Reprint below – to see the original letter on click here
On July 30, 2012, the Incorporated Village of Port Jefferson filed a Complaint with the Federal Energy Regulatory
Commission (Commission) against National Grid Generation LLC (National Grid), alleging that National Grid has manipulated the capacity and energy markets on Long Island. I am filing these brief comments in support of the Village of Port Jefferson and urge the Commission to initiate a full investigation as requested in the Complaint.
The simple fact that Long Island’s energy prices remain high despite an apparent glut in generation capacity is clear evidence that Long Island’s energy markets are not working as intended and that Long Island rate-payers have suffered as a result. Although the Complaint is directed solely at National Grid, the center of the problem clearly is the unbalanced relationship between National Grid and the Long Island Power Authority (LIPA). LIPA must procure capacity and energy and it appears to be considering renewal of the exiting Power Supply Agreement (PSA), which is set to expire next May, in order to meet this responsibility. But the unfavorable terms of the PSA are left over from a different era, an era of broken markets that supposedly ended with the advent of the current electricity markets. To allow National Grid and LIPA to renew the PSA on its current terms is to admit that the market was not repaired.
The relationship between National Grid and LIPA is the problem. National Grid claims that they are playing by the rules, but those are rules that clearly benefit National Grid at the expense of Long Island ratepayers. There is no question that National Grid has been – and will continue to be – a key player in the electricity markets on Long Island. Nor can there be any doubt that LIPA will need to purchase electricity and capacity from National Grid in some form – absent divestiture. As a result, it is clear that LIPA is powerless to counter-balance National Grid’s influence on the Long Island markets. It is also clear that the terms of the PSA have been a true impediment to new investment and cheaper power on Long Island – as evidenced by National Grid failure to put forward an RFP proposal to repower Port Jefferson, despite the reality that at least one company reportedly has expressed serious interest in the repowering of this plant. Accordingly, any attempt by National Grid and LIPA to renew the PSA should be thoroughly scrutinized.
Thank you for the consideration of this request.
– NY State Assemblyman Steve Englebright