Joint Group Letter on Governor Hochul's Proposal for NYPA to Build New Renewable and Energy Storage
Dear Governor Hochul, Speaker Heastie, and Leader Stewart-Cousins:
New York needs the private sector to get renewable electricity projects
built
To meet its renewable energy mandates, we need the private sector to remain acutely interested in New York and aggressively develop, invest in, and build wind, solar, and battery storage energy projects. Our fear is that, if New York State signals that it prefers that NYPA build the needed renewable energy and storage, the private sector will decide it is preferable to engage in the development process outside of New York.
ACE NY, Advanced Energy United, IPPNY, NY-BEST, New York State Laborers' Organizing Fund and SEIA support the provision of the Assembly’s Budget Resolution, which EXCLUDES the Governor’s proposal (Parts XX and YY of S.4008-A / A.3008-A) to have the New York Power Authority (NYPA) build new renewable and energy storage projects without sufficient limitation. Our groups agree with the Assembly that this topic need not be addressed during the State’s Budget process, as it does not have positive fiscal implications; furthermore, because NYPA does not pay taxes on its properties, it would have a negative impact on future State and local revenues. Numerous policy reasons exist for why NYPA should not re-enter the renewable and energy storage development business, as discussed in more detail below.
The Assembly’s Resolution also states that the Assembly is committed to developing a plan to require that any of NYPA’s projects in this realm would fill gaps identified by an assessment of progress toward meeting the energy goals of the Climate Leadership and Community ProtectionAct (CLCPA), while including provisions of benefit to union labor and to low-income consumers. However, if the Legislature and Governor decide that an agreement on this topic is needed before the end of this Legislative Session, the clean energy industry has provided amendments to accomplish the Assembly’s intention in a way that protects ratepayers and doesn’t hinder successful private sector investment. A detailed summary of our amendments is attached and highlighted below.
Needed amendments to Governor’s Proposal regarding NYPA:
- NYPA should be prohibited from bidding for NYSERDA contracts. Not only is it not a level-playing field for one state authority to compete with the private sector to win a contract from another state authority, it would not be additive to the State’s renewable energy development efforts to simply have NYPA win planned state procurements rather than the private sector.
- The directive to NYPA should be subject to a CLCPA Test. NYPA should confer bi-annually, with an opportunity for public comment, with other energy agencies to decide whether and how NYPA should use its powers to build new renewable and energy storage projects. The outcome should be a Public Service Commission (PSC) finding about whether the renewable electricity mandates will be met after assessing if there are not enough projects in the New Yok Independent System Operator’s (NYISO) Interconnection Queue to make the needed progress and that NYPA’s solicitations and those of the New York State Energy Research and Development Authority (NYSERDA) are not working as intended to meet the targets. If the Commission makes this finding, then NYPA can act with independent private sector partners.
- Other guardrails should be put on NYPA’s participation. NYPA should first conduct competitive procurement for its renewable energy supplies and replace its fossil fuel generation. NYPA should be required to partner and collaborate with the private sector, and NYPA’s subsidiaries should be financially separate. NYPA should be required to only acquire property from willing sellers and not involve condemnation. No preference can be given to NYPA over a private developer, given that NYPA owns and operates both generation and transmission (in order to avoid monopolistic market power). NYPA should clearly be subject to Office of Renewable Energy Siting law and all other provisions with which private sector developers must comply.
- The current restriction on utilities owning power generation should be maintained. Our amendment also continues the State’s prohibition on utilities constructing and owning new energy generation. If NYPA is allowed to re-enter the business, the utilities will want the same and already have been trying to win this position through actions at the PSC and legislation.
Why do our groups oppose NYPA building renewables or storage?
- It does not create a level playing field with the private sector. NYPA would be competing for a contract with a sister state agency, NYPA owns significant portions of the transmission system and would be negotiating interconnections with itself; NYPA has captive customers, which would bear the costs of development, and NYPA can underbid the private sector.
- It will undermine private sector interest, enthusiasm, and participation in New York. This will undermine the current, successful model, which relies on private sector companies to develop these projects. Over 50,000 MW of wind, solar, and battery storage projects are in the NYISO’s Interconnection Queue. More than 120 renewable energy projects, totaling over 12,000 MW, have received contracts from NYSERDA.
- It does not help with the real delays and barriers that exist in New York. There are real challenges to building renewable energy projects, and this doesn’t solve – or help – with any of them. There are transmission system constraints, permitting delays, local opposition, jammed up interconnection processes, and supply chain problems. NYPA will run into the same problems.
- It will expose NYPA customers to the full risks. NYPA’s customers would be responsible for paying all of the costs of NYPA’s projects, including cost over-runs. (Or, if NYPA wins a contract from NYSERDA, a combo of ratepayers and customers would be responsible.) Not all of NYPA’s power projects have been successful, including its Hudson Transmission Partners project that resulted in an approximate liability of $645 million for NYPA.
- NYS decided that the same entity should not own power generation AND the wires for a reason. Twenty years ago, New York and many other states redesigned a failing electric utility model and required utilities and authorities to divest their power generation facilities. Since then, power supply has gotten cheaper and cleaner. Each time the Commission has re-examined this question, it has found that utility ownership of generation would be riskier and more expensive for NY ratepayers, and it has decided against moving backwards. The same wisdom applies to NYPA ownership of renewable generation.
