N.Y. PSC Will Allow ConEdison Solutions to Develop Small Scale Renewable Projects in Affiliated Service Areas

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February 28, 2011  

The New York PSC will permit Consolidated Edison Solutions, Inc., and Consolidated Edison Development, Inc. to proceed with the development of 200 MW of small scale renewable energy projects in their affiliated utility service areas of Consolidated Edison and Orange & Rockland, after finding that the minimal solar development overcomes any presumption of vertical market power (Case 10-E-0497).

ConEdison Solutions and Consolidated Edison Development are interested in developing small-scale solar, and potentially other small-scale renewable energy projects, throughout New York State, including within the ConEd and O&R service territories. The competitive affiliates plan to construct up to 100 MW of renewable energy projects in ConEd's service territory and up to 100 MW of renewable energy projects in O&R's service territory, each of which would be sized at 20 MW or less (see 10/13).

In its Vertical Market Power Policy Statement, the PSC adopted a rebuttable presumption that, "ownership of generation by a T&D company affiliate would unacceptably exacerbate the potential for vertical market power."

However, "[t]he VMP Policy presumption -- that utility affiliation with generation ownership creates the incentive for the exercise of market power in pursuit of higher market prices for that generation -- is overcome under these circumstances," the PSC concluded.

"A generation addition limited to the 200 MW size proposed is a small amount, in comparison to the amount of energy delivered in the Con Ed/O&R service territories, especially since the renewable generators comprising the addition tend to have low capacity factors ... Moreover, the amount earned from selling the generation the [ConEd] Affiliates’ renewable facilities will produce has a minimal impact on the economic viability of each project. Consequently, there is little incentive for the utility parents to attempt to manipulate the operation of their monopoly transmission and distribution systems in pursuit of higher prices for that generation. As a result, the economic harms the VMP Policy was primarily directed against are not present in a meaningful way here," the Commission said.

The PSC did condition approval of the generation on the affiliated utilities developing a plan, subject to PSC approval, to mitigate the potential for discrimination. "Appropriate conditions should stop the utility parents from taking actions that would favor their [competitive] Affiliates upon the interconnection of renewable facilities," the PSC said.

The plan shall be filed within 30 days, and will be considered in a new proceeding.

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