Indeck Energy-Alexandria, LLC (Indeck Energy) has filed a lawsuit in Saratoga county Supreme Court challenging the legal authority of the Governor, the Department of Environmental Conservation (DEC) and the New York State Energy and Research Development Authority to impose, without legislative or other proper basis, a costly pollution control scheme under the Regional Greenhouse Gas Initiative, a multi-state compact designed to reduce carbon emissions in the Northeast.
“We support the intent of the RGGI program to reduce greenhouse gas emissions and to mitigate the effects of global warming,” said Indeck Energy president Gerald F. DeNotto. “We simply believe the program as implemented by DEC and NYSERDA is flawed. The regulations arbitrarily discriminate against a few electric generators that are bound by long term fixed price contracts. We made our case during the stakeholder process, in written testimony and in meetings with state officials. No changes were made. Regrettably, there was no choice but to file this lawsuit.”
Since 1985, Indeck Energy has developed or invested in clean energy facilities worldwide. In addition to its Corinth plant, Indeck has developed, and now owns and operates, a variety of power plants. It is currently developing renewable energy plants including new solar, biomass and wind generation units.
“Indeck Energy’s business is developing and operating clean, low-emitting sources of energy,” added DeNotto. “To make these investments, there must be a level regulatory playing field. New York’s version of RGGI levies a ‘RGGI tax’ on electric generators. Most generators have a fair opportunity to recover that tax by passing through the cost. But our Corinth plant will be left with a heavy cost of the allowance tax, and no opportunity to recover it. Unaltered, this program will cost Indeck millions of dollars that otherwise could be invested in new sources of clean power.”
Through the RGGI program, ten Northeastern states created a joint, regional “cap and trade” emission control scheme to limit and ultimately reduce CO2 emissions within the region. Each of the ten states was allocated a portion of the overall cap. Under the RGGI scheme, each state issues a number of “allowances” (tradable certificates allowing the emission of one ton of CO2) equal to each state’s specific cap for that year, and sells those allowances in a joint auction. All the auction revenues are paid to the states, which use the funds as they see fit. Affected generation facilities must acquire sufficient allowances to equal their actual emissions. While RGGI seeks to reduce CO2 emissions in the ten state region, it is likely to foster increases in emissions outside the ten state area, and raise the costs of electricity for consumers in the region.
Indeck Energy’s Corinth power plant is a 128 megawatt combined-cycle unit fueled by clean natural gas. Combined-cycle units are particularly clean and efficient because they utilize more of the combustion energy to produce electricity, and also produce useful heat or steam as a byproduct.
Indeck Energy signed a long term contract with Consolidated Edison in 1989 to sell the output of the facility at a fixed price. The contract did not contemplate a program like RGGI, and the New York Public Service Commission, which approved the contract in 1990, strongly discouraged a re-opener that could have allowed for the recovery of costs arising from dramatically changed laws.
Virtually all other generating facilities subject to RGGI have a fair opportunity to recover the costs of RGGI allowances. Even dirtier units will be allowed to recover their costs, while Indeck-Corinth’s clean unit can never recover the additional cost under the current RGGI program.