NYSERDA Plan Could Add $200/Month Each in Electric and Gas Costs

NIMBYismRoger Caiazza
Independent Researcher and Publisher,
Pragmatic Environmentalist of New York

NYSERDA plans to implement Andrew Cuomo’s climate ideas for New York could add costs to residential customer of $200/month each for electricity or gas.

Alicia Barton, President & CEO of the New York State Energy Research & Development Authority (NYSERDA) recently announced the release of NYSERDA’s 2020-2023 Strategic Outlook which is their overview of their plans for the next several years.  This is important because the plan to implement the aspirational Climate Leadership and Community Protection Act (CLCPA) is supposed to be developed in this timeframe and NYSERDA staff will undoubtedly play an important role in that effort.  This post provides an overview of this report and costs.  Subsequent posts will address NYSERDA’s missions in more detail.

NYSERDA

Background

On February 11, 2020 the following email was sent from NYSERDA.

Last year was a landmark year for climate action in New York. Governor Cuomo’s nation-leading Green New Deal and the signing of the New York State Climate Leadership and Community Protection Act (CLCPA) have put us at the forefront in lowering carbon emissions and advance a clean energy future with a just and equitable transition that is addressing the most pressing issue of our time – climate change.

Building on the momentum of our accomplishments, New York State is on the path to achieving a carbon free electricity system by 2040, an 85 percent reduction in greenhouse gas emissions by 2050, and ultimately a carbon-neutral economy, touching on all sectors including transportation, buildings and industrial production. With climate action featured prominently in Governor Cuomo’s annual State of the State and Executive Budget addresses this year, NYSERDA’s work to combat climate change, preserve the environment, and grow the green economy is more important than ever before.

I am therefore excited to share NYSERDA’s 2020-2023 Strategic Outlook, which presents our key objectives and strategic focus areas while placing them into the broader context of New York’s long-term energy policies and market landscape. The report highlights our increasing efforts to support New York’s energy transformation through decarbonization of transportation, energy affordability and equity, electrification of buildings, and building a resilient energy system in support of NYSERDA’s five mission outcomes:

  • Greenhouse Gas Emissions Reduction
  • Renewable Energy
  • Energy Efficiency
  • A Distributed and Resilient Energy System
  • Building a Clean Energy Economy.

I hope you will take the time to review the Strategic Outlook and understand we cannot be successful in accelerating action to meet the needs of a changing energy landscape without participation from stakeholders like you. Together we will seize the opportunity to make Governor Cuomo’s vision for a clean energy future a reality.

Message from President and CEO

The strategic outlook report includes an introductory message from the President.  According to this message the rationale for action on climate change “reached new heights during the September 2019 Climate Week, with the youth movement and climate strikes in New York City and across the nation driving home the urgency and importance of addressing one of the most pressing matters of our time.”  Color me unimpressed.  According to this children and activists are responsible for setting New York policy.  What could possibly go wrong?

Funding Commitments

At the top of my list of issues for this regulation is costs which, by the way, is not usually a concern of children and activists.  According to the document: “Several funding sources help NYSERDA advance the State’s clean energy goals and achieve the Authority’s mission. NYSERDA invests these funds in a fiscally responsible manner that maximizes benefits to New Yorkers, fills critical gaps, and addresses the needs of the market.”

Per the document there are four funding mechanisms.

Clean Energy Fund

Authorized by the Public Service Commission (PSC) and derived from an assessment on retail sales of electricity by State utilities — it is comprised of four portfolios: Market Development, Innovation and Research, NY-Sun, and NY Green Bank.

Clean Energy Standard

As authorized by the PSC, these funds are realized by NYSERDA through the sale of Tier 1 Renewable Energy Credits (RECs), Offshore Wind Renewable Energy Credits (ORECs), and Zero Emission Credits (ZECs) as well as receipt of Alternative Compliance Payments from New York’s Load Serving Entities (LSEs). Through PSC orders, LSEs are obligated to meet annual compliance obligations for RECs, ORECs and ZECs. As needed, utility financial backstop collections may be called upon to meet funding shortfalls.

