BRICKFIELP BURCHETTE

RITTS ~STONE, PC
WASHINGTON. D.C.
AUSTIN. TEXAS

February 20,2014

Honorable Kathleen H. Burgess

Secretary
State of New York Public Service Commission
Office of the Secretary
Three Empire State Plaza
Albany, NY 12223-1350

Re:

Proceeding on Motion o{the Commission to Examine RepoweringAlternatives

to Utility Transmission Reinforcements, Case No. 12-E-OS77

Dear Secretary Burgess:

Nucor Steel Auburn, Inc. submits this letter in opposition to the extension request that
Cayuga Operating Company, LLC ("Cayuga") submitted on February 18, 2014 in this matter.
This is the fifth extension that Cayuga has requested in this proceeding, but no good cause exists
to authorize further extensions.
More than one year has passed since the Commission directed New York State Electric
and Gas Corporation ("NYSEG") to examine the costs and benefits of repowering one or both of
the Cayuga units. 1 During that time, NYSEG conducted the required examination, concluded that
transmission upgrades in the form of the Auburn Transmission Project ("ATP") was a superior
resource solution to repowering, and filed an Article VII application which was modified to
incorporate all upgrades NYSEG deems necessary in the event that the Cayuga units are not
repowered. The Commission's September notice setting a filing deadline required Cayuga and
NYSEG to explore a possible repowering agreement and to file any such agreement for
Commission approval by October 24, 2013. The Commission ordered that if the parties were
unable to reach agreement, they should file their respective recommendations for further action
in this proceeding. NYSEG and Cayuga subsequently have requested a series of extensions to
that deadline which currently is February 28,2014.
It is telling that the previous extension requests were filed jointly by Cayuga and NYSEG
and asserted that allowing additional time for further discussion was appropriate and necessary.
In this instance, however, Cayuga has filed a unilateral request which NYSEG now opposes, and,
in a letter dated February 19,2014, NYSEG states that it is prepared to file its recommendation.

See, Case No. 12-E-OS77, Order Instituting Proceeding and Requiring Evaluation of Generation Repowering,
issued January 18, 20l3.

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BRICKFIELO BURCHETTE
RITTS &STONE, PC
It is reasonable to conclude, therefore, that there are no serious prospects for a negotiated
agreement between NYSEG and Cayuga. The Commission should deny Cayugas extension
request and require Cayuga and NYSEG to file their recommendation on February 28,2014.

In this regard, it is important to keep in mind that NYSEG ratepayers are clearly affected
by delays in implementing permanent and economic resource solutions in this region. On
December 27, 2012, NYSEG and Cayuga entered into a reliability support services agreement
for the continued operation of Cayuga Generating Facility Units 1 and 2. This RSS agreement
was intended to maintain reliability until transmission upgrades were completed or other
reliability remedies could be implemented. That agreement expired on January 15, 2014, and
the Commission was forced to approve a more extensive RSS agreement to maintain system
reliability. In its order approving the RSSA 2, the Commission stated its interest''in ensuring that
ratepayers are not required to subsidize unnecessary expenditures under the RSSA-2:' Order
Deciding Reliability Need Issues and Addressing Cost Allocation and Recovery, Case No. 12-E0400, at 8 (January 16, 2014). Under the RSSA 2, Cayuga receives a fixed monthly charge of
nearly three million dollars from NYSEG, in addition to compensation for capital expenditures.
These costs are borne by NYSEGs ratepayers.
Finally, continued delay and uncertainty in this proceeding will negatively impact other
Commission matters currently under consideration. In Case No. 13-T-0235, the Commission is
considering an application by NYSEG and National Grid for the construction of a 14.5 mile
transmission line in the City of Auburn, Town of Throop, Town of Brutus, and Town and
Village of Elbridge (,Auburn Transmission Project). NYSEG and National Grid discuss in their
Joint Application for a Certificate of Environmental Compatibility and Public Need, that service
to customers in NYSEGs Auburn Division is dependent on the generating units at the Cayuga
Generating Facility. This dependency is a direct result of the limited transmission in the area.
The Auburn Transmission Project is intended to relieve that limitation. The pending
transmission proposal consists of two phases, Phase 2 of which is necessary ''in light of the
anticipated mothballing of both Cayuga generating units:' Joint Application of New York State
Electric & Gas Corporation and Niagara Mohawk Power Corporation d/b/a National Grid,
Case No. 13-T-0235, at 5 (May 31, 2013). A resolution of the repowering matter in Case No.
12-E-0577 will clarify the need for the Auburn Transmission Project. This project is necessary
to provide more reliable service to NYSEGs Auburn Division customers and further delay in this
proceeding will only serve to hinder the efforts to complete the Auburn Transmission Project.
Nucor Steel Auburn urges the Commission to deny Cayugas extension request and
resolve this proceeding expeditiously.

t '--

Re,srctful~bmi tted

ct -~

James W. Bre
OwenJ. Kop n
Counsel to Nucor Steel Auburn, Inc.