A New York appeals court has upheld a 1994 decision by the New York Public Service Commission (PSC) authorizing a qualifying cogeneration facility (QF) to make retail sales to certain industrial customers in the service territory of a retail electric utility. The PSC had authorized Sithe/ Independence Power Partners L.P. (em developers of a 1040-megawatt natural gas fired QF (em to sell electricity to steam host customers Alcan Rolled Products Co. and Liberty Paperboard L.P. See, Re Sithe/Independence Power Partners L.P., 155 PUR4th 149 (N.Y.P.S.C. 1994). Alcan was a customer of Niagara Mohawk Power Co., a franchised retail electric utility. Liberty, with a substantial equity infusion from Sithe/ Independent's parent, Sithe Energies, Inc., planned to locate a new paperboard recycling facilities on the QF property. The certificate for the sale was conditioned on Sithe's paying an "equalization fee" to reimburse Niagara Mohawk for lost contributions for fixed costs associated with the loss of Alcan as a retail customer. (In an earlier order, the PSC found that the retail sales were subject to state regulation despite Sithe's status as a QF under the Public Utility Regulatory Policies Act of 1978 (PURPA). See, Re Niagara Mohawk Power Corp., 150 PUR4th 149 (N.Y.P.S.C. 1994)).
The court rejected Niagara Mohawk's claims that the PSC had failed to properly consider the factors identified under state law to determine public need for the proposed sale: 1) the adequacy of the existing service, and 2) Niagara Mohawk's ability and willingness to continue service. The court said that the facts supported the PSC's conclusion that Niagara Mohawk's tariffed-based rates could not meet Alcan's requirements for electricity at a price that would permit the customer to remain competitive at its existing plant in New York. Niagara Mohawk Power Corp v. New York Public Service Commission, __ N.E.2d __, No. 74552, Feb. 29, 1996 (N.Y.App.Div.). t
Phillip S. Cross, an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY, reported on these cases.
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