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

Because this claim for an enhanced “cost-based” credit is contrary to the
principles agreed to between the Public Customers and NYPA, it must be
rejected. The 2003 settlement to which all of NYAPP’s members entered into
states:
Except for the cost-based credit for surplus
hydroelectric energy sales . . . the Systems will
neither receive nor claim (in the Hydro cost of service
or otherwise) a past or future share of any other
ancillary services or surplus energy-related Hydro
revenues received by NYPA . . . . NYPA will continue
to credit the cost-based revenues from hydro energy
sales in the Hydroelectric cost of service in the same
manner as in the 2003 Hydroelectric cost of service
study. The credit will be based on NYPA’s tariff
energy charge, as it changes from time to time. 14
Although it is careful to assert that it is not seeking a share of the Authority’s
revenues 15 (as that would be disallowed under the terms of the Auer Settlement),
NYAPP’s claim would essentially undo its agreement with NYPA setting forth the
crediting methodology for all excess sales of energy (which includes energybased
ancillary services sales).
In similar fashion, the Neighboring States’ claim is also inconsistent with their
NYPA settlements. In their contracts with NYPA for Niagara Project power, their
members agreed that certain methodologies and principles adopted by the
Authority in 2003 could continue to be used without objection when the Authority
sets future hydro rates. One of those principles is “(iii) Treatment of sales to third
parties, including the New York Independent System Operator.” Thus, under the
terms of their Niagara contracts, the Neighboring States have already consented
to the continued use of the 2003 methodology, and their claim to enlarge the
“cost-based” production credit in the derivation of the base hydro rate has no
merit. The Neighboring States cite this contract principle for the opposite result
14 From NYPA’s settlements with MEUA, City of Jamestown and the four rural electric
cooperatives; emphasis added.
15
See Russell at 32-33.
17