Isramart : Calpine Opposes Deal in New York State Carbon Trading Lawsuit

Isramart news:
Calpine Corp., the largest U.S. generator of electricity fueled by natural gas, opposes the settlement of a lawsuit that could overturn the Northeast’s cap- and-trade program for carbon dioxide from power plants.

The deal between New York state officials and a subsidiary of Indeck Energy Services Inc. “arbitrarily and capriciously discriminates against” other companies, Cynthia Stroman, a Washington-based partner at law firm King & Spalding LLP, said in documents filed in the New York Supreme Court yesterday. Stroman represents two of Calpine’s plants in New York.

Indeck, which owns a 128-megawatt natural gas-fired power plant in Corinth, New York, sued the state last year, claiming it illegally entered the Regional Greenhouse Gas Initiative, or RGGI, a cap-and-trade program for power plants from Maryland to Maine. The carbon trading program sells pollution permits, each representing one ton of carbon dioxide, at quarterly auctions.

In December, Buffalo Grove, Illinois-based Indeck agreed to withdraw the lawsuit in exchange for some free permits and a promise that New York-based utility Consolidated Edison Inc. would cover the cost of any more pollution rights the Corinth plant needed to buy at auction. The Indeck plant sells electricity to Consolidated Edison under a long-term contract.

Brooklyn Navy Yard Cogeneration Partners LP and Selkirk Cogen Partners LP, which also sell electricity to Consolidated Edison, were included in the proposed settlement.

‘No Basis’

Houston-based Calpine’s New York plants, along with power producers Nassau Energy Corp. and Astoria Energy LLC, want state Supreme Court Judge Thomas McNamara to throw out the settlement because there is “no basis upon which to favor this one small group of generators,” Stroman said.

Indeck and the other generators won the concessions only because they “chose to mount a judicial challenge to the legality of the entire RGGI program” and gained leverage over New York state officials, she said. New York has raised $181 million from auctioning carbon dioxide permits and used $90 million to cover shortfalls in the state budget.

To avoid “further legal proceedings,” New York officials need to offer Calpine and other power generators that weren’t included in the proposed Indeck settlement a “fair and reasonable” deal, Stroman said.

The power generators included in the Indeck settlement didn’t get preferential treatment, Morgan Costello, a New York state assistant attorney general, said in the court documents.

The “key to the settlement” was Consolidated Edison’s agreement to cover the cost of carbon dioxide permits the generators bought at auction, Costello said. In exchange, the New York State Energy Research and Development Authority would spend a “commensurate” amount of the auction proceeds on energy efficiency and renewable electricity projects in Consolidated Edison’s service territory.

Calpine and other power generators could negotiate a “similar arrangement” with the utilities that buy their electricity, Costello said.