New York Public Service Commission Issues Order to Implement Clean Energy Standard | Practical Law

New York Public Service Commission Issues Order to Implement Clean Energy Standard | Practical Law

The New York State Public Service Commission has issued a mandate establishing the state’s first ever Clean Energy Standard to be implemented by the New York State Energy Research Development Authority.

New York Public Service Commission Issues Order to Implement Clean Energy Standard

Practical Law Legal Update w-003-8643 (Approx. 4 pages)

New York Public Service Commission Issues Order to Implement Clean Energy Standard

by Practical Law Real Estate
Published on 04 Nov 2016 • New York
The New York State Public Service Commission has issued a mandate establishing the state’s first ever Clean Energy Standard to be implemented by the New York State Energy Research Development Authority.
In an effort to further fight climate change, reduce pollution, and guarantee a diverse and dependable energy supply in New York, Governor Andrew M. Cuomo announced the state’s first ever Clean Energy Standard mandate as ordered by the New York State Public Service Commission (NYSPSC). The comprehensive and ambitious clean energy mandate calls for a transition to 50% renewable energy sources by 2030.
Currently, New York generates approximately 23% of its electricity from renewable sources, about 80% of which comes from hydroelectricity. This means other renewable sources such as solar, wind, and non-hydroelectric renewables currently account for just 5% of New York’s electricity requirements.
On August 1, 2016, the NYSPSC issued the groundbreaking order establishing the state’s first Clean Energy Standard (CES). Implementation of the CES will primarily be the responsibility of the New York State Energy Research and Development Authority (NYESRDA).

Key Aspects

The new mandate includes a number of requirements to move the state towards it's clean energy goals including:
  • That by 2030, 50% of New York’s electricity will come from renewable energy sources, and greenhouse gas emissions will be reduced by 40%.
  • That Energy suppliers phase in renewable power sources beginning with 26.31% of the stated load in 2017, increasing to 30.54% in 2021, and reaching 50% by 2030.
  • All load serving entities (LSEs), including retail and other electric providers who provide service to end-users and wholesale customers, are required to purchase renewable energy certificates (RECs) or make alternative compliance payments to NYSERDA. These certificates are tradable commodities:
    • whose cost must be paid directly to renewable developers to help finance new renewable energy sources to be added to the electric grid; and
    • represent proof that 1 megawatt-hour of electricity was generated from an eligible renewable energy resource and delivered into the shared system of power lines for energy transport that comprise the New York power grid.
As part of the CES mandate NYSERDA will also require the six New York investor-owned utilities and other energy suppliers to purchase zero emission credits (ZECs) starting in April 2017. The purchase of ZECs will:
  • Support nuclear zero-carbon electric facilities located in upstate New York, that have been struggling due to low oil prices by mandating that energy suppliers pay for the intrinsic value of carbon-free emissions.
  • Address the concerns of a growing number of climate change experts who have warned that if these nuclear plants were to close abruptly, New York would likely experience:
    • a 31 million metric ton increase in carbon emissions; and
    • an expected public health and societal cost of at least $1.4 billion over the next two years.
The plan to subsidize nuclear energy is surprising given Governor Cuomo’s historic position in opposition to nuclear power. Which includes a call for the permanent shutdown of Indian Point Energy Center, a nuclear power plant located about thirty miles north of Manhattan.
NYSERDA will also continue its efforts to develop a blueprint to advance offshore wind energy, in support of the new mandate.

Practical Implications

In order to reach the ambitious goals mandated by the new CES both solar and wind generation must increase substantially. However, because the CES sets these goals for a relatively short period of time there will be significant impacts on energy producers and consumers. The CES will require utilities and smaller LSEs to build new renewable facilities, execute purchase agreements with other renewable energy generators, or instead purchase RECs to meet the new renewable energy standard.
The CES reinforces Governor Cuomo’s opposition to natural gas as a viable renewable energy resource. The CES mandate for increased renewable energy sources comes after the Governor banned natural gas extraction using hydraulic fracturing in New York in December 2014. In April 2016, the Cuomo administration also denied necessary water quality permits for the federally approved Constitution Pipeline which plans to deliver natural gas from the Marcellus formation in Pennsylvania to New York and other markets in the northeast.
It remains to be seen whether the “50% renewable energy by 2030” goal can be reached and its economic implications absorbed. While the Governor’s office media release claims the CES will cost the average residential consumer less than $2 a month, it is too early to determine the totality of the economic effects of the CES on energy producers, and consumers.