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LS Power Wants to Keep Financial Data Secret from State Regulators

Power company looks to qualify for ratepayer subsidy without surrendering key financial data to Board of Public Utilities.

LS Power wants the state to funnel millions of dollars in ratepayers' subsidies to help it build a gas-fired power plant in West Deptford Township, but is not willing to provide crucial financial data to the New Jersey regulators who will review the project.

In a filing with the Federal Energy Regulatory Commission (FERC), the company is seeking to restrict access to its "highly sensitive, bid-related information" to the federal agency; PJM Interconnection, the operator of the regional power grid; PJM Market Monitor, an independent expert who ensures the wholesale market is competitive; and, at the discretion of the commission, an outside expert.

LS Power is one of a half-dozen expected bidders seeking to win lucrative subsidies from the state Board of Public Utilities (BPU) to develop new power generation in New Jersey, a policy aimed at reducing high energy costs to businesses and consumers. The subsidies could end up costing New Jersey ratepayers some $2 billion.

The subsidies would be awarded under a new law that seeks to develop power capacity in New Jersey in an auction scheduled to be held in May. LS Power does not want to include information about what price it would offer capacity in that auction.

The policy, however, has been the subject of much controversy from consumer advocates, who call it a "sweetheart deal" for a handful of companies and power plant suppliers, the latter of which have challenged the effort before the federal agency and the federal courts. Foes say it will create a bad precedent that would make it unlikely new power plants are developed in the state in the future, unless more subsidies are handed out.

In addition, power suppliers are earning huge profits from capacity payments to keep the lights on, and they fear new power plant construction would erode the bottom line.

Peak Power

In the filing, LS Power is seeking to withhold information about what price it will bid in a May 2014 auction to provide capacity in the PJM region. Power plants make money both on the energy their plants produce and on having the reserve capacity to meet peak power demand. This has become increasingly expensive in New Jersey because the power grid here is highly congested, making it difficult to wheel excess power supplies from other parts of the region.

By withholding what price it will bid from state regulators, they will have no way of knowing precisely how much the LS Power plant (otherwise known as West Deptford Energy [WDE]) will earn on its investment.

LS Power did not return messages for comment, but explained its rationale for seeking to keep the information confidential in the filing.

"Providing intervenors (which would include competitors, states and other customers) with access to pre-auction bid information, even subject to a Protective Order, would set dangerous precedent and violate the Commission’s longstanding policy of preventing the disclosure of granular, non-aggregated bid offer data that can be linked to a particular market participant," the applicant said in the filing.

In addition, the applicant argued "releasing WDE’s highly sensitive bid-related data and supporting documentation to third parties (including competitors, states and other customers) in advance of the upcoming BRA (auction) would have significant detrimental competitive impact on WDE and could undermine the results."

Critical Reception

The filing was criticized by opponents of the project. Glen Thomas, president of PJM Providers Group, a coalition of power suppliers, found it troubling that LS Power is saying to regulators they have no right to see how much their project costs, a position that makes it impossible for the state to figure out its rate of equity.

"All along, LS Power has been looking for special rules to get this plant built," said Thomas, referring to the original bill that set up the subsidy program and was specifically written in a way to benefit only LS Power. "This is just another example of that."

Thomas said the request to keep the crucial financial information secret is very unusual. "It’s hard to imagine the FERC will allow them to stay with this veil of secrecy," he said.

The BPU is expected to make public information about what other companies are bidding to participate in building new capacity. NJ Spotlight disclosed last week that PSEG Power is planning to submit three separate projects for a total of 1,100 megawatts of capacity.

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