Message-ID: <5016083.1075861639418.JavaMail.evans@thyme> Date: Mon, 26 Nov 2001 12:49:55 -0800 (PST) From: howard.fromer@enron.com To: /o=enron/ou=na/cn=recipients/cn=notesaddr/cn=a3a4cb81-65db1a4f-862569e7-6cfe2f@enron.com, jeff.ader@enron.com, c..aucoin@enron.com, rick.bachmeier@enron.com, jeff.brown@enron.com, ees <.brown@enron.com>, dana.davis@enron.com, david.duran@enron.com, tom.dutta@enron.com, frank.ferris@enron.com, janel.guerrero@enron.com, utku.gulmeden@enron.com, gautam.gupta@enron.com, mason.hamlin@enron.com, w..hammond@enron.com, lance.hinrichs@enron.com, palmer.letzerich@enron.com, john.llodra@enron.com, richard.lydecker@enron.com, tom.may@enron.com, jim.meyn@enron.com, narsimha.misra@enron.com, steve.montovano@enron.com, l..nicolay@enron.com, sarah.novosel@enron.com, juan.padron@enron.com, willis.philip@enron.com, richard.ring@enron.com, edward.sacks@enron.com, janelle.scheuer@enron.com, doug.sewell@enron.com, dan.staines@enron.com, d..steffes@enron.com, kathleen.sullivan@enron.com, d..thomas@enron.com, jason.thompkins@enron.com, rob.wheeler@enron.com Subject: FW: Member Alert #48-2001 - Court of Appeals issues Potential Setbackto SEQRA Generators In NYPA Turbine Ruling Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Fromer, Howard X-To: /o=ENRON/ou=NA/cn=Recipients/cn=notesaddr/cn=a3a4cb81-65db1a4f-862569e7-6cfe2f , Ader, Jeff , Aucoin, Berney C. , Bachmeier, Rick , Brown, Jeff , Brown, Michael (EES) , Davis, Dana , Duran, W. David , Dutta, Tom , Ferris, Frank , Guerrero, Janel , Gulmeden, Utku , Gupta, Gautam , Hamlin, Mason , Hammond, Pearce W. , Hinrichs, Lance , Letzerich, Palmer , Llodra, John , Lydecker Jr., Richard , May, Tom , Meyn, Jim , Misra, Narsimha , Montovano, Steve , Nicolay, Christi L. , Novosel, Sarah , Padron, Juan , Philip, Willis , Ring, Richard , Sacks, Edward , Scheuer, Janelle , Sewell, Doug , Staines, Dan , Steffes, James D. , Sullivan, Kathleen , Thomas, Paul D. , Thompkins, Jason , Wheeler, Rob X-cc: X-bcc: X-Folder: \JSTEFFE (Non-Privileged)\Steffes, James D.\Inbox X-Origin: Steffes-J X-FileName: JSTEFFE (Non-Privileged).pst Attached FYI is a memo prepared by IPPNY summarizing a NY Court of Appeals = (NY's highest court) decision issued last week that could impact environmen= tal reviews of projects that are smaller than 80 MW and thus not subject to= the State's siting law. As noted by IPPNY, the impact of this court ruling= could be to delay the environmental review and thus the permitting time fo= r these smaller plants. In other generation-related developments, the NYS = Siting Board last week approved the Astoria Energy project. This is a 1,000= MW natural gas-fired combined-cycle facility to be loacted in Astoria, Que= ens, New York City. The plant is estimated to go in service the 3rd quarter= of 2004. This brings to over 1600 MW the amount of new in-city generation = recently approved by the State Siting Board, on top of the 400 Mw\W added t= his past summer by the NY Power Authority. -----Original Message----- From: Vanessa Anctil [mailto:Vanessa@ippny.org] Sent: Monday, November 26, 2001 3:25 PM To: IPPNY Members 2 Cc: Carolyn Brown Subject: Member Alert #48-2001 - Court of Appeals issues Potential Setbackt= o SEQRA Generators In NYPA Turbine Ruling Member Alert #48-2001 November 26, 2001 Court of Appeals issues Potential Setback to SEQRA Generators In NYPA Turbi= ne Ruling On November 20, 2001, the New York State Court of Appeals denied a motion b= y the New York Power Authority ("NYPA") for leave to appeal a Appellate Div= ision decision, Uprose v. Power Authority of State of New York, requiring t= he preparation of an Environmental Impact Statement ("EIS") for its install= ation of 10 GE LM6000 turbines at several sites in New York City. (IPPNY's= brief supporting NYPA's motion was accepted by the Court.) The impact of = the ruling may be to delay the environmental review for projects evaluated = under the State Environmental Quality Review Act ("SEQRA"). The Court of Appeals, the State's highest court, did not affirm the Appella= te Division's decision, it merely declined to consider the appeal, which wa= s discretionary. The decision is binding only in the courts of the 2nd jud= icial department, which includes Long Island and Westchester, although cour= ts in other areas of the state may rely on the case for guidance. Prior to the lawsuit, NYPA issued a negative declaration of potential signi= ficant impact with regard to the turbine projects, a SEQRA prerequisite to = proceeding without preparing an EIS. The Appellate Division decision requi= red that NYPA prepare an EIS by January 31, 2002 because NYPA's analysis of= particulate matter 2.5 ("PM2.5"), which relied on an evaluation of PM10 as= a proxy, was insufficiently detailed to support a negative declaration.