Monthly Archives: October 2014

Testimony Presented to the Town of Wawayanda Planning Board Regarding CPV

March 27, 2013

 

Town of Wawayanda

Planning Board

 

Members of the Planning Board:

 

Some people from our town justify the CPV power plant project saying we need “ratables”, while others disagree because our Town Supervisor and Board are giving CPV a PILOT. Many of us here tonight also see it as the head of a deadly snake, the Millennium Pipeline, that winds its way through the countryside threatening to destroy our health, safety and quality of life and which, can only lower property values as industrialization encroaches on our agricultural community. Many of us have questioned whether it was appropriate that the Town of Wawayanda Planning Board assumed “lead agency status” for the SEQUA process in the first place, and whether their review has been objective, competent, arms length or independent and/or impartial in the second place.

 

This question has taken on new and greater meaning as the true scope of this project has begun to come to light. In 2009, when the initial DEIS came out, it was not evident that the CPV plant would rely on unstable hydrofracked gas snaked across our county by means of the Millennium Pipeline. Nor was it anticipated, that because that pipeline was installed with a section of undersized pipe, a dangerous and noxious Compressor Station would be need to be built in the heart of a rural residential neighborhood. The need for a pump station to get Middletown grey water to the plant for coolant was not understood, especially by the people who now live nearby at the Workforce and Minority Housing project on Route 6 near the Historic Designated Graveyard site, residents who live on Kirbytown Road or in the other high density low income housing projects nearby and senior housing now under construction on County Route 78; and, the question is raised as to whether an impact study has been done as to the effect of CPV’s use of Middletown’s water on the city’s drinking water? Will it be contaminated? In addition, concerns raised by Goshen Planning Board representatives, myself and Orange Environment, Inc., relative to health hazards and safety despite proposed mitigations and environmental dangers from Sulfur Dioxide and Nitrogen Oxide, which contribute to acid rain and smog, and Carbon Dioxide which causes global warming and climate change, and other carcinogens and toxic pollution that will be emitted from the power plant remain major concerns not just for Wawayanda and nearby municipalities but Orange County and beyond.

 

Some think that the alleged $30 Million in project Host Community Benefit and PILOT money over 20 of the 30-year life expectancy of the plant is a great thing; others do not. Reference is made to another CPV project, the Sentinel Energy Center in Southern California that generates $25 million in Sales Tax and $5 million in annual property taxes revenue according to press releases. The question is why the local Town Supervisor, Mr. Razzano, and Republican Town Board members have not demanded fair taxation here?   This, too, raises questions as to whether they are equipped and/or competent to the task of negotiating “fair and reasonable” compensation and accommodation from CPV for hosting a project of this scope and import on behalf of Orange County. How will Middletown, Minisink, Goshen and elsewhere be compensated? And, how is “fair and reasonable” being defined? Can they or anyone put a price on the health and safety of our community, our children, our seniors, a sustainable environment, us?

 

While CPV has told everyone that this proposal will provide “clean energy to New York State,” it clearly is not going to be “clean” or as “clean” as other alternative energy options. And, since it will further pollute the air we breathe and endanger the water we drink; that there is no assurance that it will not devalue our property, make it impossible for us to sell our homes, relocate our families or be compensated for our losses; or that ANY of the energy produced at this facility will be available to our homes or any residences in nearby municipalities, we ask WHY, we, the residents of Wawayanda, Minisink, Middletown, Goshen and other neighboring Orange County communities must suffer the brunt of all the adverse environmental and other negative impacts of this project; for it is not the CPV electric generating plant alone, but the Millennium Pipeline, the incomprehensibly maddening Minisink Compressor Station, the pipeline ventilation system at the intersection of Route 1 and County Route 12, as well as the potentially explosive unstable gas pipeline itself that threatens the safety and well being of all of us in this area. And, what will come after this project; more industrial development that changes the nature and character of our community? None of these ominous consequences are necessary or would even be a consideration were it not for these projects and those willing to surrender their integrity and our homeland for money and political power. Residents of our town and others as well as those of neighboring municipalities need to know that their families, their children, their seniors as well as minority populations are being considered when you make your decision to allow this project to go forward.

 

Again, some believe this project will be beneficial. Many others and we want to know for whom? Just how much does CPV project to gain by development of this power plant. What is CPV’s projected annual profit for this facility relative to the PILOT and Host Community Benefit Program allocation being negotiated by our town politicians, and how much of that profit will be sheltered in “Off Shore Tax Havens” or tax loopholes from Federal, State and Local Taxes?   Obviously CPV will not be paying its fair share of taxes given the PILOT our town leaders are allowing.   And, how much of CPV’s profit will be spent on Political Action Committees (PAC’s) to allow them to buy influence with our Republican politicians and further their corporate agenda?

 

In sum, we continue to question the need for and benefit of the CPV power plant here in Wawayanda and Orange County. We believe the people of Orange County have not been properly informed about or included in deliberations on the CPV power plant and its related projects which, will have enormous adverse health, safety, environmental and other impacts on residents throughout Orange County and beyond. Allowing this project to go forward will not promote development of “clean energy” in New York State. On the contrary, it will promote hydraulic fracturing for natural gas extraction along with the consequent negative environmental impacts to provide fuel for its operation. It will increase our country’s dependence on fossil fuels, increase global warming and accelerate climate change. It will further contaminate the air we breathe which, already exceed Federal Air Quality Standards and endanger our water as well as the food our farmers grow, sell and we consume. We question the fairness and reasonableness of the deal town politicians are giving CPV and allowing them to get away without paying their fair share of the tax burden.

 

This project has gone much to far without adequate scrutiny, public awareness and input. It is not to late to stop it. Now is the time to do so.  An administrative hearing is requested by the NYS Department of Environmental Conservation with regard to the concerns raised above as well as any and all remaining permit applications on behalf of CPV’s power plant and related projects.

