Experts: Utility-Owned Power Plants Would Put New York Ratepayers on the Hook for Project Risks
ALBANY, NY – As Albany policymakers and regulators consider proposals to allow utilities to own electric generation, academic experts and clean-energy industry leaders are warning that the model would shift project costs and financial risks from private developers to New York ratepayers, weaken competition, and undermine the state’s competitive electricity market:
Yale Law Professor Joshua Macey said, “The deeper problem with utility ownership is who bears the losses when things go wrong. When an independent developer’s wind farm runs over budget or never gets finished, the developer absorbs the loss. When a regulated utility builds the same project, overruns are passed to captive customers. New York utilities’ own transmission projects reveal the systemic challenge…Letting the companies that own the wires also own power plants makes this worse. A utility that controls transmission has every reason to make interconnection smooth for its own projects and slow for everyone else’s, and to steer grid investment toward lines that protect its assets rather than lower costs for customers.”
Executive Director of the Electricity Law Initiative at Harvard Law School Ari Peskoe said, “A lot of this is about…when utilities build projects, they put the risk on the public.”
Electric Power Supply Association President and CEO Todd Snitchler said, “When generation is built competitively, investors are the ones that bear the risk if that power plant gets delayed, exceeds construction budgets or ends up not being cost-effective. Generation built under the monopoly utility model, however, passes those risks onto captive customers.”
Executive Director for the Alliance for Clean Energy of New York Marguerite Wells said, “While we agree that the status quo of how the state procures energy generation is failing, the solution is procurement reform for independent power producers, not lining utility companies’ pockets… If the state reauthorized utilities to own generation, it would hinder competition and increase energy prices. The private market takes on the costs and risks for renewable project development, and the competitive procurement process ensures that lowest-cost projects move forward.”
New England Power Generators Association President Dan Dolan said, “Now more than ever we need utilities focused on what they do best – building out the necessary T&D infrastructure, repairing storm damage, and delivering electricity to consumers safely and efficiently. Dealing with transmission and transformer siting, distribution-level public policy implementation, and other services are crucial. But, diving back into a highly competitive generation sector after 30 years away feels very, very foolish.”
New Jersey’s Division of Rate Counsel Director Brian Lipman said, “utility-owned generation will likely shift the risk of producing generation away from generation developers and onto ratepayers.”
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About IPPNY
IPPNY is New York’s trade association dedicated to representing the largest fleet of clean energy generation in New York State and companies involved in: the competitive power supply industry; the development of electric generating facilities; the generation, sale, and marketing of electric power; and natural gas transmission facilities. IPPNY Member companies produce nearly 80% of New York's electricity, utilizing all sources, such as wind, solar, hydro, energy storage, natural gas, low sulfur oil, biomass, and nuclear. Furthermore, IPPNY’s Members have invested more than $10 billion in capital improvements at their facilities, have supported nearly 19,000 long-term jobs across the State, and pay approximately $1.5 billion in local property taxes annually.
