R.E. Ginna power plant in Ontario, Wayne County
R.E. Ginna power plant in Ontario, Wayne County ()

A new Cuomo administration plan to reduce New York’s dependence on nonrenewable energy sources by 2030 was challenged in a federal lawsuit filed by non-nuclear power generators Wednesday, alleging the plan forces the state’s energy consumers to illegally subsidize its nuclear plants.

In the federal action in the Southern District, a coalition of non-nuclear electricity generators claim the Cuomo administration’s “Zero Emission Credit” program intrudes on the energy-regulating authority of the Federal Energy Regulatory Commission (FERC) and also unlawfully interferes with interstate commerce.

The state Public Service Commission established the emissions credit program this summer to take effect in April 2017 and to run for at least 12 years. The commission said it is part of a larger strategy, dubbed the Clean Energy Standard, which aims to ensure that 50 percent of electricity consumed in New York is generated from renewable sources in order to reduce greenhouse gas emissions by 40 percent by the 2030 deadline.

In essence, the emissions credit program would provide subsidies paid by all New York electricity ratepayers to nuclear power plant operators within New York. In return, the state said the program would keep the plants economically viable and contributing power to the state’s energy grid, while buying the state more time for the development of renewable energy sources.

But in Coalition for Competitive Electricity v. Zibelman, 1:16-cv-8164, the non-nuclear power-producing plaintiffs say the program will “profoundly disrupt” the FERC-regulated system of utilities buying power wholesale at auction due to the presence of electricity produced with the help of public subsidies.

“This would harm other generators, including the plaintiffs, because the lower auction prices will result in lower revenues,” the suit claims. “In the long-term, with nonsubsidized generators forced to exit the market, lower prices will deter potential new generators—including generators of renewable sources of energy—from entering the market.”

The complaint contends that payments from New York ratepayers could be as high as $7.6 billion under the Zero Emission Credit program, with all funds going to Exelon Corp.,a Chicago-based energy company. The company already operates the nuclear plants at Nine Mile Point north of Syracuse and Ginna, near Rochester, and is scheduled to take over operation of the third nuclear plant upstate, Fitzpatrick, in mid-2017.

Jonathan Schiller, managing partner at Boies, Schiller & Flexner in Manhattan, is representing the plaintiffs in the lawsuit filed Wednesday.

The chairwoman of the commission, Audrey Zibelman, said in a statement Wednesday that 29 other states have taken actions similar to New York’s to encourage the development of renewable energy and lessen their dependence on power generated from fossil fuels.

“New York’s goal to reduce carbon emissions by 40 percent by 2030 is essential to protect New York and New Yorkers, and we will vigorously defend it and are confident of our success,” she said.

In a letter to state legislators who raised concerns about the emissions credit plan late this summer, Zibelman said the plan was crafted to avoid the kinds of violations of FERC authority that the plaintiffs in the suit filed Wednesday contend it commits.

The cost of purchasing new renewable resources, plus the carbon-free electricity from nuclear plants, would add less than $2 a month to the average residential customer’s bill in New York, commission spokesman James Denn said Wednesday. The four nuclear power plants still in operation in New York produce just under one-third of the total amount of electricity generated in the state.

Because of regional pricing factors, the Indian Point nuclear plant north of New York City probably won’t be eligible for subsidizes under the Zero Emission Credit program, state regulators said. Gov. Andrew Cuomo has expressed concerns about the safety of that plant because of its proximity to New York City for years, but has not taken action to close it.

In addition to the trade group Coalition for Competitive Electricity, the plaintiffs include two Houston-based energy producers, Dynegy Inc. and NRG Energy Inc.