 

Finally, the rule enacted by the Republican controlled Wawayanda Town Board regarding public input at hearings that only allows three (3) minutes is a disgraceful negation of the people’s constitutional right to Free Speech. This board has met for over five years while the people affected by this project have been excluded and you have the arrogance to allow only a few minutes for us to respond; it is an affront to American democracy, a statement about the Republican administration and a shameful abuse of authority.

 

Randolph Hurst

83 Post Road

Slate Hill, NY 10973

Sierra Club Request for Rehearing/Reconsideration of Commission Order

SIERRA                         STERLING FOREST/HIGHLANDS COMMITTEE

CLUB                RAMAPO/CATSKILL GROUP CONSERVATION COMMITTEE

FOUNDED 1892

ATLANTIC CHAPTER

 

August 27, 2014

 

Via Email to: paul.agresta@dps.ny.gov and secretary@dps.ny.gov

 

To: Honorable Paul Agresta, Administrative Law Judge

And Honorable Kathleen H. Burgess, Secretary

 

New York State Public Service Commission

Three Empire State Plaza

Albany, NY 12223-1350

 

Subject: CASE 10-E-0501 Petition of CPV Valley, LLC (CPV) for a Certificate of Public Convenience and Necessity, Approval of Financing and for Approval of a Lightened Regulatory Regime. Sierra Club Request for Rehearing/Reconsideration of Commission Order issued on July 28, 2014 denying the Request to Revoke.

 

Dear Judge Agresta and Secretary Burgess:

 

Sierra Club predicates this request on the fact that the Commission failed to respond to or misstated the contentions in our filings of June 10 and July 10, 2014.

 

In the interests of brevity, please refer to the Sierra Club Motion to Revoke filed on June 10, 2014, and Correspondence with Attachments dated July 10, 2014, for background information.

 

INTRODUCTION

 

On May 9, 2014, as the Commission was issuing the Order Granting the Certificate to CPV, the Middletown Times Herald-RECORD published an interview with CPV Vice President Steve Remillard, who contradicted the financing representation that CPV had previously made to, and accepted on face value by, the Public Service Commission. Mr. Remillard acknowledged that CPV could not obtain outright private financing in the current competitive power market. CPV would now need a long-term contract with a state organization. That state contract secured by the taxing authority of New York State is necessary to guarantee the private revenue bonds needed to finance the power plant construction and operation. Such a state contract would not only nullify the requisite competition necessary for Lightened Regulation, but also would shift financial risk from the private CPV investor to the captive ratepayer and taxpayer, a new circumstance, which is in total opposition to the justification the Commission gave for granting the certificate in the first place.

 

The Commission’s May 9, 2014 Order noted that: “. . . we need not make an in-depth analysis of the proposed financial transaction . . . Additional scrutiny is not required to protect New York ratepayers who cannot be harmed by the terms arrived for this financing because CPV Valley will bear the financial risk associated with its financial arrangements.” (See pages 22-23).

 

CPV’s most recent comment reversed the above noted rationale to grant the Certificate. The Request to Revoke was made based upon the significant power market and financial market changes that had evolved since the October 2010 CPV Petition. The new circumstances would reverse the CPV business plan, would negate the role of market competition, and would now burden the public with financial risk. The hope of the Sierra Club Motion was that the financing requirements for the Certificate would be updated, would be given professional evaluation and would provide guarantees to protect both the ratepayers and the taxpayers from financial risk.

 

On July 28, 2014, the Commission issued an Order Denying the Sierra Club Motion for Certificate Revocation.

 

CIRCUMSTANCES REQUIRING REHEARING/RECONSIDERATION

 

We agree with CPV’s desire to obtain long-term power purchase agreements (PPA’s) to provide financial stability in a rapidly changing power supply market and we have shared those considerations with CPV. However, the only long-term PPA’s that we would support are competitive bilateral contracts between private CPV investors and private investor-owned utilities where all financial risk remains in the private sector. We strongly oppose the current bait-and-switch tactic by CPV to promise competition and to assume financial risk but then attempt to secure state guaranteed contracts, which transfer financial risk from private investors to the public.

 

The Commission discussion on page 17 of the July 28, 2014, Order thoroughly misstates the Sierra Club position: “Despite Sierra claims, a PPA would not transfer all financial risk from CPV Valley to ratepayers, but would simply allow CPV Valley to provide greater certainty to lenders, thereby facilitating financing agreements.” Contrary to the Commissions assertions, the Sierra Club never made such a claim regarding private competitive PPA’s. All PPA’s are not the same. We support competitive bilateral PPA’s between CPV investors and utilities, which do not transfer risk to ratepayers and taxpayers. PPA’s by themselves do not assign risk. A vastly different impact is determined by whether or not the counter-parties to the contract are public or private. We oppose the suggested PPA with a state agency, which does transfer financial risk to the public and would be an unjustified gift to CPV.

 

The notation by the Commission of a PPA obtained by CPV through the Energy Highway Initiative is a vacuous distraction from this discussion. No such contract exists and no offer for such a contract with CPV has been proposed.   The only active efforts to modernize New York’s electric power system is the Reform the Energy Vision (REV) Proceeding currently in progress. And, last weeks PSC staff report on REV favors decentralized power supply networks and reauthorizing utilities to reenter power generation activities, either of which would create immense market obstacles for large central power plant projects such as CPV.

 

Also on page 17, the Commission discussion discounts the veracity of the newspaper reporter’s interview story without any justification for doing so. To quibble over the use of quotation marks is another distraction. Whether or not Mr. Remillard’s comments were expressed as a direct quote or were paraphrased neither ensures nor diminishes the accuracy of the message. Please note that Mr. Remillard reaffirmed the May 9, 2014 news story regarding the necessity of a state agency contract to obtain financing during a conversation on June 12, 2014, with the undersigned.

