New York’s Energy Policy Landscape

Posted: March 15, 2016
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Governor Cuomo has introduced several proposals aimed at improving New York’s clean and reliable energy profile. Do these plans provide a responsible roadmap for supplying a growing New York with clean, reliable and affordable energy for the long term?

By: Arthur ‘Jerry’ Kremer and Rob DiFrancesco

Introduction

Governor Andrew Cuomo is striving to be on the cutting edge of clean energy policy in America. This is reflected in his recently introduced “Clean Energy Standard” plan, which calls for dramatic reductions in carbon emissions over the next 15 years.

Also, in his 2016 annual State of the State address, Governor Cuomo vowed to make New York, “…the international capital for clean and green energy products.” He mentioned small-scale solar research and micro-grid development, as well as other clean energy initiatives.

These pronouncements follow a myriad of past energy initiatives the Cuomo Administration has proposed in recent years – but will these plans work? The following summarizes Governor Cuomo’s chief energy plans and the implementation challenges.

What Is The Clean Energy Standard?

Announced in late 2015, the Clean Energy Standard calls for a 40% reduction in greenhouse gas emissions from 1990 levels by 2030; 50% renewable energy use by 2030; and a 23% reduction in buildings’ energy consumption by the year 2030 from 2012 levels.

The Governor aims to achieve these goals through the establishment of a $5 billion Clean Energy Fundto drive investment in clean energy in the state, as well as a mandate requiring utility companies to purchase a percentage of their power from struggling upstate nuclear plants according to a New York Public Service Commission Staff White Paper on Clean Energy Standard released in January. The Clean Energy Standardis a very significant policy proposal, as its implementation will codify these carbon reduction standards and make them legally binding in the state regardless of the costs associated with their implementation.

A Patchwork Of Proposals

Previous plans and proposals by New York State include the following.

  • Reforming the Energy Vision (REV) – This is an overarching plan to meet the governor’s goals of greenhouse gas reduction and renewable energy development. REV would fundamentally change how power is generated and distributed, with small community microgrids producing power, predominantly from renewable sources.
  • New York State Energy Plan – The New York State Energy Plan is a broad roadmap that is further reflected in REV and the Clean Energy Standard (40% reduction in greenhouse gas emissions, 50% renewable power grid).
  • Energy Highway – This is a plan to provide an additional 3,200 megawatts of power across the state primarily through improved transmission, generation, and additional clean power.

The Nuclear Bridge

As the Cuomo Administration’s energy planning has evolved, an unfortunate dichotomy has emerged.

In a December 2 letter to PSC Chair Audrey Zibelman the Governor said, “In developing the [Clean Energy] Standard, additional attention needs to be given to ensure emissions free sources of electricity remain operational. Specifically, elimination of upstate nuclear facilities, operating under valid federal licenses, would eviscerate the emission reductions achieved through the State’s renewable energy programs, diminish fuel diversity, increase price volatility, and financially harm host communities.”

Nuclear power accounts for 30% of the state’s total electricity supply. The closure of any nuclear power plant, as the Governor correctly points out, takes the step backwards on its carbon emissions (i.e., those emissions spike) and endanger reaching the CES carbon reduction goals.

Yet, the administration has also continued its aggressive campaign to shutdown New York’s biggest and most reliable nuclear energy source, the Indian Point Energy Center.

Indian Point fulfills all of the requirements Governor Cuomo seeks for the power grid. Indian Point is the state’s preeminent supplier of virtually emission-free energy. An independent 2015 study found that closing Indian Point would increase carbon emissions dramatically – by 8.5 million metric tons a year. This is the equivalent of adding 1.6 million cars to New York’s roads. Indian Point also accounts for 5,400 New York jobs – jobs at the plant as well as those elsewhere in the state created by its $1.6 billion in annual economic activity.

Simply put, closing Indian Point is a body blow to the CES goals, and probably a knock out punch.

Energy Planning Priorities

As planning continues, one thing must be given the highest priority: costs that will burden utility ratepayers throughout New York. Towards this end, an open and transparent process to implement state energy plans must allow proper input from the people who bear the costs for them.

New Yorkers deserve an energy infrastructure that leaves the financial risk with private investors instead of putting everyday ratepayers on the hook for cost overruns or slow returns. The state already has some of the highest electricity costs in the nation, and new measures to improve our clean energy profile cannot come with prohibitive, added costs for ratepayers.

Furthermore, we cannot rely on Canadian hydroelectricity to meet carbon reduction or reliability benchmarks in New York. Not only is that a temporary solution to a long-term problem, but jobs and billions of New York dollars annually will be taken out of the state.

Conclusion

Under Governor Andrew Cuomo’s leadership, New York has the potential to set a new standard for clean energy generation in America. At the same time, a patchwork of policy proposals points to energy planning that lacks cohesion, transparency, a clear direction. The financial costs to New Yorkers could also be quite significant. Finally, Governor Cuomo’s policies clearly pick winners and losers in the marketplace, including punishing the most productive nuclear plant, Indian Point, and rewarding other plants. The Clean Energy Standard sets ambitious goals (see: Public Service Commission white paper) but unless the administration establishes one clear and consistent energy plan that allows free markets to flourish and grow, it will not be possible for the state to achieve its carbon reduction mandates to be implemented over the next two decades.

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Arthur “Jerry” Kremer is the former chairman of the Assembly Ways and Means Committee and a principal author of the state’s power plan siting law. He now serves as chairman of the New York Affordable Reliable Electricity Alliance (New York AREA).

Rob DiFrancesco is the director of New York AREA, a diverse organization of business, labor and community groups including Entergy, the owner of Indian Point. Founded in 2003, New York AREA’s mission is to ensure that New York has an ample and reliable electricity supply, and economic prosperity for years to come. For more information visit www.area-alliance.org.