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New York Lowers Minimum Near-Term Renewables Obligations

In a pair of decisions issued the same day in mid-November, the New York Public Service Commission moved to simultaneously terminate the state’s existing Energy Efficiency Portfolio Standard (EEPS), which dates back to 2008, and revise the minimum thresholds for acquisitions of renewable power under New York’s recently enacted Clean Energy Standard (CES).

n opting to phase out the EEPS, the commission explained that the program was now close to 10 years old and had provided both regulators and the energy industry with important information and experience about using EE offerings as a means for avoiding the construction of baseload power plants. But, the commission added, with the advent of the state’s Reforming the Energy Vision (REV) policy, many of the EEPS program’s elements had been rendered redundant. It therefore elected to go ahead and begin the process of ending the plan.

As to the changes it was making to the CES, the commission emphasized that its original order adopting the CES, released in August of 2016, had been designed purely as a framework or set of guidelines for promoting further use of clean energy technologies. According to the commission, it had always contemplated that the initial renewables requirements established under the CES were apt to be modified as the program advanced. Importantly, though, the commission affirmed that it remained committed to the overarching long-term target set for renewables in the CES, which was to have at least 50% of all electricity sales in the state come from renewable resources by 2030. The commission averred that that objective was not disturbed, even if the annual targets for renewables were being reduced for the next four years compared to what had been set forth in its initial CES framework decision.

As originally devised by the commission, load-serving entities (LSEs), which the commission defined as electric utilities and large-volume consumers, would have been required to acquire at least 1.1% of their electric supply from renewable resources in 2018. That percentage was due to rise to 2.0% in 2019, 3.4% in 2020, and 4.8% in 2021. That progression was deemed reasonable for the early years of the CES.
However, the commission said, it found it necessary to revisit the CES matrix for renewables as a result of two events. The first was ongoing implementation directives associated with New York’s REV initiative. The second was the commission’s action in broadening its definition of clean energy to encompass not just renewables, but also nuclear power, given that nuclear reactors do not produce greenhouse gas emissions as do fossil fuel-fired units.

The commission therefore reasoned that, at least in the first years of the CES plan, it was appropriate to highlight nuclear power, since New York is already home to several fully functioning nuclear facilities. The commission elaborated that reducing the role of renewables in the initial years of the CES program made sense because a number of solar and wind generation projects are not yet complete.

As a result, the commission ruled that LSEs should be obligated to obtain no more 0.15% of their supply from renewables in 2018 rather than the 1.1% listed in the framework order. The targets for renewables for the next three years were lowered as well, to 0.78% for 2019, 2.84% for 2020, and 4.20% for 2021. From the commission’s perspective, those percentages are more likely to track with the reality of installed renewables capacity and are not so low as to risk nonattainment of the ultimate goal of 50% renewables by 2030.

The commission’s decision was greeted with skepticism from many parties, and indeed, not all members of the commission itself were on board with the revisions made to the CES. Commissioner Diane X. Burman abstained, saying that the commission had not provided enough detail on the new thresholds for renewables. She was quoted as alleging that the order was still “leaving holes for decision-making.”
Other stakeholders decried what they thought was bias in favor of nuclear power to the detriment of renewable energy projects. They cautioned that by reducing the minimum purchase requirements from renewable energy facilities over the next few years, some project developers may be unable to secure requisite financing in time to take advantage of federally available tax credits that are scheduled to sunset in 2020. They argued that the minimum requirements for renewables under the CES plan should be more evenly distributed throughout the years leading up to 2030 instead of being weighted so lightly in the early years and then much more heavily in the later years.

Turning back those complaints, the commission pointed out that the 2021 4.2% renewables requirement under the revised CES matrix was not that much lower than the original 4.8% obligation. The commission thus held that the amended renewables targets through 2021 represented a trajectory that provided sufficient certainty for LSEs, project sponsors, and other market participants alike. The commission added that it did not believe the new minimums were so low as to hinder further development of renewable energy facilities. Re Large-Scale Renewable Program and a Clean Energy Standard, Case 15-E-0302, Nov. 17, 2017 (N.Y.P.S.C.).

With regard to phasing out the EEPS program, the commission said it was persuaded that its more recently promulgated REV programs were superior to the EEPS plan. Further, the commission cited to the fact that all utilities in the state but one had already exceeded their electricity usage reduction goals under the EEPS plan. The commission observed that even that one company, Orange & Rockland Utilities, had managed to achieve 98% of its targeted savings.

The commission underscored the energy efficiency features of the REV policy, noting that the initiative directs the state’s utilities to develop annual distributed system implementation and energy efficiency transition implementation plans. In light of those required plans, the commission ruled that the EEPS itself was no longer necessary.

Interestingly, Commissioner Burman dissented with respect to ending the EEPS program. She stated that the commission could still learn from the EEPS and that it might be premature to terminate the program so abruptly. Re Energy Efficiency Portfolio Standard, Case 07-M- 0548, Nov. 17, 2017 (N.Y.P.S.C.).