Spotlight on Clean Energy Standard
In December 2015, the New York State Department of Public Service (DPS) was directed to develop a Clean Energy Standard (CES) to meet the State Energy Plan’s 50% renewable energy by 2030 target through an enforceable mandate. DPS was also directed to explore ways to keep emission-free nuclear power facilities operational to continue New York’s greenhouse gas emissions reductions. The benefits of the CES are highlighted in a complementary factsheet found at the www.ny.gov website and searching for “Clean Energy Standard.”
At its January 2016 session, the Public Service Commission (PSC) directed the DPS Staff to develop a White Paper and process for Commission consideration of a CES program. DPS Staff investigated best practices of renewable portfolio standards across the country, particularly in neighboring states. The “Staff White Paper on Clean Energy Standard” was released on January 25, 2016 for comment, and can be accessed at the Commission’s www.dps.ny.gov website.
Summary of Staff White Paper on Clean Energy Standard
Currently, New York meets about 26% of its electricity needs from renewable sources and 30% from nuclear generation. The Staff White Paper on CES proposes the following principal policy objectives:
- Increase renewable electricity supply to achieve the “50 by 30” goal,
- Support construction of new renewable generation in New York State,
- Prevent closure of emissions-free nuclear facilities, and
- Promote the progress of market objectives.
Proposed CES Framework for Public Comment
New energy procurement requirements for utilities & other retail energy supply companies (ESCOs): Providers of electricity to New York homes and businesses would be required to comply with the CES, in proportion to their annual retail electricity sales. The New York State Power Authority and Long Island Power Authority are also expected to comply.
Energy procurements from three tiers: Utilities and ESCOs would be required to procure a percentage of their electricity from three “tiers” (or categories of energy resources): 1. Existing Renewables; 2. New Renewable Generation; and 3. Existing Nuclear Power Resources. This would provide the utilities and ESCOs with flexibility in choosing renewable technologies to meet the mandate and support for existing eligible nuclear facilities thereby providing clear alignment between the CES program elements and the desired policy outcomes.
Eligible renewable energy resources: Eligible renewable energy resources include wind, solar, hydroelectric, biomass, biogas, liquid biofuel, fuel cells and tidal ocean. The White Paper also recommends including certain out-of-state resources that can deliver clean electricity into New York in order to expand supply options and increase market competition.
Continued operation of zero-emission power plants: The Staff White Paper proposes the establishment of a requirement that all utilities and ESCOs procure a pro rata share of Zero Emission Credits (ZECs) attributable to generation from qualified nuclear facilities to maintain the State’s current largest source of zero-emission electricity which is nuclear power generation. Near-term closure of nuclear generating plants in response to current economic pressures would increase New York State’s reliance on fossil fuel-generating plants, resulting in increases in carbon emissions of over 15.5 million metric tons each year.
Verifying CES compliance: Utilities and ESCOs would demonstrate compliance with the new CES mandate through the use of tradable renewable energy credits (RECs) for renewable energy purchases and ZECs for qualified nuclear generation purchases. RECs and ZECs would be tracked by a new State electronic tracking system currently under development. Annual requirements for RECs and ZECs would be established on a three-year basis.
Cost containment: An “alternative compliance payment mechanism” would be established for each CES tier allowing utilities and ESCOs to pay into a fund as an alternative to purchasing RECs or ZECs when they are in short supply and effectively capping REC and ZEC prices. Costs of meeting the CES will be further reduced by other state energy programs and initiatives to advance clean energy, including the Clean Energy Fund, utility energy efficiency programs, and utility investments in demand side resources.
Energy and environmental values of renewable development in New York: The White Paper proposed several options for providing renewable energy developers an opportunity to capture the monetary value of 1) the energy produced by renewable facilities, and 2) the environmental benefits associated with its electricity generation. Capturing these value streams is important to support project financing, reduce compliance costs and provide generators and customers with price stability.