=20 The potential impact for new generation projects is that applicants proposi= ng power plants under 80 MW, which are subject to SEQRA, may be required to= prepare an EIS. A State agency may still be able to issue a negative decl= aration, and thus avoid the requirement to prepare an EIS, if an applicant = demonstrates in its Environmental Assessment Form ("EAF") that there is no = potential for adverse environmental impacts from PM2.5. However, as a resu= lt of the Uprose decision, the applicant may not be able to make this demon= stration by relying on a PM10 proxy analysis. If the demonstration cannot = be made that PM2.5 will not have a potential adverse environmental impact, = the agency must make a positive declaration, requiring the preparation of a= n EIS and associated public notice and participation. Potentially signific= ant delay could result from this process. The Appellate Division decision should have little impact on Article X appl= ications. The Article X process supplants the SEQRA process. Essentially,= the Article X process requires the preparation of an EIS equivalent, where= in PM2.5 is analyzed. At least one case, Consolidated Edison's East River = Repowering Project, has addressed the PM2.5 issue. In that case, the Depar= tment of Environmental Conservation ("DEC"), Department of Health, and the = Department of Public Service agreed that the only applicable legal standard= for PM2.5 is the PM10 proxy standard. The Board on Electric Generation Si= ting and the Environment ruled that PM2.5 was not an issue in the case beca= use it is within the purview of the companion DEC air permit proceeding. A= ruling distinguishing the Uprose case was made by the Commissioner of DEC.= Although the court found that the proxy analysis conducted by NYPA was no= t sufficiently detailed in the EAF to support a negative declaration under = SEQRA in the Uprose case, the DEC Commissioner found in the East River case= that the PM10 analysis will support the determination as to whether or not= the proposed project complies with the PM2.5 standard. In an unrelated development, the FERC last week issued two orders addressin= g issues related to market mitigation. In its Order Establishing Refund Ef= fective Date And Proposing To Revise Market-Based Rate Tariffs And Authoriz= ations ("Market Rates Order"), FERC instituted a proceeding to investigate = the justness and reasonableness of the terms and conditions of market-based= rate tariffs and authorizations of wholesale generators. FERC noted that = it intends to revise all existing market-based rate tariffs and authorizati= ons by adding the following language (which will be included in all new aut= horizations, as well): "As a condition of obtaining and retaining market-based rate authority, the= seller is prohibited from engaging in anticompetitive behavior or the exer= cise of market power. The seller's market-based rate authority is subject t= o refunds or other remedies as may be appropriate to address any anticompet= itive behavior or exercise of market power." FERC indicated that the refund effective date will be 60 days from notice o= f the Market Rates Order in the Federal Register. In a second order, FERC announced that it will implement an industry-wide s= tandard market mitigation measure that will address conditions of market sh= ortage in which market power could be abused. The surplus margin assessmen= t ("SMA") tool will be employed by FERC to determine what entities possess = market power. The SMA will replace the FERC's existing "Hub-and-Spoke" met= hodology for determining whether an entity possesses market power. Entiti= es that fail the screen are required to sell uncommitted capacity into the = spot market pursuant to a form of cost-of-service rates. The SMA order exp= ressly does not apply in New York, because FERC noted that it will not appl= y this new mitigation procedure in markets (including NY) where market miti= gation plans have been approved by FERC. Copies of the orders are available upon request. If you have any questions= , please don't hesitate to contact IPPNY.