 

Also note that the genesis of that news article was through efforts involving CPV and its local business partners and beneficiaries to publicize the Orange County Partnership’s May 5, 2014 letter to Governor Cuomo. (See Sierra Club July 10, 2014 attachments.) That letter was a coordinated lobbying effort to put pressure on the Governor to sign a state PPA contract with CPV. That letter and news article were to coincide with the PSC Certificate decision directly related to Case 10-E-0501.

 

The Certificate of Public Convenience and Necessity, Approval of Financing, and Approval of a Lightened Regulatory Regime all require PSC decisions to be made in the “PUBLIC INTEREST,” not just in the interest of ratepayers. The Commission narrowly focuses on captive ratepayer risk and ignores the Sierra contention regarding financial risk to all taxpayers who are just as captive.

 

The Commission discussion on page 13 justifies its limited position with a series of false economic theories and misplaced examples resulting in erroneous conclusions. For instance, the Commission states: “Although Petitioner believes that there is too much generation supply and too little demand, as a general rule, additional supply benefits ratepayers by decreasing prices through competition.” That promised price reduction somehow has not been the experience of consumers. That theory may apply to an oversupply of unsold autos piling up on a car dealers lot, but it does not apply to power markets where electricity cannot be stored. Our real life experience has been that too much generation supply and too little demand results in power plants becoming unprofitable and closing down, which is the major reason for the creation of the FERC/NYISO New Capacity Zone that has artificially raised electricity prices to the detriment of all ratepayers and taxpayers.

 

Further, “If there is indeed oversupply, then either CPV Valley will be dissuaded from building, or run the risk that such oversupply will prevent it from achieving the revenue desired.” Both CPV and the financial market would agree to that Commission scenario but CPV’s response is a third alternative to obtain state guaranteed contracts, which shifts financial risks to taxpayers instead of CPV investors, which is not in the public interest.

 

And, the Commission discussion on bankruptcy is incredibly simplistic and deceiving: “Entrance into, and exit from bankruptcy is a normal incident in competitive markets, but as CPV Valley observes, four New York generators have emerged from bankruptcy while another is being restructured. Consequently, power plants can survive bankruptcy and continue to operate.”   Bankruptcy, however, is a business failure that is not in the public interest and should not be the goal of a business plan. Power plants can survive bankruptcy, but can the public and our economy survive a procession of power plant bankruptcies? The examples of Mirant and Dynegy show how those bankruptcies devastated the finances of the taxpayers and the municipalities in which they were situated, especially the school districts. The North Rockland School District is obligated to refund Mirant over $220 Million, and the Marlboro School District is obligated to refund Dynegy over $10 Million, plus bond interest, as a claw-back for retroactive bankruptcy court-ordered reassessments to benefit investors. None of those designer bankruptcies are in the public interest.

 

CONCLUSION

 

Collectively, market forces beyond the control of CPV have presented new circumstances that require a current evaluation of the financial capabilities and resources needed to move the CPV project forward in a manner that avoids any financial risk to the public. We maintain that this request represents sufficient “NEW CIRCUMSTANCES” to warrant such reconsideration to protect the public interest.

 

At a minimum, we request a financial condition be added to the Certificate/Approvals analogous to Condition 15(b) of the Article VII Certificate of Environmental Compatibility and Public Need issued to Champlain Hudson Power Express (Case 10-T-0139). The condition 15(b) would require that the CPV project would be developed, financed, constructed, and operated on a competitive merchant basis with no reliance on a contract with any municipal subdivision, agency, authority, or any other entity of the State of New York, which would obligate same to pay for any construction, operational cost, or indebtedness related to the CPV project.

 

Respectfully submitted,

 

/S/

 

Jürgen Wekerle, Co-chairman Sterling Forest/Highlands Committee

PO Box 287, Walden, NY 12586, Tel: 845-744-5116, Email: jwekerle2@gmail.com

 

/S/

 

Randolph Hurst, Ramapo/Catskill Group Conservation Committee

83 Post Road, Slate Hill, NY 10973, Tel: 845-374-6006,

Email: randyjhurst@gmail.com

 

cc: David Drexler, Esq., Pramilla Srivastava, Steve Remillard, and Ruth Leistensnider, Esq.

 

CPV Won’t Reduce Electric Costs – Letter to the TH-Record Editor

CPV Won’t Reduce Electric Costs (original title) published on-line in the Mid-Hudson News.com as “Competitive Power Ventures” [see opinion tab, which is still available] also published in the THR on May 26, 2014, p.10 entitled: “More on CPV”

 

The THR article “State stalls on new power plant” about Competitive Power Ventures Valley Energy project panders to corporate propaganda and doesn’t tell the whole story.

 

Its headline, claiming that the “Facility could help lower rates for consumers,” merely repeats CPV marketing hype. CPV will cost both tax and ratepayers. It requires a property tax abatement, sales and mortgage tax exemptions, other IDA inducements, and now demands a “take or pay” power contract through NYPA that guarantees its investors’ returns; this despite the fact that in its PSC filing CPV promised to “bear all the financial risks associated with the financing arrangements.”

 

Steve Remillard’s claim that “because the New Capacity Zone is so new, the hikes are not sufficient for securing financing” is a poor excuse for an unjustified attempt by CPV to transfer all risk to the ratepayers and taxpayers, who ultimately foot the bill.

 

Further, CPV will rely on Marcellus and other “natural” gas as fuel, which, as we saw this winter, exposes customers to extreme price volatility, and, should congress succeed in removing the current barriers to liquification and export so gas can be sold overseas where the price is three to five times higher than in the US, natural gas prices will skyrocket and electric costs will too.

