PSC Must Propose a Clean Energy Standard that Protects Consumers and Promotes Competition
Power Sector Principles for Reducing Emissions and Spurring Private Investment
Albany, N.Y. 1/19/16 - The Independent Power Producers of New York (IPPNY) support Governor Cuomo's goal to create a Clean Energy Standard. A workable Clean Energy Standard must be structured in a comprehensive and inclusive manner. IPPNY calls upon the state Public Service Commission (PSC) to issue a proposal which attracts private investments and avoids passing costs directly onto ratepayers. IPPNY's ultimate level of support will be determined by the extent to which the PSC's proposal is equitable, prioritizes system reliability, protects consumers from unwarranted charges, and adheres to sound market principles.
"A market based approach is essential," said Gavin Donohue, IPPNY President & CEO. "The details of a Clean Energy Standard must be consistent with New York's highly successful wholesale electricity market by which ratepayers receive electricity at the lowest possible cost and in which private developers make investment decisions based on market signals and not guaranteed revenues through long-term contracts."
New York already has a proven track record of attracting private investment. Since 2001, over 1,700 megawatts of wind resources have been constructed and nearly 6,000 megawatts of inefficient generation have been suspended or retired - primarily as a result of market signals and not at the expense of ratepayers. In future instances where long-term contracts are used in lieu of market based approaches to secure investment, it is essential that mechanisms be in place so that all resources receive fair market revenues without insulation from market signals - less the essence of competition be undermined.
It also is important that the Clean Energy Standard not discriminate between a broad variety of existing and new low- or zero-emitting resources, as fuel diversity is crucial to maintaining grid reliability. In that same respect, proposals that unilaterally determine which plants remain open and which plants close damage the market, threaten reliability, and drive away potential private investment.
"Generators that are able to meet their emissions requirements and perform economically should be allowed to operate in the state," said Mr. Donohue. "State strategies that pick winners and losers are especially redundant in light of record low fuel and wholesale market prices that are currently driving uneconomic facilities to retire. Just this past December, New York saw the lowest wholesale price of energy since the market was created, and those prices are being reflected in consumers' energy bills and generators' decisions to invest in new resources."
Though the Clean Energy Standard calls for 50 percent of electricity generation to come from renewables by 2030, the ultimate goal is and should be to reduce carbon dioxide (CO2) emissions as effectively and efficiently as possible. In pursuit of that goal, the Clean Energy Standard should be applied to all sectors of the economy, especially when considering the power sector has already reduced CO2 emissions by more than 52 percent below 1990 levels, meeting its share of the state's energy goal (reducing CO2 emissions by 40 percent below 1990 levels by 2030) 15 years in advance.
"The power sector has shown its ability to reduce emissions and sets an example for other sectors to do the same," said Mr. Donohue. "If the state wants to meet its long-term emissions reduction goal of reducing CO2 emissions 80 percent below 1990 levels by 2050, it is time to extend emissions reduction programs to other sectors of the economy. Otherwise, the state can expect to see diminishing returns on the power sector's ability to further reduce emissions while staying economic and continuing to provide reliable electricity."
In the interest of providing a strong foundation for the development of a balanced and practical Clean Energy Standard, IPPNY has developed some Key Principles for consideration.
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The Independent Power Producers of New York, Inc. (IPPNY) is an Albany-based trade association representing the competitive power supply industry in New York State. IPPNY Members generate over 75 percent of New York's electricity using a wide variety of generating technologies and fuels including hydro, nuclear, wind, coal, oil, natural gas and biomass. They have invested over $10 billion in their facilities and employ over 10,000 people. Annually, they pay over $600 million in taxes and invest more than $55 million in their communities.
