New York Power Association modifies rates to fund hydro plant modernizations

WHITE PLAINS, N.Y., 12/1/11 (PennWell) — A rate modification plan adopted by the New York Power Authority (NYPA) Board of Trustees for hydropower provided to certain customers will ensure these groups continue receiving the lowest-cost electricity in New York State.

The cost-based rates for NYPA preference customers will remain between 70 and 80 percent less than average comparative market rates and are the result of an initiative to lower state agency budgets by 10 percent, NYPA says. Preference customers consist of 47 municipal electric systems and four rural electric cooperatives.

“The rate adjustment — the first that we’ve undertaken since May 2008 for a category of hydropower known as preference power — will permit a gradual return to full-cost recovery for this block of power, as required by state law, and allow us to recover costs stemming from ongoing and future investments in capital project upgrades,” says Michael J. Townsend, NYPA chairman.

Life extension and modernization programs at the St. Lawrence-FDR and Niagara projects, which are both more than 50 years old, are among the principal factors in the rate adjustment. NYPA will have invested more than $490 million from 2009 to 2014 for the continued reliability and efficiency of these generating facilities.

The rate plan will be gradually implemented over three-and-a-half years, beginning December 2011, and is in accordance with cost-of-service methodologies approved by NYPA trustees in 2003. That plan extends through 2025.

The overall effective rate for typical customers will be adjusted from the current 1.07 cents per kwH to about 1.33 per kwH in 2014.

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