Regional Greenhouse Gas Initiative (RGGI)

Derived from sale of carbon emission allowances as set forth in 6 NYCRR Part 242 and 21 NYCRR Part 507.  The amount of revenues available is dependent on the variable auction prices for the allowances. Per requirements in 21 NYCRR 507, RGGI funds are used to advance energy efficiency, renewable energy, and carbon abatement projects in New York State.

Other Funds

Includes sources provided by various sponsors used for specific purposes. Public funds are leveraged considerably with private sector funding through NYSERDA programs.

For the first time that I have been able to find, the State admits how much some of this might cost.  The NYSERDA Strategic Outlook Anticipated Commitments (April 1, 2020 – March 31, 2023) table states that the total 3-year investment level cost is $14,255,988,000.  Importantly, this is not the entire cost just the cost of the State’s programs to fill critical gaps and address the needs of the market.

The Clean Energy Fund is the largest source of funding.  It is “derived from an assessment on retail sales of electricity by State utilities” which means that the ratepayers are on the hook for the $4.75 billion annual costs.  If all that funding were new charges to the utility bills and my guesses how it should be apportioned, then the average cost per residential customer is on the order of $200 per month for electricity and $200 for gas.  The state should provide that number but note the utility companies have been forbidden to show those numbers in their bills.  Make no mistake, however, increases in utility rate cases undoubtedly include these added costs.

Although NYSERDA claims that they invest these funds in a fiscally responsible manner that maximizes benefits to New Yorkers their results to date do not augur well for the cost to implement the CLCPA.  The State has started to do the scoping study to determine how to meet the emission reduction targets, but that won’t be available for three years.

In the meantime, I have evaluated the cost effectiveness of New York’s CO2 investments using the New York Clean Energy Dashboard and NYSERDA’s RGGI-Funded Programs Status Report – Semiannual Report through December 31, 2018.  As shown on the table of anticipated commitments I expect that the CO2 reduction benefit will only be 44,669,559 tons based on the results of those programs to date.  More importantly, there are few indications that these investments will be fiscally responsible because most investment programs described in the investment reports do not meet the social cost of carbon[1] cost effectiveness threshold.

One last item of note is that the priority initiative for energy storage is funded at just under $160 million.  In my table I did not claim any expected reduction in CO2 emissions because energy storage does not directly displace fossil fuel emissions.

On the other hand, energy storage is absolutely needed to backup renewable wind and solar when the wind does not blow at night. When someone claims that wind and solar costs are comparable to a new gas-fired power plant they ignore the added costs necessary to get power to your home whenever you need it.  That requires energy storage and those costs will be enormous.  In particular, for the period 2040 to 2050 I found the energy storage necessary to cover the wind and solar deficit when the wind was not blowing at night for the example period of January 3-4 2018 was a staggering $176.3 billion.

[1] The Social Cost of Carbon is supposed to represent the future cost impact to society of a ton of CO2 emitted today.  Therefore, it is entirely fair to use it as a metric to determine if the investments made from carbon pricing income are cost effectively reducing CO2.  I believe New York will base their carbon pricing on a $50 global social cost of carbon at a 3% discount rate so that is the cost benefit effectiveness threshold metric I use.

Reposted with permission from Pragmatic Environmentalist of New York.

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7 thoughts on “NYSERDA Plan Could Add $200/Month Each in Electric and Gas Costs

  1. Roger I am glad that you are calling attention to all this “stealth” future costs-loading that Cuomo is behind. Every month I look at my SBC (aka System Benefits Charge (HA!)) and cringe at being taxed indirectly without any say in it.

    • It essentially is a tax. It pays for the highly inflated salaries of PSC Commissioners who are “appointed” by the guv…and we all know what the “quality assurance/quality control” requirements are for being one of Andy’s minions is.
      No matter how hard the DPS staff works to try and solve problems, the Commissioner’s will undoubtedly muck it up.

  2. Pingback: Cuomo Proposes to Shove Renewables Onto Your Town, Like Them or NotNatural Gas Now

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