Attention RG&E Customers:
Rate Increase Approved
New York OKs temporary RG&E rates during FERC case
Source Article: Utility Markets Today
Date Published: August 14, 2015
The New York PSC took the rare step of approving temporary rates yesterday so that the cost of Rochester Gas & Electric's (RG&E) reliability support services agreement (RSSA) with Exelon's Ginna Nuclear Power Plant would not balloon. The RSSA has yet to win final approval from the PSC and its terms are still being hashed out in a case before FERC.
Under the deal, monthly payments of $17.5 million (minus some wholesale revenues from the plant) were supposed to start on April 1, pending approval of the two regulators. If the deal were approved by the PSC and FERC, RG&E would have to make a "deferred collection amount" totaling each monthly fee from April 1 on plus interest.
The deferred payments would be made in equal monthly installments such that the final payment would be in March 2017.
If the case drags on into December, RG&E could owe $140 million or so and it reportedly only brings in $436 million/year in T&D revenue. RG&E asked for the temporary rates because each month that goes by without final approval, the deferred payment totals and their interest keep growing.
The more the regulatory approval process drags on, the less time ratepayers will have to deal with that back pay â€“ thus leading to higher payments, it added.
The temporary rates will start to collect money so that ratepayers are less shocked with bigger monthly payments if the RSSA wins approval. They will be subject to refunds in the event the deal is rejected.
The PSC picked staff's solution to the problem, meaning lower rates than RG&E sought and the use of customer credits to help offset the RSSA deferral costs.
With the costs of the deferred payments mounting, the PSC found it prudent to approve the temporary rates and avoid bill shock for consumers. Without any action, the deal could have caused customers' delivery bills to go up over 20%, the PSC said in its draft decision.
The deal has not yet won final approval, but the PSC found the Ginna plant is needed for reliability in RG&E's territory and it would shut down due to low market prices there.
The PSC is in this situation because Ginna has been unable to sustain its business due to low wholesale prices, PSC Chair Audrey Zibelman said at the commission meeting yesterday. "One of the things that the staff is working on with the utilities, and I think it's going to be just incumbent on us to look at, is where these situations may arise in the future so that we can avoid them," she added.
"I don't think anyone likes these contracts."
Historically this sort of dilemma was not a big issue in New York, but is becoming one that could be tackled through improved resource planning of the transmission system, Zibelman said. If more economic transmission solutions, which is the long-term fix to Ginna's retirement, are available, then they should be used to avoid RSSAs, she added.