FERC favors developer in NYISO dispute

FERC Ruling on Caithness II rejects PSEG-LI add-on criteria to NYISO interconnection, slashes transmission upgrade costs, supports Long Island rate savings, enhances grid reliability, and advances efficient combined-cycle power and local economic development.

YAPHANK, NY – The Federal Energy Regulatory Commission FERC, the principal energy regulatory body in the United States, has ruled that PSEG Long Island’s PSEG LI criteria for determining the electric transmission upgrades required to reliably and safely interconnect new generation facilities violate FERC’s Orders and the New York Independent System Operator’s NYISO tariffs.

FERC’s decision Caithness Long Island II, LLC v. New York Independent System Operator, Inc. is a repudiation of the special transmission interconnection requirements that PSEG-LI had added onto the standard NYISO criteria for determining the upgrades required to connect power plants and undermines PSEG LI’s invalid and unsupported claims that Caithness II would increase electric rates on Long Island.

The rejected PSEG-LI criteria would have required the Caithness II project to incur hundreds of millions of dollars in transmission upgrade costs to safely and reliably connect the new plant to Long Island’s electric grid. As a result of this decision, there will only be minimal transmission upgrade costs, and the Long Island electric ratepayers will reap the benefits.

Indeed, a study by General Electric Consulting has previously found that, due to its high efficiency, Caithness II is expected to save Long Island an average of $192 million annually or over a billion dollars in wholesale energy costs over the first six full years of operation under the Caithness proposal that the Long Island Power Authority LIPA management previously selected in connection with LIPA’s 2010 Request for Proposals.

“Not only is this ruling a victory for Caithness II, it is a triumph for Long Island ratepayers,” said Ross Ain, President of Caithness Long Island II, LLC. “PSEG-LI has been blocking Caithness II with false claims about high transmission costs to connect Caithness to the electric grid and claims about an approximately six percent increase in rate hike without any supporting documentation. The reality is that Caithness II would save ratepayers money, provide much needed economic development, hundreds of jobs and increased tax revenues to support Long Island’s schools, libraries, fire districts and local government. The new plant will also substantially reduce Long Island’s imports of expensive off-island electricity from power plants owned by PSEG and others in New Jersey, Connecticut and upstate New York, as well as significantly reduce air and water pollution from the old, inefficient plants on Long Island.” LIPA management selected Caithness II in 2013 for its value to Long Island ratepayers and the environment. It is a combined-cycle 750-MW natural gas-fired plant that will be built adjacent to the existing Caithness facility in Yaphank.

PSEG-LI recommended that the project be put on hold in August 2014. Caithness II has widespread support from environmental, business, government and labor leaders, and is expected to save ratepayers in excess of $192 million in annual electricity costs, in addition to creating significant environmental and economic benefits.

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