Indeck Energy Settlement: RGGI

From the Global Climate Law blog:

The New York State Energy Research and Development Authority (NYSERDA), New York State Department of Environmental Conservation (DEC) and New York State Public Service Commission have announced a settlement of Indeck Energy’s challenge to the legality of the RGGI. Indeck and others contended that the RGGI system of auctioning emission allowances puts companies who are locked into long term contracts at a serious disadvantage and challenged New York’s authority to implement RGGI. This litigation and settlement highlight the kinds of issues likely to arise as companies face the prospect and costs of current and future regulatory programs focused on long-term reduction of greenhouse gas emissions.

On December 23rd, a consent decree, approved by all parties to the Indeck litigation, was lodged with the court in which the lawsuit was pending. The New York Attorney General’s Office will receive public comments on the decree until January 29, 2010. After consideration of the public comments, New York will decide whether to move for judicial entry of the consent decree.

Under the decree, Con Edison would pay the cost of additional allowances that Indeck and other parties would need through the end of their long term contracts. DEC “committed in the Consent Decree to maintain the LTC set-aside account under the DEC Rule at 1.5 million allowances annually through 2016.” In addition, the Public Service Commission “agreed to consider approval of a tariff amendment allowing Con Edison to pass through the costs of purchasing allowances [estimated at $2.6 million a year] to its ratepayers.” The settlement announcement suggests the pass through will ultimately be rate neutral because “NYSERDA has agreed in the Consent Decree to use a portion of the RGGI proceeds to fund energy efficiency programs in Con Edison’s rate territory, which such funds will be commensurate with the costs associated with Con Edison’s payment of allowance costs. . .”

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