 

Informed residents of Orange County aren’t falling for CPV’s self-serving hype. Maureen Halahan and others should not be so easily influenced by corporate misinformation either, if they care about the people they supposedly represent and serve.

 

Randolph Hurst

Slate Hill, NY

 

Sierra Club Reply to CPV’s 6/25/14 Response to Sierra Club’s Motion for Revocation.

SIERRA                       STERLING FOREST/HIGHLANDS COMMITTEE

CLUB               RAMAPO/CATSKILL GROUP CONSERVATION COMMITTEE

FOUNDED 1892

ATLANTIC CHAPTER

 

July 10, 2014

 

Via Email to: secretary@dps.ny.gov

 

Honorable Kathleen H. Burgess, Secretary

New York State Public Service Commission

Three Empire State Plaza

Albany, NY 12223-1350

 

Subject: CASE 10-E-0501 Petition of CPV Valley, LLC (CPV) for a Certificate of Public Convenience and Necessity Pursuant to Section 68 of the Public Service Law, Approval of Financing Pursuant to Section 69 and for Approval of a Lightened Regulatory Regime.

Sierra Club Reply to CPV’s 6/25/14 Response to Sierra Club’s Motion for Revocation.

 

Dear Secretary Burgess:

 

In accordance with the Commission’s June 17, 2014, Notice regarding the above Case, enclosed please find the Sierra Club reply to CPV’s June 25, 2014, Response to the Sierra Club June 9, 2014, Motion for Revocation.

 

  1. INTRODUCTION

 

  • In a Petition dated October 12, 2010, CPV Valley, LLC (CPV) requested that the NYS Public Service Commission (the “Commission” or “PSC”) issue an Order granting a Certificate of Public Convenience and Necessity, Approving Financing and providing for a Lightened Regulatory Regime.

 

To obtain those PSC Certificate/Approvals, CPV was required to provide the Commission with, “ . . . a description of the manner in which the cost of such plant is to be financed; evidence that the proposed plant is in the public interest and economically feasible; and, proof that the applicant is able to finance the project and render adequate service.” (See CPV Petition page 4.)

 

  • Following the prerequisite completion of the SEQRA Environmental Impact Statement process, and the procurement of required permits from other involved parties, the Commission conducted a Public Statement Hearing on February 25, 2014, at Orange County Community College (SUNY Orange), Middletown, New York.

 

In conjunction with that public hearing, the Sierra Club presented detailed written and oral comments challenging CPV claims of economic feasibility and the viability of the financing upon which the proposed power plant depends and, without which, the project could not render adequate service and would not be in the public interest. Examples were presented revealing declining sales, consumption, and production trends adversely affecting power plants throughout New York State; the recent bankruptcies and/or the lack of profitability of five Hudson Valley power plants; the fact that four new merchant generating/transmission proposals (including CPV) capable of supplying over 3,700 MGW of new power, had permits but had no customers, had no financing, and were in competition with each other for market share; the fact that formal transmission upgrade proceedings before the PSC were underway that could deliver over 2,200 MGW of additional power into our region; and, the fact that the restarting of existing Bowline and Danskammer power plants would add another 1,700 MGW of electricity into a very competitive load zone that already is well-supplied by available generation without the need for any of the above noted additional production/supply.

 

All of the above noted circumstances do not support the financial viability of CPV as a privately financed competitive merchant generating company operating in the regional market, which has a profound overhang of existing and proposed dispatchable supply without the prospect for additional demand/customers.

 

  • The Commission carefully considered the Sierra Club comments. Without disputing our contentions, the Commission issued a thoughtful, well-reasoned decision on May 9, 2014, granting the CPV Certificate/Approvals based upon CPV’s representations that CPV would be financed by private investors, would sell into the competitive, wholesale market, and could favorably compete against other suppliers. Because of their new super-efficient technology and “cheaper” fuel sources, CPV could out perform and under price competitors even in a harsh economic climate, and thus win customer contracts and, in theory, lower the price of electricity to the benefit of consumers. The Commission reasoned that under those competitive circumstances, which are also required for CPV to be eligible for a Lightened Regulatory Regime, the financial rewards from CPV construction/operation would fully accrue to CPV investors, and the financial risks would also be the responsibility of CPV investors. As a consequence, ratepayers and the public would be protected from any market risk or financial harm.

 

  • Also on May 9, 2014, a timely news interview with CPV Vice President Steve Remillard by reporter Jessica DiNapoli was published in the Middletown Times Herald-Record (see enclosed article) that totally contradicted the financial representation that CPV had made to the PSC up to that point in time. CPV now professed that private financing was unavailable and that a long-term Take–or–Pay contract with a state agency was needed to guarantee private financing. That state contract, however, would transfer all financial/market risk from private CPV investors to the ratepayers and to the public, exactly what the competition recognized by the PSC was intended to prevent. Such a contract would also eliminate CPV from competitive market participation upon which lightened regulation is predicated, which also is contrary to representations in the CPV Petition.

 

  • Because of the horrendous financial liability that would be shifted to ratepayers and to all taxpayers as noted in the May 9, 2014, news story, the Sierra Club, on June 9, 2014, requested that the PSC reopen this case and revoke the Order that also had been issued on May 9, 2014.

 

  • On June 17, 2014, the Commission issued a Notice Concerning the Petition for Rehearing including responses to the Sierra Club Request for Revocation.

 

  • On June 25, 2014, attorneys for CPV responded and brought to our attention that our June 9, 2014, request had not been properly served on CPV. We had been advised that the PSC service list would distribute our submission to all parties, which we have since learned is not the case. Further, it was our understanding that CPV Vice President Steve Remillard received a copy of our Revocation Request at the June 12, 2014, Orange County NY Industrial Development Agency (IDA) meeting, which we collectively attended. Please accept our sincerest apologies for inconveniencing the Commission and CPV. We appreciate CPV and attorney Ruth Leistensnider for being able to respond to our request in a timely manner. The following comments are a reply to the CPV response dated June 25, 2014.

