On December 23, 2009, the New York State Department of Environmental Conservation (DEC), the New York State Energy Research and Development Authority (NYSERDA), and the New York State Public Service Commission (PSC) announced a proposed Consent Decree in the Indeck Corinth v. Paterson et al lawsuit. The lawsuit, initially filed by Indeck in January 2009, charged that New York discriminated against Indeck Corinth and other power plants with long-term contracts (LTCs) that do not allow the plants to pass the costs of purchasing RGGI CO2 allowances on to end consumers. The lawsuit also claimed that RGGI violated both the New York State Constitution and the Federal Constitution.

According to the proposed settlement, Con Edison (ConEd) will purchase any additional RGGI allowances on behalf of Indeck Corinth that are necessary to cover the plant’s compliance obligation beyond what the plant receives from DEC’s LTC allowance set-aside pool. ConEd will make a similar commitment to cover the compliance obligations of two other power plants with which the utility has LTCs (Selkirk Cogen Partners and Brooklyn Navy Yard Cogen Partners). In exchange, Indeck will drop the lawsuit. DEC will maintain the current LTC set-aside at 1.5 million allowances per year.

ConEd will continue to purchase such allowances until the current long-term contracts expire, which is scheduled to occur in 2015 for Indeck and Selkirk and in 2016 for Brooklyn Navy Yard. The estimated cost of covering these compliance obligations is expected to be approximately $2.6 million per year from 2009 through 2011. To compensate ConEd for these expenditures, NYSERDA will direct RGGI auction revenues equal to the cost of the allowances for smart grid and energy efficiency initiatives in the utility’s service territory.

The proposed settlement is expected to be published in the New York Environmental Notice Bulletin on December 30, 2009. From the date it is published, there will be a 30-day public comment period on the Consent Decree.

Click here to view the proposed Consent Decree.

A statement from DEC on the proposed settlement is available here.