CITIZEN POWER ALLIANCE

The latest volume of an epic story about the Southern Tier's global energy ambitions is still being printed, and it has already generated plenty of buzz.

It's in the form of an 809-page technical report detailing the hazards and safeguards associated with harvesting the Marcellus Shale, the largest natural gas reserve in the country.

The document, released last week by the Department of Environmental Conservation, is at the core of a conflict about how effectively New York will lay new ground rules for an industry poised to change the economic and environmental landscape of the Southern Tier.

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If the United States is going to set up a cap-and-trade system similar to the one in Europe in an effort to reduce greenhouse gas emissions, who will regulate the new carbon market?

That question has yet to be settled.

As written in the Senate climate bill introduced on Wednesday, the job would go to the Commodities Futures Trading Commission, an organization that currently oversees the commodity futures and option markets in the United States.

In the House climate bill, passed in June, the Federal Energy Regulatory Commission would assume the main responsibilities — with the C.F.T.C. handling only the trading of carbon “derivatives.”

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At a confidential meeting today, parties including the staff of the Maine Public Utilities Commission and Central Maine Power Co. will seek ways to settle CMP's landmark request for a $1.4 billion upgrade of its transmission system.

But two prominent parties in the case say the settlement attempt – initiated at CMP's urging – reflects political pressure by the utility's parent company and threatens to short-circuit a legal process that's meant to test whether the project is necessary in its proposed form.

They also say that Gov. John Baldacci's wind power trade mission to Europe last week, and statements the governor made during the trip, send a message that Maine's energy future depends heavily on the approval of the transmission line, which would directly benefit Iberdrola, the Spanish owner of CMP's parent company, Energy East.

"My concern is that the vast amount of money at stake has resulted in Iberdrola and Energy East putting a great deal of pressure on the governor and his energy staff," said Anthony Buxton, a lawyer representing paper mills and other businesses. "I'm concerned the PUC staff is trying to drive a settlement with CMP, without the opportunity of full hearings under oath."

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Syracuse, NY -- State utility regulators today authorized an auction to distribute $95 million to new power plants fueled by the wind, the sun, biomass or other renewable sources.

The auction will be the fourth conducted under a standing state mandate to derive 25 percent of New York's electricity from renewable energy sources by 2013.

Members of the state Public Service Commission, who voted Thursday to approve the latest auction, noted that the time is right for new renewable energy projects. Developers can take advantage of federal stimulus grants worth up to 30 percent of a project's cost, as long as they begin construction by next year.

The auction will be conducted by the New York State Energy Research and Development Authority. Here's how it works:

Power plant developers whose projects qualify as renewable energy submit sealed bids stating a price they would accept for their "renewable energy credits," which are calculated based on how many kilowatt-hours a facility produces. Renewable energy credits supplement a power plant's income from actual energy sales, which depend on market prices.

Bids are evaluated primarily on price, with some consideration for each project's potential to spur economic development. Ten-year contracts go to the winners.

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The New York Regional Interconnect said Friday it is suspending plans to build a 190-mile power line in the state, saying a recent decision by federal regulators makes the $2.1 billion project too risky.

The company had asked the Federal Energy Regulatory Commission to reverse a rule established by the region's power grid operator, saying it gave utilities too much power over the project. But the commission denied the request this week, prompting NYRI to suspend operations nearly five years and more than $20 million into the line's development. NYRI is a partnership between privately held American Consumer Industries Inc. and Borealis Infrastructure, which manages the infrastructure investments of Canadian pension plan OMERS.

The FERC decision chills investment by an independent transmission developer at a time when federal officials are trying to expand the nation's electric grid in part to incorporate renewable generation, said Chris Thompson, the company's president.

"It seems like FERC, the Department of Energy, and the Obama administration are not on the same page," Thompson said in an interview Friday.

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A $278 million rate hike request by New York State Electric & Gas and its sister utility, Rochester Gas & Electric, is on the agenda for Tuesday’s meeting of the Public Service Commission.

Staff at the Department of Public Service have sought dismissal of the request, so it is possible that the commission members could vote on Tuesday whether to approve the motion and stop the case from moving forward. It could also deny the motion by the staff and allow the case to move forward. The DPS is the administrative arm of the PSC.

NYSEG, which has 800,000 customers in upstate New York, is owned by Iberdrola SA, a Spanish utility. Iberdrola acquired NYSEG and RG&E last fall as part of a $4.5 billion acquisition of Energy East Corp. Under the terms of the PSC’s approval of the deal, NYSEG and RG&E were told they cannot seek a rate increase until October of this year.

NYSEG and RG&E say that their poor financial condition merits a rate increase earlier than that.