 

  1. SIERRA CLUB REPLY TO THE JUNE 25, 2014 CPV RESPONSE

 

  • The CPV response consists of two assertions: first, that the Sierra Club request is based on a news report that was taken out of context, and second, that even if that news story were accurate, no misrepresentation was made by CPV since the option of obtaining a “Power Purchase Agreement” (PPA) was noted in the underlying Petition. We submit that both of those responses are in error.

 

However, because the CPV response also blends several tangential issues that are somewhat confusing, further explanation is required to put the Response in proper context.

 

  • The June 25, 2014, CPV Response conflates and homogenizes three separate – related but distinct – proceedings as if those proceedings were directly connected in a dependent, linear fashion, and thus obfuscates the basis for the Sierra Club Revocation Request.

 

Foremost is Case 10-E-0501, which is the only case of relevance here, and which is the subject of the October 12, 2010, CPV Petition, the May 9, 2014, PSC Order issuing the Certificate/Approvals requested by the Petition, the June 9, 2014, Sierra Club Request to Revoke the May 9, 2014, Order, the June 25, 2014, Response by CPV, and the instant Sierra Club Reply to that CPV Response.   This Case, 10–E–0501, was filed October 12, 2010, well before the Energy Highway Blueprint Initiative and the subsequent Case 12–E–0503, “Generation Retirement Contingency Order” (Indian Point), were created.

 

The Energy Highway Blueprint Initiative, which is intertwined in the CPV Response, was announced by the Governor during the 2012 State of the State message to promote private efforts to modernize the Grid. A Task Force was formed, two major forums took place during the spring of 2012, and recommendations were made in October 2012, after which the Task Force disbanded and the Energy Highway Blueprint Initiative was concluded. The Request for Information (RFI) process was just that: an information gathering effort by the Task Force to identify all grid-related merchant projects affecting New York and to collate a status report for each. Over one hundred responses were received including that of CPV. The Energy Highway was essentially a planning effort of critical importance. It was not, however, an implementation program to fund power plant construction as purported by CPV. Implementation of Task Force recommendations was delegated to other State agencies.

 

One outgrowth of the Energy Highway Task Force recommendations was PSC Case 12–E–0503, “Generation Retirement Contingency Plans” regarding Indian Point, which resulted in a New York Power Authority (NYPA) “Request for Proposal” (RFP) during April 2013, to which CPV responded. Multiple competitive responses were received including those of Cricket Valley Energy Center and the Champlain Hudson Power Express Transmission Cable. All responses remain open but dormant. A PSC Order dated November 4, 2013, essentially placed the RFP process on hold due to companion transmission upgrade proposals, the creation of the FERC/NYISO New Capacity Zone, and evolving production developments by existing power plants such as Bowline, Roseton and Danskammer. Danskammer, for instance, just received PSC approval on June 27, 2014, to restart and, together with Roseton and Bowline, can do so without the need for a high risk, State Take-or-Pay Contract.

 

  • None of the above array of potential actions favors public or private funding for CPV. Rather, any one or any combination of those projects argues against CPV’s construction at all. No RFP evaluation or “selection” is being contemplated especially since Indian Point remains open and retirement remains a distant prospect. No contracts were prepared or offered, or even exist as promoted by CPV agents. For CPV and its supporters even to infer that a “ contract decision” for CPV is imminent and just requires the Governor’s signature is wildly misleading. The PR spin is akin to someone claiming ownership of a winning lottery ticket before the numbers are even chosen and demanding that the Governor sign the check and deliver the proceeds. The goals of the 12–E–0503 RFP action appear now to be superfluous.

 

  • NEWS ARTICLE WAS NOT TAKEN OUT OF CONTEXT. The CPV Response argues that the May 9, 2014, news story was “ . . . taken out of context and not reflective of what was said.” (See page 2.) Continuing on page 5, CPV states, “ . . . the statement cited by the Sierra Club . . . was not a direct quote of Mr. Remillard, but rather the reporter’s statement of what was said, and was taken out of context.”

 

Criticizing the messenger is rather lame. Whether or not the words were placed within quotation marks or were paraphrased does not alter the accuracy of the content. Please note that reporter Jessica DiNapoli is an experienced journalist who has covered the utility industry and related power plant issues for years.

 

Similar comments regarding the necessity for a State contract were also made to Times Herald-Record reporter James Walsh (“IDA to decide on property tax deal for power plant,” June 12, 2014, enclosed); (“Tax incentives OK’d for power plant,” June 13, 2014, enclosed); and, (“Host town could gain from power plant,” June 24, 2014, enclosed).

 

The representation that a State Take-or-Pay contract is necessary to guarantee CPV financing, and that such a contract is awaiting the Governor’s signature, is often repeated by CPV’s business partners, IDA representatives, and political beneficiaries. That expectation prompted the Orange County NY IDA’s rush to award incentives (TH-Record articles June 12 and 13, 2014), and the push from the Town of Wawayanda to secure “Host Community Benefits” from CPV (TH-Record, June 24, 2014).

 

  • The above noted expectations also prompted the Orange County Partnership to lobby the Governor on behalf of CPV, which prompted the May 9, 2014, news story to begin with.

 

In a letter to Governor Andrew M. Cuomo, dated May 5, 2014, the Orange County Partnership, et al., stated that CPV had received “the final permit” required to construct the proposed power plant (four days prior to the Commission vote . . .) and beseeched the Governor to “ . . . make the CPV Valley Energy Center a key component within your Energy Highway blueprint . . . .” And, “ . . . we ask that you move quickly to help make this project a reality.” (Letter enclosed.)

