‘Uniquely Favorable Environment’ for Shift
By William Opalka
New York consumers will see little change in their electric bills as the state switches to renewable energy resources at an accelerated pace, according to a study released by the Public Service Commission on Friday.
The Clean Energy Standard cost study puts a price tag on the state’s goal of generating 50% of its electricity from renewable resources by 2030.
“New York can meet its clean energy targets with less than a 1% impact on electricity bills (or less than $1 per month for the typical residential customer) in the near term and shows net positive benefit of $1.8 billion by 2023,” the study says. “… The current combination of low energy prices, low interest rates and available tax credits presents a uniquely favorable environment for near-term investment into renewables.”
The net benefit includes EPA’s “social cost of carbon” — an estimate of climate change damages, including changes in agricultural productivity, human health, property damages from increased flood risk and changes in energy system costs. It is projected at about $24/MWh in 2023.
The CES is part of New York’s Reforming the Energy Vision initiative to switch the state’s energy generation mix to cleaner and more distributed resources. It also promotes the preservation of upstate nuclear generation during a transitional period until 2030.
The cost study builds on a white paper released in January that outlined the policy goals (15-E-0302). (See New York Would Require Nuclear Power Mandate, Subsidy.)
PPAs vs. RECs
The study’s base case assumes power purchase agreements and renewable energy credits would be used equally to procure the 5.2 GW of Tier 1 renewables envisioned by 2023, which would be dominated by land-based wind (38%) and solar power developed under the NY-Sun initiative (52%). By minimizing investors’ exposure to commodity price risk, procuring capacity through PPAs would be far cheaper than procurement through RECs, the study said.
Changes in CES program costs as a result of energy prices would be balanced by the effect on ratepayers’ overall bills. “For example, lower-than-expected energy prices could increase the CES program costs, but this would be offset by a reduction in energy bills from lower wholesale energy prices,” the study says.
The New York CES is unique in that it promotes financial incentives to keep upstate nuclear power plants viable through 2030 to retain their carbon-free generation as the state transitions to renewable resources. (See related story, Environmental Group Urges Ill. Legislators to Save Nuclear Plants.)
“In addition to the cost and benefits quantified in this study, there are significant economic development benefits identified — for example, the proposal to provide new support for upstate nuclear plants would protect 25,000 direct and indirect jobs, $3 billion in direct and indirect economic activity and $145 million in state tax revenue,” according to the study.
Nuclear plants would be subsidized with a formula based on their costs of service. The study used a range of program costs — from $59 million to $658 million — based on low and high assumptions of the cost of generation of nuclear power and future energy prices.
Zero emission credits for nuclear plants will be based on an “open book” assessment of plants’ costs. Detailed cost estimates were not published in the study “to avoid prejudicing this process,” the study said.
The Upstate Energy Jobs Coalition of business, labor, economic development and other organizations reacted swiftly to the news.
“The state’s analysis confirms what most of us already know, which is that the costs of allowing upstate nuclear plants, with all of their economic and clean energy benefits, to close prematurely greatly outweigh the costs of implementing the CES,” said L. Michael Treadwell, CEO of the County of Oswego Industrial Development Agency. “The closure of FitzPatrick, Ginna and Nine Mile Point would be a severe blow to the economy upstate, a region that’s already struggling to turn its economy around.”
Entergy has said its James A. FitzPatrick plant would close despite state efforts to keep it operating. (See New Lifeline for FitzPatrick Nuclear Plant.) Exelon’s R.E. Ginna plant is expected to close in a year once an above-market contract to keep it operating expires. (See NYPSC OKs Ginna Deal.)