Don't let utilities derail CNY's economic comeback (Guest Opinion by Gavin J. Donohue)
Gavin J. Donohue is president and chief executive officer of the Independent Power Producers of New York Inc. (IPPNY), based in Albany. Central New York is finally experiencing something that has been elusive for far too long: real economic momentum.
After decades of economic decline, Syracuse and the surrounding region are undergoing a transformation under Gov. Kathy Hochul. Major semiconductor firms like Micron and other advanced industries are planting their flags in Central New York, representing the largest private investment in New York State history. The governor deserves credit for championing this economic comeback and for positioning Upstate as a national hub for the future of advanced chips and memory manufacturing.
A strong economy requires a strong electric grid. Private developers stand ready to be partners in this economic renaissance and help New York meet rising demand with affordable, reliable power that supports growth. But that progress depends on a fundamental condition: Businesses need confidence that energy will remain affordable, reliable and predictable.
A continual policy debate in Albany threatens to undermine that confidence. At issue is a proposal for utility-owned generation, or UOG, which would allow utility monopolies to reenter the power generation business rather than relying on competitive markets. Not only is the proposal unpopular with New Yorkers, according to recent statewide polling, it would also be a serious policy mistake.
This debate is especially timely given the growing conversation around new large-load growth in New York, particularly from data centers. Hochul’s decision to pause and evaluate data center development reflects a serious commitment to getting the policy right. As New York plans for data centers and other large-load users to come onto the grid, the answer is better planning, stronger coordination and smarter procurement. This is not the time to abandon the competitive framework that has served the state well.
For more than a quarter-century, New York has benefited from a competitive electricity generation model.
According to independent research, that framework has helped keep costs down: Since New York moved away from utility-owned generation, consumers have paid 35% less for power supply than they would have under the old monopoly model. It has also encouraged innovation, diversified the state’s energy mix, attracted private investment and placed risk on developers rather than ratepayers. Competitive markets create the right incentives: Private developers have to deliver projects on time and on budget if they want to succeed.
Utility-owned generation weakens those incentives. It would move New York back toward a system in which monopoly utilities are allowed to own generation with the expectation of guaranteed cost recovery. In practice, that means if a project runs over budget, is delayed, or underperforms, customers could end up paying the bill.
That is bad policy for several reasons.
First, UOG shifts risk onto ratepayers. Families and businesses should not be forced to absorb the downside of expensive generation projects that fail to meet expectations. Under the competitive model, private developers bear that risk. Under UOG, the public increasingly does.
Second, UOG creates policy uncertainty at exactly the wrong time. The companies now investing in Upstate New York are making large, long-term decisions. They need to know the rules of the road will remain stable. If New York suddenly changes course on how it procures power generation, investors may start to question whether the state remains a dependable place to do business. Just as important, private investment brings flexibility and creates opportunities for unique joint ventures that can help meet the needs of large employers and fast-growing industries.
That matters because this is not just an energy-sector debate. It is an economic development issue. Semiconductor manufacturers, advanced industrial facilities and other large employers need confidence that power will be reliable, prices will remain competitive, and state policy will be rational and predictable. If New York makes energy more expensive and less certain, it risks undermining the very investments it has worked so hard to attract.
Third, UOG reduces competition. Utilities are monopoly service providers, not competitive generators. Expanding their role in generation would reduce pressure to innovate, cut costs and operate efficiently. Over time, less competition almost always means higher costs and worse outcomes for customers.
New York has a rare opportunity to fulfill a genuine economic comeback in Upstate New York. Let’s not jeopardize that opportunity by shifting risk to ratepayers and sending the wrong message to investors who want to do business here. New Yorkers deserve to benefit from a state powered by competition, resilience and economic empowerment.