 

This OC Partnership letter was copied to reporter Jessica DiNapoli who thereupon interviewed CPV Vice President Steve Remillard for further information, which was reported in the May 9, 2014, story under the headline: “State stalls on new power plant.” That headline was especially curious since the State by then had approved the final Certificate needed to initiate CPV construction and operation. What obstacle was the State still imposing on CPV to keep the project from moving forward? How was the State preventing private investors from spending their own money to construct CPV’s power plant? What contract decisions were they talking about? The news article provided some insight:

 

“ . . . Competitive Power Ventures . . . cannot move forward, even with the final permit, called the certificate of public convenience and necessity.

CPV still needs the state to decide if it will award the company a long-term power contract through the Energy Highway, an initiative to modernize the energy system. The contract would have a state organization buy energy from CPV over a number of years and is essential for the company to secure financing for the plant, said Vice President Steve Remillard.

CPV expected a decision in the fall, he said.

Maureen Halahan, CEO of the Orange County Partnership, said now is the time for the state to make a decision, because of the creation of a new zone hiking electricity rates in the Hudson Valley. The Partnership helped CPV on the project.”

 

The answer to the mystery contract became clear. It was not the need for any permit that was stalling CPV’s construction. It was the reluctance of investors too smart to risk their own money on CPV and the desire of CPV supporters to make the State use public tax dollars instead. Likewise, ratepayers would also be on the hook.

 

Follow-up discussions with the principals confirmed that the only decision requested of the Governor and of the State was to have the State commit to a Take–or–Pay contract with CPV. That contract would serve as collateral to guarantee repayment of private financing for a high-risk investment in a saturated market having no customers, which otherwise would not be funded by savvy private investors. The State would be obligated to back private CPV financing with the taxation power of the State and would be required to repay any CPV losses with other State revenue. Such a State guarantee would also lower CPV borrowing costs, a financial benefit and advantage that competitors would not receive. All financial risk for CPV would thus be transferred from private investors to the State. An example of that risk is NYPA’s current $64 Million annual Take-or-Pay LOSS for the Hudson Transmission Project constructed to deliver power to New York City, which New York City does not need. (See Albany Times Union April 5, 2014, article entitled: “No customers for Authority’s power.” (Enclosed)

 

Subsequently, Mr. Remillard unambiguously acknowledged the need for a Take–or–Pay contract to finance CPV during a conversation with the undersigned on June 12, 2014, following the Orange County IDA meeting at which incentives for CPV were approved. That conversation reaffirmed the accuracy of the May 9, 2014, news story that, contrary to the assertions of CPV, was very much in context.

 

  • The CPV Response claims that no Petition misrepresentation took place since the sale of power via a “Power Purchase Agreement” (PPA) was an option noted in the Petition. The June 25, 2014, CPV response argues that “ . . . CPV Valley’s Petition specifically stated it would participate exclusively in the wholesale market either through the NYISO spot market, neighboring control areas, power purchase agreements (‘PPA’) or financial hedge contracts . . .. Thus, CPV Valley’s intent to pursue a PPA has been made clear from the beginning and is not new information, nor was there any misrepresentation by CPV Valley in its Petition.”

 

The October 12, 2010 Petition also states, “Since the Project will be a competitive wholesale provider of electricity and will not serve retail customers, the scrutiny applicable to monopoly utilities under PSL Section 69 may be reduced.” (See Petition, page 10).

 

Further, the Petition notes on page 9, footnote 11, that, “ . . . the Commission found that where the facility provided benefits by enhancing competition, that the facility was economically feasible and in the public interest . . .. As demonstrated above, CPV Valley will enhance competition in the energy markets, and therefore, the CPV Energy Project should be found to be economically feasible and in the public interest on this basis alone.”

 

Regarding financial risk as it relates to economic feasibility and the public interest determined by enhanced competition, the Petition states, “As with other financings approved for such facilities, captive New York ratepayers cannot be harmed by the terms of the contemplated financing because the Petitioner and its affiliates bear all financial risks associated with the financing arrangements.” (See Petition, page 10.)

 

But those CPV assertions are misrepresentations since an exclusive, “no-bid,” non-competitive State Take–or–Pay contract is not the equivalent of a competitive PPA. A State guaranteed contract shifts all financial risk to the State, reduces competition at the expense of other rival merchants, subverts the Petition’s claim to enhance competition and also violates the eligibility conditions needed by CPV to qualify for a “Lightened Regulatory Regime.”

 

The CPV Response is in error by attempting to substitute the term “Power Purchase Agreement” as noted in the Petition for the term “State Take–or–Pay contract” as noted in the Sierra Club Request to Revoke. The two terms as described here cannot be equated with each other especially since the controlling word “competitive” is absent from the CPV PPA definition, which is contrary to market-driven PPA’s as implemented by industry.

 

A competitive PPA is a bilateral contract between competing power generators and a utility, which would solicit bids among merchant power facilities in order to obtain and distribute electricity to existing utility customers.

 

A no-bid Take–or–Pay contract between CPV and a State agency such as NYPA, however, would be the antithesis of competition.  Such a deal would only benefit CPV investors at the expense of its merchant competitors such as Cricket Valley Energy Center, Champlain Hudson Power Express, Bowline, Roseton and Danskammer, and would reduce competition to the disadvantage of ratepayers and taxpayers. Such a non-competitive sweetheart deal would not only be bad business for the State, but would also stifle private competition. The stated competition is also a requirement for a “Lightened Regulatory Regime” which is predicated on FERC’s promotion of competition among merchant power plants to prevent de facto monopoly supply arrangements from forming.

 

Such anti-competitive attempts by CPV destroy its Petition claim to “enhance competition” and reveal that the CPV facility is not “economically feasible” and is not in the “public interest.”

