Central Hudson: IPPNY "Unwilling[] to Allow New Entrants" Into Capacity Market

Opposition from the Independent Power Producers of New York to the re-opening of the Danskammer Generating Facility, "demonstrate its [IPPNY's] unwillingness to allow new entrants or reentry into the competitive wholesale energy and capacity markets," Central Hudson Gas & Electric said in comments to the New York PSC.

The Danskammer facility was damaged during Hurricane Sandy, and closed by Dynegy. Dynegy sold the plant to Helios Power Capital, which is seeking to re-open the facility, due to higher capacity prices in the new G-J local capacity zone.

"IPPNY opposes the return of Danskammer to the competitive wholesale electric market, where Danskammer's return will help to mitigate price increases expected as a result of the new [Lower Hudson Valley] capacity zone. IPPNY opposes Danskammer's return to the competitive wholesale energy and capacity markets because IPPNY represents existing wholesale generators who will benefit from higher prices in the capacity market absent Danskammer's return to service," Central Hudson said.

"IPPNY wants to delay, or even deny, the entry of additional generation into the new capacity zone so that its members can benefit from FERC approved high prices during the interim period while new transmission may be built to relieve the constraints with which FERC is concerned. IPPNY is simply adverse to the market price reduction effects that additional generation, such as Danskammer, will bring to the capacity market with its return to operation," Central Hudson said.

Central Hudson confirmed that it is in discussions with Danskammer's owners to enter a contract with the facility, but there is no contract at this time. "Central Hudson must purchase capacity, and continually seeks to purchase capacity either directly from suppliers or through the NYISO market to provide its customers with reliable and reasonably priced service," the utility noted.

"Central Hudson is exploring options that will mitigate the expected impact of the new capacity zone, which will increase capacity prices to the detriment of Central Hudson's customers -- and other Load Serving Entities' customers in the new capacity zone -- while enriching existing merchant generators, including IPPNY's members within the new capacity zone," Central Hudson said.

"IPPNY engages in conjecture that Central Hudson's customers will face higher costs over the long run because they will be required to fund the uneconomic investment. IPPNY's conjecture is simply propaganda intended to scare the Commission into denying Petitioners' request to reopen Danskammer without a shred of evidence to support IPPNY's hypothesis. Neither Central Hudson nor Petitioners have any motivation to enter into a contract that would be uneconomic for either party. The Commission regulates both Central Hudson and Petitioners and has access to any contract that Central Hudson may enter. There is simply no reason to believe that a contract between Central Hudson and Petitioners, if one occurs, will result in anything other than lower rates for customers compared to the rates they are expected to pay after the new capacity zone becomes effective May 1, 2014," Central Hudson said.