New York PSC Approves 50% Clean Energy Standard With Nuclear Subsidies

The New York Public Service Commission voted Monday on a 50% clean energy standard. Officials say this will reduce greenhouse gas emissions 40% by 2030, ensuring the state’s power mix is diverse and can attract billions in clean energy investments.

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Governor’s Mansion in Albany, New York

New York’s Clean Energy Standard mandates the state obtains half its power from renewable sources by 2030. Additionally, it guarantees income for three struggling upstate nuclear power plants to keep them operating.

In spite of nuclear opposition, the unanimous decision directs $965 million in additional revenue to the Fitzpatrick, Ginna, and Nine Mile plants over the first two years of the program, with adjustments every two years until 2029.

The state schedule, requires utilities and energy service companies to begin serving up 26.31% renewable power starting next year, and will grow to 30.54% by 2021.

Gov. Andrew Cuomo called the decision a “bold action” that positions New York as a national leader in the clean energy economy.

“This Clean Energy Standard shows you can generate the power necessary for supporting the modern economy while combatting climate change,” Cuomo said in a statement announcing the decision. “Make no mistake, this is a very real threat that continues to grow by the day and I urge all other states to join us in this fight for our very future.”

The new standard includes “concrete, cost-effective steps today to safeguard this state’s environment for decades to come,” Cuomo said. New York will enforce this standard by requiring utilities and other energy suppliers to obtain a targeted number of Renewable Energy Credits each year These credits will be paid to participating renewable developers.

A key component of the CES is a subsidy plan to support the state’s struggling nuclear power plants, which have been losing out in the marketplace largely due to cheap natural gas. The standard would direct about $965 million to the plants over the first two years, using a formula based on expected power costs and the social price on carbon federal government agencies use in rulemaking.

As reported by UtilityDIVE, the vote on this clean energy standard could have an immediate impact on utility plans in the state:

“Last year, Entergy Corp. announced plans to shut down its James A. FitzPatrick plant. But in July, the company revealed it was in talks with Exelon to possibly sell the facility rather than closing up shop. Exelon agreed to purchase the plant if the nuclear subsidies were approved, throwing a lifeline to 838 MW of carbon-free generation.”

The the PSC’s original clean energy standard called for $7 billion in income supports over 12 years, and it is unclear how the changes to the program will affect the sale. The CES also includes subsidies for wind and solar, which reportedly would have cost between $22/MWh and $35/MWh in recent years. The nuclear subsidy will start at $17.48/MWh.

According to UtilityDIVE reporter Robert Walton, the nuclear subsidy might face legal challenges, as the auction mechanism delves into new territory. This spring, the US Supreme Court struck down a plan in Maryland that would have incentivized new in-state power generation by setting a price floor and having ratepayers make up the difference if the plants were unprofitable in wholesale auctions.

Opponents of power subsidies in Ohio have considered Hughes v. Talen Energy Marketing as a route to block ratepayer support in that state, and a similar challenge could come into play in New York. Last week at a utility regulatory conference, executives for gas generator Calpine told Utility Dive they considered the draft clean energy standard proposal to be in conflict with the Supreme Court ruling, and expected a legal challenge if it was approved.

“We feel like it’s tied to the wholesale market,” Sarah Novosel, Calpine senior vice president for government affairs and managing counsel, said of the draft proposal. “The Court said in Hughes that as long as an action is untethered to the wholesale market it might permissible. We think it it tethered to the wholesale market.”

Concerning its final order, the PSC acknowledged the risks of the Hughes case, adding critics of the draft proposal had failed to propose other mechanisms to keep the nuclear generation online while remaining “untethered” from the wholesale market.

The overall effect of this vote will fuel Gov. Cuomo’s call for growing New York’s clean energy economy.

State-by-state energy emissions

As reported by The US Energy Information Administration (USEIA), energy-related carbon dioxide (CO2) emissions vary significantly across states, whether considered on an absolute or per capita basis. Total state CO2 emissions include those from direct fuel use across all sectors, including residential, commercial, industrial, and transportation, as well as primary fuels consumed for electric generation.

“The overall size of a state, as well as the available fuels, types of businesses, climate, and population density, play a role in determining the level of both total and per capita emissions. Additionally, each state’s energy system reflects circumstances specific to that state. For example, some states have abundant hydroelectric supplies, while others contain abundant coal resources. This paper presents a basic analysis of the factors that contribute to a state’s CO2 profile. This analysis neither attempts to assess the effect of state policies on absolute emissions levels or on changes over time, nor does it intend to imply that certain policies would be appropriate for a particular state.”

The USEIA adds the term energy-related CO2 emissions includes emissions released at the location where fossil fuels are consumed. When fuels are used in one state to generate electricity which is consumed in another state, emissions are attributed to the producing state, not the using state. “Analysis attributing emissions to the consumption of electricity, rather than the production of electricity, would yield different results,” adds the USEIA.

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According to the US Energy Information Administration,

“Over the time period from 2000 to 2013, CO2 emissions fell in 37 states and rose in 13 states (Table 1). The greatest percentage decrease in CO2 emissions occurred in Maine at 27%, or 6 million metric tons (mt). The greatest absolute decline was 52 million mt in New York (25%). The state with both the greatest percentage and absolute increase was Nebraska, at 28% (11 million mt).

“From 2012 to 2013, 16 states saw a decrease in emissions, while 34 experienced an increase. This is reflected in the national data for 2013 as emissions were up about 2.5%. Because of differences in data aggregations it is difficult to compare the total for all states with the total for the United States.”

Images via Shutterstock & USEIA

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