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Assemblyman Tom O’Mara, R-Big Flats, is sponsoring legislation that would create the Bulk Energy Electricity Program.

Assemblyman O’Mara noted that the amendment and corresponding legislation (A.2056) would reduce energy costs to the state by seeking more cost-efficient solutions with respect to electricity.

Under the legislation, the New York State Office of General Services would administer the Bulk Electricity Purchasing Program and make it available on a voluntary basis to state agencies, municipalities and school districts. OGS will be tasked to ensure that each contract for service entered into is with the lowest responsible bidder, provides for service and maintenance and gives additional amounts of electricity at the bulk rate in sufficient quantities in the event of an emergency.

“Bulk purchasing of electricity will help reduce costs for school districts and local governments and may result in lower property taxes,” O’Mara said. “It is important for the Legislature to encourage bulk buying on state and local levels as a way to lower energy costs, save important tax dollars during these tough economic times and encourage energy conservation.”

The legislation is expected to be brought to the Assembly floor for a vote via the amendment process in the coming days.

The federal government could one day come in and tell north country farmers and other property owners that they have no choice but to allow a proposed transmission line carrying wind-generated power to cross their land. And adding to the affront, they might have to pay for it, too.

That's the thrust of legislation introduced by Senate Majority Leader Harry Reid, D-Nev., to give Washington expansive new powers to build thousands of miles of power lines needed to ensure the country meets its long-term goals for increasing reliance on electricity from renewable energy sources.

The reliability and capacity of the country's aging power grid to carry the power from distant sources have been questioned. By one estimate, as many as 15,000 miles of high-voltage lines will be needed crisscrossing the country to get power from likely producers in the Midwest and Western states - or from north country wind farms - to the East Coast and other parts of the country.

However, doing that will require years of planning and siting of power lines that will have to be reconciled with local and state permitting regulations, subject to contentious public hearings and strict environmental reviews that could delay or even halt construction.

U.S. Senator Charles E. Schumer today wrote to the Public Service Commission asking them to reject Energy East's request to raise gas and electric rates on nearly 1.5 million New York ratepayers. In a letter, Schumer outlined a host of reasons for the PSC to dismiss their request, contending that it violated several of the terms established by the PSC in approving Iberdrola's purchase of the utility and also made questionable claims in an attempt to justify the rate increase.

“This rate hike application reeks of profit mongering by a company that promised not to do just this as a condition of the approval of its merger. Just as New Yorkers are struggling to make ends meet, Energy East is trying to pull a fast one on its customers. The PSC should reject this application without any hesitation,” U.S. Senator Charles E. Schumer said.

Iberdrola, a Spanish utility company, recently purchased Energy East, which is the parent company of NYSEG and RG&E, serving over 1.5 million ratepayers, spanning communities across Western NY, the Finger Lakes Region, the Southern Tier and Hudson Valley, the Capital Region and North Country.

During the regulatory approval process, Iberdrola committed to setting aside a $275 million pool of funds -- or Positive Benefits Adjustments (PBA) -- to keep customer rates low. At the time, Schumer said he would only support a deal containing provisions that would keep customer rates low. The final deal stipulated that a rate hike increase could not be requested for 13 months after the merger and that the $275 million Positive Benefits Adjustments be used to reduce rates or offset costs of the merger. Today, Schumer asked the PSC to determine whether the company was planning on using the $275 million in PBAs to offset the proposed rate hike, and if not, to determine how the company intended to use that fund.

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Albany, N.Y., February 25 –State Senator George Winner (R-C-I, Elmira) said today that with just over one month to go until the April 1 deadline to have a new state budget in place, the state’s Democratic leaders are still considering an Empire Zone reform plan that would devastate local economic development and lead to job losses.

“The Empire Zone program is upstate New York’s No. 1 economic development tool, and Governor Paterson wants to take it away from local businesses and manufacturers. I haven’t heard any of the state’s Democratic leaders back away from the plan, and that’s frightening. The governor’s plan is a rejection of the Empire Zone program, not reform,” said Winner. “The last thing we can afford is for a job-killing plan like this one to be approved at the last minute with very little public discussion.”

Governor David Paterson’s proposed 2009-2010 state budget would cut $272 million by taking Empire Zone benefits away from companies currently participating in the program. Under the Paterson plan, businesses previously deemed qualified for Empire Zone benefits would be retested to determine if they meet a new, higher 20:1 benefit-to-cost standard. The proposal would also eliminate the roles of local Empire Zone certification officers and administration boards in the current certification process, with the role of sole certification officer falling to the state economic development commissioner.

Winner said if Paterson's proposal is enacted, most of the businesses and manufacturers in his legislative district currently receiving Empire Zone benefits would no longer qualify.

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