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Astoria plant ruling could raise city rates

The state Public Service Commission said the Federal Energy Regulatory Commission's decision to rerun a test of Astoria Energy's operating costs could lead to a $500 million spike in electricity bills across the state. Photo by Christina Santucci
TimesLedger Newspapers

The state is demanding the Federal Energy Regulatory Commission turn back a recent decision regarding how market rates for one of Astoria’s power plants are calculated on the grounds that the ruling could increase electricity bills across the state by up to $500 million.

“FERC is modifying the rule in a way that will artificially force [Astoria Energy II] to increase its offer price for capacity to a point where it will not be accepted,” the state Public Service Commission said in a press release.

The PSC’s request for a hearing was in response to FERC overturning last month a 2010 decision by the New York Independent System Operator. The latter agency determined that the costs of operating Astoria Energy II, a 550-megawatt plant, at 17-10 Steinway St. in Astoria’s Con Edison complex, were smaller than the predicted revenues the plant was projected to earn from the electrical market.

Astoria Energy II’s local competitors — US Power Generating’s Astoria Generating and TransCanada’s TC Ravenswood — had issued complaints against the ISO’s decision and FERC decided to have the ISO redetermine Astoria Energy II’s operating costs with changes to the test the PSC said would set up Astoria Energy II’s cost to be higher than the market rates.

The PSC estimated this could increase electricity bills for consumers both in New York City and upstate by $500 million in 2013.

A spokesman for FERC said in an e-mail the federal agency could not comment on the PSC’s petition to overturn its recent decision at this time, but he said the PSC and other parties have requested a rehearing on the decision and that those petitions are now being considered.

Astoria Energy II did not respond to requests for comment.

State Sen. Michael Gianaris (D-Astoria), who has been a critic of the neighborhood’s power plants and FERC, said he supported the PSC’s challenge.

“It’s bizarre and unfathomable that FERC would do this,” he said.

Gianaris said changing the price structure for the markets was unreasonable given the current economic climate and that the power companies are already making a lot of money. He accused FERC of thinking of the energy industry rather than the customers.

“FERC has to get its act together,” Gianaris said. “It’s supposed to be an industry representing the public and too often it is in cahoots with the industry trying to take money out of people’s pockets.”

The senator had previously criticized FERC for a decision that would have allowed the city’s power generators to hike its rates for peak electrical times to pay for property taxes, but the companies already get property tax credits. FERC overturned its decision.

Reach reporter Rebecca Henely by e-mail at rhenely@cnglocal.com or by phone at 718-260-4564.

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