 

 

III. CONCLUSION

 

The matter at hand is not about an Energy Highway Blueprint Initiative, an exercise that has been concluded.

 

It is not about a Request for Information (RFI), a process that has been completed.

 

It is not about a FERC/NYISO New Capacity Zone issue that is currently being challenged by the State in Federal Court.

 

It is not about a replacement for Indian Point (Case 12–E–0503), a power plant that first must actually close. Please note that transmission solutions alone could replace Indian Point production, which include Case 13–E–0448 Proceedings, and the West Point Partners Cable Proposal (Case 13–T–0292) that could channel the full 1,200 MGW output of the Athens Generating Facility (which CPV’s parent company operates . . .) directly into the Westchester Con Ed grid interconnection that currently serves Indian Point.

 

It is not about the false pretences of public officials and business cheerleaders who lobby for a phantom contract that would not only con the State into assuming financing obligations for the private CPV power plant, but also would disrupt the competitive basis of the power supply markets.

 

The above are distractions from the simple truth that CPV made assertions in its Petition in order to obtain the required Certificate/Approvals and immediately reversed those representations upon the PSC’s issuing those coveted Certificate/Approvals. Those serious misrepresentations, no matter how one chooses to define a “PPA,” also undermine the integrity of the entire PSC public hearing and permit decision-making process.

 

In its Petition, CPV affirmed that the project’s construction and operating costs would be funded by a combination of private debt and equity, that CPV had the resources to obtain the required financing, that CPV would sell its electrical output exclusively in the competitive wholesale market, that those sales will enhance competition amongst suppliers, and, that captive ratepayers and the public cannot financially be harmed “ . . . by the terms of the contemplated financings because the Petitioner and its affiliates bear all the financial risk associated with the financing arrangements.” (See Petition, page 10).

 

Before the ink was even dry on the Commission’s Decision to grant the Certificate/Approvals, CPV recanted and publically acknowledged that insufficient private financing existed, and that CPV required a Take–or–Pay contract from the State to provide surety to guarantee the financing for the power plant.

 

The Petition promises private financing but CPV now requires a State contract to purchase all electricity produced by CPV for resale by the State or to have the State pay for all CPV          costs even if the State does not “take” and resell any of that electricity. That contract feature is especially damaging in a market of volatile fuel prices without needed customers where the power cannot be stored for future sale.

 

The Petition promises that all the risk would be shouldered by the private investor and that the ratepayer and taxpayer would be protected from market risk and financial harm, but CPV’s need for a State contract would now protect the investor from financial harm and shift all market risk and financial losses to the ratepayer and taxpayer.

 

The Petition promises to enhance competition, but CPV’s need for a State contract would nullify the required competition needed to obtain lightened regulation.

 

The Petition promises increased municipal revenue and financial benefits created from the value-added activity of private enterprise, but CPV’s need for a State contract would mean that other State taxpayers would be obligated to transfer State revenue into municipal coffers and into the pockets of CPV investors, the exact opposite of a customer-based, earnings driven, private sector business model.

 

Contrary to the representations made in the Petition, such a non-competitive contract would shift all financial and market risk from CPV investors to the State, to ratepayers and to the public and would be detrimental to all taxpayers and give CPV an unfair advantage over its market competitors. Such a contract would inhibit competition, not enhance it.

 

As a consequence, the CPV project has not satisfied the requirements needed to obtain a Certificate of Convenience or Lightened Regulation. The project would not be economically feasible and is not in the Public Interest.

 

Due to all of the misrepresentations, which materially depart from the financial arrangements described in the CPV Petition upon which the Commission based its May 9, 2014, Order, including a financial plan that is essentially nonexistent, we reaffirm our Request that the Commission Reopen this Case and Revoke the Order that was approved on May 9, 2014.

 

Respectfully submitted,

 

 

 

Jurgen Wekerle, Co-chairman Sterling Forest/Highlands Committee

PO Box 287, Walden, NY 12586, Tel: 845-744-5116, Email: jwekerle2@gmail.com

 

 

 

Randolph Hurst, Ramapo/Catskill Group Conservation Committee

83 Post Road, Slate Hill, NY 10973, Tel: 845-374-6006, Email: randyjhurst@gmail.com

 

Enclosures

 

cc: Paul Agresta, Esq.

David Drexler, Esq.

Pramilla Srivastava

Steve Remillard

Ruth Leistensnider, Esq.

Sierra Club Motion to Revoke NYS PSC Certifications for CPV

 

 

 

Via Email to: secretary@dps.ny.gov

 

June 9, 2014

 

To: Honorable Kathleen H. Burgess, Secretary and

Honorable Paul Agresta, Administrative Law Judge

 

New York State Public Service Commission

Three Empire State Plaza

Albany, NY 12223-1350

 

Subject: CASE 10-E-0501 Petition of CPV Valley, LLC (CPV) for a Certificate of Public Convenience

 

Dear Secretary Burgess and Judge Agresta:

 

We request that the PSC revoke the May 9, 2014 ORDER GRANTING CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY, AUTHORIZING LIGHTENED RATEMAKING REGULATION, AND APPROVING FINANCING to the CPV Valley LLC proposed power plant due to the flagrant misrepresentations that CPV officials made in their October 12, 2010 petition to the PSC.

 

Among other requirements, CPV, the Petitioner, must provide the Commission with “ . . . a description of the manner in which the cost of such plant is to be financed; evidence that the proposed plant is in the public interest and economically feasible; and proof that the applicant is able to finance the project and render adequate service.” (See CPV Petition, page 4.)

