Minutes of the Annual Meeting of the Power - New York Power ...

B. Issue: Increased “Cost-Based” Credit for Ancillary Services Production
Public Comments:
NYAPP asserts that it should receive a larger cost-based credit for the production
of ancillary services than is included in the CoS. NYAPP reaches this conclusion
through its review of NYPA data showing the gross volume of sales of two
ancillary services from the Niagara Project to the NYISO (there are none from the
St. Lawrence Project): regulation service and operating reserves. NYAPP
proposes that the base hydro rates should be lowered to reflect the costs of
producing these additional sales of ancillary services, and not simply the costs
associated with the production of ancillary services for the needs of the
Authority’s contract customers. (NYAPP Statement at 4-5; Russell at 29-34).
NYAPP proposes two possible CoS adjustments, based on either summer peak
period sales or the “peak month” sales which NYAPP says occurred in October
2005. The requested adjustments are either $10.5 million or $17.5 million in
Rate Year 2007, and either $11.2 million or $18.6 million in Rate Year 2008.
(NYAPP Statement at 4-5; Russell at 31-32). The Neighboring States appear to
make a similar claim when they state that the CoS should recognize an additional
“cost-based credit” in excess of $6 million for each Rate Year. (NS Comments §
2). 11
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It is not entirely clear whether the Neighboring States are requesting, similar to NYAPP, a
larger cost-based credit for producing ancillary services at the Hydro Projects, or a direct share of
the Hydro Project revenues derived from ancillary services sales. To the extent the NS
Customers are requesting such inflated credit, their claim is disposed with in the same manner as
NYAPP’s in the discussion accompanying this footnote. To the extent they are claiming a direct
share of NYPA’s ancillary services sales revenue, that is a violation of the Auer Settlement
principles to which they have agreed, and the response to such arguments is subsumed within
Issue E, “Request for CoS Credit for Hydroelectric Energy Sales into NYISO Markets.”
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