Limits on utility ownership of renewable resources: The White Paper proposed that investor-owned utilities would continue to be prohibited from owning electricity-generating facilities, including renewable resources, except in exceptional circumstances where there are unambiguous benefits to consumers not being provided by third-party providers. Utilities, however, would be allowed to partner with third parties in investments in renewable generation if it lowers cost and is consistent with principles of the Commission’s Orders.
Implementation and assessment: Upon Commission approval of a CES program, DPS Staff would develop an implementation plan in consultation with the New York State Energy Research and Development Authority. The Commission would conduct assessments of the CES every three years so the program can be adjusted as needed to achieve the “50 by 30” mandate.
Summary of Clean Energy Standard Cost Study
A benefit-cost analysis of the proposed CES is required to support the Commission’s obligation to ensure that electric prices are just and reasonable. The study examines the impact that key cost drivers can have on overall consumer bills and will assist the Commission in the design and implementation of a cost-effective CES. The Clean Energy Standard White Paper – Cost Study (Cost Study) was issued on April 8, 2016 for comment.
The Cost Study estimates that, even in this period of lower electricity prices due to historically low natural gas prices, New York can meet its clean energy targets with a less than 1% impact on electricity bills (or less than $1 per month for the typical residential customer) in the near term and shows a net positive benefit of $1.8 billion by 2023 due in large part to the benefits associated with carbon emissions reductions. Importantly, the conclusions presented in the Cost Study are based on analyses covering the period from 2017 through 2023 due to a comparatively high degree of confidence in near-term forecasts and input assumptions. The detailed analysis through 2023 also coincides with the timing of the periodic three-year CES reviews as proposed in the White Paper. Forecasting the cost of achieving the entire 2030 target is deemed highly speculative at this point. However, the Cost Study does provide 2030 estimates that indicate modest bill impacts and a net positive benefit in reaching the full 50% mandate.
The Commission strongly believes that obtaining public input regarding the CES program is critical to developing a rational and balanced approach to achieving the State’s clean energy goals. Stakeholders such as consumers, government agencies and officials, public interest and environmental groups and industry representatives are invited to review and submit comments on the CES White Paper and the Cost Study. To ensure public involvement, the Commission also provides opportunities, such as workshops and public statement hearings, to hear from stakeholders and the public on the design and development of the CES.
All documents related to this proceeding are posted on the Department’s www.dps.ny.gov website. From the website’s home page, click on the “Search” button and enter 15-E-0302 in the “Search by Case Number” field.
Comments on the Clean Energy Standard proceeding can be submitted to the Commission through the following methods:
- Via Public Statement Hearing: A series of hearings were held across the state in the 2016. Hearing dates were announced via public notices, press releases and the Commission’s www.dps.state.gov website. Stay informed of proceeding activities such as case filings or Commission issuances by subscribing to the Department’s on-line document management system. Registered users of the application can self-subscribe to the service or party list, submit comments and E-File. Visit www.dps.ny.gov for more information about this service. Interested persons who choose not to sign up to receive email notifications can visit www.dps.ny.gov to check on the status of the proceeding.
- Via Mail/Email: Submit comments electronically to the Secretary, at [email protected] or by mail or delivery to the Secretary at the New York State Department of Public Service, Three Empire State Plaza, Albany, NY 12223-1350. Comments delivered in these manners should reference the associated case number (15-E-0302).
- Via the Department Website: Comments may be entered directly into Case 15-E-0302 by clicking here than enter your comments in the “Post Comments” section located at the top of the page.
- Call the Toll-free Opinion Line: Individuals may choose to submit comments by calling the Commission’s toll-free Opinion Line at 1-800-335-2120. This line is set up to receive in-state calls 24 hours a day. Callers should press “1” to leave comments about Case 15-E-0302 Clean Energy Standard. Comments received via the Opinion Line are not transcribed, but a summary is provided to the Commission for their consideration.
Comments from the public will be accepted at any point while this proceeding is pending, but are requested by June 6, 2016 to ensure full consideration. All public comments will become part of the record considered by the Commission.