Unless the federal government takes immediate action to reverse a short-sighted plan, electricity consumers in Orange County and across the mid-Hudson Valley can expect to see significant hikes in the price they pay for energy. Orange and Rockland Utilities customers here could see price hikes as high as 15 percent. So what’s driving this massive increase? Not the classic economic laws of supply and demand. The new capacity zone is just another example of old, top-down control out of Washington.
Instead, Orange County residents are being forced to pay more for their electricity with little to nothing in return thanks to the Federal Energy Regulatory Commission (FERC), the federal bureaucracy which approves so-called "capacity zones" in New York and other parts of the country. On May 1 Orange County became part of a new electricity capacity zone known as the Lower Hudson Valley Capacity Zone, which includes New York City. Orange County, along with other parts of the mid-Hudson Valley, are being forced into the fourth such capacity zone in the Empire State, in which utilities and distributors can only buy their energy from suppliers within the zone.
FERC’s plans to raise our rates is premised on a mind-blowing concept: that the rates of Hudson Valley residents, particularly those in Orange County, are too low. Rather than squeeze those of us downstate, why not invest in better technology to transmit that energy from upstate suppliers and power generators? In addition to opposition from small business owners and homeowners, green groups don’t like the capacity zone because it threatens to undue years of advances in alternative fuel technology by favoring a handful of traditional power generators in the short term.
On May 7 I sent a letter to Cheryl LaFleur, FERC’s Acting Chair, urging the federal agency to eliminate the creation of the new capacity zone, or delay the action until it could be properly vetted and commented on. "In this still-uncertain economic environment, municipalities and residents cannot afford the onerous impacts of the new capacity zone," I wrote. Thus far I have received no answer from Chairwoman LaFleur. The county then filed an amicus curiae brief as a friend of the court in the US Court Appeals for the Second Circuit in Central Hudson & Electric Corp. v. Federal Energy Regulatory Commission. The submission was read in support of the plaintiff, Central Hudson, for a June 3 hearing in which the court heard arguments from the utility to stay or cancel auctions for higher-priced electricity under FERC’s new capacity zone.
On Wednesday, June 4 the US Court of Appeals rejected a motion by Central Hudson to eliminate or delay the new electricity pricing plan. As your county executive, I can tell you that Orange County does not intend to give up this fight, nor roll over for the federal bureaucrats that want to hike electricity rates for residents and industry. The problem with this plan’s implementation is that utility companies serving the zone, such as Central Hudson and Orange and Rockland Utilities, must purchase the entirety of their energy capacity within that zone, rather than from other parts of the state, as had been the case prior to FERC’s approval of the new capacity zone. For consumers in Orange County and others within the Lower Hudson Valley Capacity Zone, the change is expected to cause a $412 million increase in electricity rates, with average consumers paying $10 or more a month on local electric bills, according to an analysis conducted by the New York State Public Service Commission.
I have a responsibility mandated by our county charter for the welfare of our residents. That responsibility extends to the financial well-being and security of the people of Orange County. Homeowners and businesses will be adversely affected if the decisions and orders issued by the Federal Energy Regulatory Commission are not reviewed and ultimately reversed. As I stated in my affidavit to the US Court of Appeals, our residents have not enjoyed a positive financial change over the past seven years and we can ill afford more of a financial burden, which will indeed befall our residents if energy costs increase as a result of FERC’s orders.