Start of N.Y. ZECs Compliance Period Given Litigation of ZEC Order

April 3, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Impacted ESCO Coalition has asked that the New York State Public Service Commission delay the April 1, 2017 start date of the Zero Emission Credit (ZEC) compliance period by 120 days, citing ongoing litigation of the PSC's ZEC order.

Under the ZEC program, ESCOs and other LSEs generally must pay a compliance cost associated with administratively determined subsidies to certain nuclear plants, with NYSERDA centrally procuring ZECs and allocating costs to LSEs.

The Impacted ESCO Coalition said in its request, "While the Coalition is generally supportive of the Clean Energy Standard ('CES') and the goals it seeks to achieve, it is concerned that the Phase I Implementation Plan does not take into account the short timeframe required for pending legal challenges to reach their conclusion. Given the likelihood one of these challenges to the ZEC Program will succeed, and the complexity of a potential unwinding of the ZEC program as a result, we strongly encourage the PSC to take immediate action to minimize possible market disruption and the resulting harm to mass-market customers."

The initial ZEC compliance period is scheduled for an April 1, 2017 start date. Beginning April 30, 2017 all load serving entities (LSEs), inclusive of ESCOs, will be required to purchase ZECs from NYSERDA based on a proportionate amount of statewide load, or energy demanded, in a given compliance year (set at $17.5394/MWh for 2017, plus an adder of $.0594, representing NYSERDA's incremental administrative costs). Compliance and reconciliation for the first round would occur in September 2018.

The Impacted ESCO Coalition noted that the PSC's ZEC order is being challenged by various generators in both federal and state court, as well as at FERC, while the New York State Senate and Assembly have also seen bills introduced to place a moratorium on the ZEC program

"If any of these initiatives successfully delay implementation of, or otherwise place a permanent stop to the ZEC Program, New York’s retail energy consumers will suffer significant harm. The process to calculate and refund ratepayer monies paid to LSEs to cover ZEC payments will be difficult to administer, burdensome and costly, and will ultimately be at the expense of ratepayers. The Commission will also be confronted with significant added costs and administrative hurdles if it is required to modify or rewind the ZEC Program after implementation. These issues may be avoided if the Commission grants the request herein to delay the April 1, 2017 start date of the Zero Emission Credit compliance period by 120 days," the Impacted ESCO Coalition said in its filing

"As noted in its previous submissions, the Coalition is generally supportive of goals of the CES to reduce statewide greenhouse gas emissions by 50% by 2030. However, the Coalition is concerned about the complexity of the ZEC program and the significant financial burdens the compliance timeline places on smaller ESCOs, as it is currently written. It is also concerned about the potential for significant harm to customers and the administrative burden to ESCOs and utilities if any of the pending proceedings require an overhaul of the program once it has already been implemented," the Impacted ESCO Coalition said in its filing

Natara Feller, Managing Partner of Feller Law Group and counsel to the Impacted ESCO Coalition, said in a statement that, "Currently, there are numerous pending challenges to the ZEC Program, in federal and state court, at the FERC and in both houses of the New York Legislature. Given the uncertainty of the Program’s future, we encourage the Commission to delay implementation of the ZEC compliance period for at least 120 Days. Failure to do so leaves ratepayers on the hook for burdensome, significant costs should the Program be modified or overturned."

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