 

CPV states that, “The project will sell its electrical output exclusively at the wholesale level and will not be a retail provider. The project anticipates selling its electrical output into one or a combination of: the spot markets administered by the New York Independent System Operator (“NYISO”), neighboring control areas, pursuant to power purchase agreements, or financial hedge contracts.” (See CPV Petition, page 3.)

 

The Petitioner repeatedly asserts that its production “ . . . will be one of the most efficient methods of generating dispatchable electricity. The high efficiency of combined-cycle technology equates to less fuel consumed to produce electricity . . ..” (See CPV Petition, page 7.) That efficiency would also lead to lower production costs and a price advantage for CPV over other generators and also enhance competition in an open market. (See footnote 11, CPV Petition page 9.)

 

The Petitioner describes its financial resources as follows: “CPV, the parent of Petitioner, as previously noted, is a leading North American electric power generation development and asset management company that has the financial capability to arrange for the proposed financing described in the ensuing section of this Petition.” (See CPV Petition, page 9.)

 

“Financing – Section 69”

 

              “Pursuant to Section 69 of the Public Service Law, Commission authorization is necessary for an “electric corporation” to enter into indebtedness payable at periods of more than 12 months. Since the Project will be a competitive wholesale provider of electricity and will not serve retail customers, the scrutiny applicable to monopoly utilities under PSL Section 69 may be reduced. See Case 06-E-0843 – Noble Clinton Wind Park I, LLC, et al., Order Approving Financing Subject to a Condition (issued September 25, 2006). The Project’s construction and operation will be funded by a combination of debt and equity, with CPV retaining an ownership position and management responsibility. CPV is backed by significant equity investment from a leading private equity investor, Warburg Pincus. CPV has lead the refinancing of existing generating assets with total loans in excess of $2 billion, representing roughly 4,200 MW. Additionally, as recent as February 2010, CPV raised approximately $320 million of long-term debt financing and equity capital for 152 MW of power projects in the United States. In the upcoming month, CPV will be financing an approximate $1 billion peaking facility located in southern California.

 

“The financing for the Valley Energy Center will be done through the limited liability company, CPV Valley LLC. Total financing will be approximately $680 million. The proceeds will be issued exclusively for the construction and operation of the generation project authorized by the Commission in the Certificate of Public Convenience and Necessity. As part of the financing for the Valley Energy Center, CPV Valley proposes to enter into a sale/leaseback (or lease/leaseback) arrangement with the Orange County Industrial Development Agency.

 

“As with other financing approved for such facilities, captive New York ratepayers cannot be harmed by the terms of the contemplated financing because the Petitioner and it affiliates bear all the financial risk associated with the financing arrangements. Case 03-E-1179 – Equus Power I, P., Order Providing for Lightened Regulation and Approving Financing (issued October 30, 2003).” (See CPV Petition page 10.)

 

Subsequently, the PSC held a Public Statement Hearing on February 25, 2014, at SUNY Orange, Middletown, NY at which time the economic feasibility of the proposed power plant was challenged (see February 26, 2014, Sierra Club Comments).

 

In its May 9, 2014 Order Approving the Certificates, the Commission relied upon the validity of the assertions made in the CPV Petition. Those assertions included that CPV and its affiliates, such as Warburg Pincus, in fact, have private equity funding and the financial ability to construct and operate the proposed power plant, that financial risk would be shouldered by private investors – not by ratepayers or by the public, that CPV would produce electricity to be sold on a competitive basis into the open power supply market such as the NYISO bid-auction system in competition with other private generators, and, as a consequence, CPV would bear any market risk while the public would be protected from any financial harm.

 

We submit that the Commission was deceived and that CPV has no capabilities to implement the financial promises made in their petition.

 

CPV Vice President Steve Remillard has confessed that CPV cannot obtain financing on the merits of the proposal and must, instead, rely on a take-or-pay contract with New York Power Authority (NYPA).   Such a government agency contract, which has not been offered by NYPA to CPV, would guarantee the bonding required to finance the project. As reported in the May 9, 2014 Times Herald-Record: “. . . Competitive Power Ventures, the Massachusetts company that proposed the plant, cannot move forward, even with the final permit, called the certificate of public convenience and necessity.

“CPV still needs the state to decide if it will award the company a long-term power contract through the Energy Highway, an initiative to modernize the energy system. The contract would have a state organization buy energy from CPV over a number of years, and is essential for the company to secure financing for the plant, said Vice President Steve Remillard.”

 

Such a contract as stipulated by Remillard would transfer all financial risk from CPV to ratepayers and to the public at large in a market that has no customers for electricity. Under that scenario, NYPA would be required to purchase all electricity produced by CPV for resale or to pay for all CPV costs even if NYPA does not “take” and resell any of that electricity. And, the probability of NYPA’s obligation to buy power with no customers is very real as exemplified by NYPA’s current $64 million annual take-or-pay contract loss for the Hudson Transmission Project designed to sell unneeded electricity to New York City (see: Albany Times Union, April 5, 2014, article entitled: “No customers for Authority’s Power”).

 

At this time, CPV has not obtained private equity to finance construction, does not intend to sell electricity competitively in the open market, does not assume any financial responsibility or market risk, and shifts all financial risk to ratepayers and to the public, contrary to the assertions contained in its Petition. In view of the above, it is clearly evident that CPV has not satisfied the requirements of PSC Law Sections 68 and 69. Therefore, we request that the Commission reopen this Case and revoke the Order approved on May 9, 2014.

 

Respectfully submitted,

 

/S?

Jurgen Wekerle, Co-chairman Sterling Forest/Highlands Committee

PO Box 287, Walden, NY 12586, Tel: 845-744-5116, email: jwekerle2@gmail.com

 

/S/

Randolph Hurst, Ramapo/Catskill Group Conservation Committee

83 Post Road, Slate Hill, NY 10973, Tel: 845-374-6006, email: randyjhurst@gmail.com