Order Issued on NYS Clean Energy Standard

On August 1, 2016, the NYS Public Service Commission (PSC) issued an Order on the Clean Energy Standard (CES). The order establishes a mechanism to implement the NY Energy Plan, which calls for 50% of the state’s electricity to be produced from renewable energy sources by 2030, a 23% increase above 2012 levels for energy efficiency in buildings, and a reduction of 40% below 1990 levels in greenhouse gas emissions, all by 2030.

The announcement was auspicious in that the PSC formalized the important goal of having 50% of the state’s electricity produced by renewables by 2030, placing NYS as a forerunner among other states in renewable energy development. The order directs that every NY utility and energy provider (including the New York Power Authority (NYPA) and the Long Island Power Authority (LIPA)) will be required to procure a certain percentage of their annual load from renewable sources. To mandate compliance, any utility or energy provider failing to obtain their allotted percentage of electricity from renewable sources will be required to pay an Alternative Compliance Payment (ACP) to the state, which in turn will be used to further renewable development.

CES hearings prior to the order resulted in extensive debates between developers and utilities as to how best supply renewable energy. While many studies showed that renewable energy could be provided at lowest cost by having independent producers sell energy to utilities, the utilities maintained that they could minimize costs by being permitted to own their own renewable energy facilities.

Another issue was whether utilities could enter into long-term 20-year Power Purchase Agreements (PPAs) for renewable power or whether utilities would purchase Renewable Energy Credits (RECs). With PPAs, utilities would purchase the actual energy and attributes, whereas with RECs, utilities would purchase renewable energy attributes. Developers prefer to sell through PPAs.

The Sierra Club had recommended that a mixed portfolio of the above devices be permitted, to see which was most cost-effective and efficient in developing renewables. The PSC’s order determined that in the first phase of the first three years of the program, only 20-year REC contracts would be utilized, with the possibility of PPAs and utility-owned generation being considered during the first review of the CES in 2020.

The definition of “renewable” sources remains the same under the PSC order, except that power from hydro projects over 30 megawatts (MW) would be permitted. The Sierra Club had some concerns that this would permit energy to be purchased from larger scale new Canadian hydro projects, and Club representatives are currently reviewing the matter. At present, however, it appears that new large-scale Canadian hydro would not be considered a new renewable energy under the CES.

The PSC deferred action in some other areas. The requirement of the NY Energy Plan to increase energy efficiency in buildings will be handled through a separate PSC proceeding, coupled with input from the Clean Energy Advisory Council.

The Sierra Club had also urged the PSC to include offshore wind (OSW), as a separate project or tier within the CES. While this separate component was not created, the administration will handle OSW through a separate master plan. The Sierra Club is requesting 5,000 MW of renewable energy from OSW by 2025. There are encouraging developments in OSW, with the governor of Massachusetts announcing on August 8 that 1,600 MW of OSW will be included in that state’s energy package. To date, areas for construction of some 2,400 MW of OSW have been identified off Long Island. The federal government has scheduled bids for an area off the Rockaways on Long Island that would support 800 MW of wind turbines, and there is an indication that the state, through NYSERDA, will be involved in the bidding process. There are also strong indications that LIPA will approve another OSW project off Montauk Point at the eastern end of Long Island.

Unfortunately, as part of the CES, the PSC adopted a nuclear subsidy plan in full. This is a serious flaw. A subsidy for the nuclear industry was first recommended in the original CES proposal, issued in January 2016. The Sierra Club maintained that CES funds should not be used to subsidize nuclear. In July, the PSC issued a nuclear subsidy proposal recommending ratepayer charges to support the Ginna, FitzPatrick and Nine Mile nuclear plants through 2030. The administration argued that the nuclear subsidies would protect 900 jobs in the industry. It also opined that since 24% of NYS electricity currently comes from four nuclear plants, maintaining the plants would keep the usage of fossil fuels low to address climate change.

Sierra Club joined with other environmental groups in opposing the subsidies in a response on July 22, once it became apparent that the subsidies to the nuclear industry could approach $8 billion by 2030. It now appears that the subsidies will amount to approximately $1 billion between now and 2020.

What can be done about the nuclear subsidy? We must all encourage the rapid development of renewable energy and efficiency to minimize nuclear subsidies. The more renewable energy and good-paying union jobs that can be created, the less reason for nuclear subsidies. The Sierra Club is urging maximization of renewable energy development targets during the first phase of the CES through 2020, as the PSC has not yet determined the percentage of renewable energy that will be required in this period.

Another encouraging note: on August 1, the PSC chair, Audrey Zibelman, stated that she hoped that consumers purchasing “green products” could be exempted from paying for the nuclear energy Tier 3 subsidy. If the PSC were to develop a statewide program for purchasing “green products,” exempting taxpayers from paying for a nuclear subsidy by purchasing renewable energy could create a significant boon to the installation and utilization of renewable energy.

It’s important for us all to realize that much opposition to renewable energy development will continue. Although we now have a policy that favors renewable energy in New York, the fracked gas industry continues to push its pipelines through the state, Bakken crude-by-rail oil trains continue to travel across the state and down the Hudson River, and oil pipelines, such as the Pilgrim Project, are promoted by the fossil fuel industry.

We must do all we can to support the development of renewables, conservation and energy efficiency, and to halt fossil fuel expansion. Global climate change continues, with ongoing heat waves along the Atlantic coast, severe drought in upstate NY, and unprecedented rain in Louisiana. We must do our part to reach and exceed the goals set for the reduction of greenhouse gases by the Paris summit. We also have the moral imperative to protect a living Earth, upon which all life depends. The decision by NYS to require 50% of our electricity to be produced from renewable sources by 2030 must be supported by all.