The state Public Service Commission has quietly reduced the amount of renewable energy that utilities will have to purchase next year by 94 percent, according to PSC documents.
In August, as part of Gov. Andrew Cuomo’s Clean Energy Standard, the PSC ordered utilities, and others, to next year purchase renewable energy credits (RECs) equivalent to 0.6 percent of their electricity usage. This amounted to a total of 974,000 megawatt-hours (MWh) of RECs, which are generated when a renewable plant such as a solar farm or wind turbine sells power into the electrical grid. The governor’s ultimate goal is for 50 percent of the state’s electricity to come from renewables by 2030, and 2017 was to be the first year in which the PSC incrementally required these “load-serving entities” to financially support increasing amounts of renewable energy.
But in an “Order Providing Clarification” issued on November 17, the 2017 amount was slashed from 974,000 to 56,142 MWh—a 94 percent reduction—after the New York State Energy Research and Development Authority (NYSERDA) determined few renewables would actually qualify to issue the credits. Load-serving entities will now have to purchase RECs equating to just 0.035 percent of their total usage.
The shortage stems from the PSC’s arbitrary rules, under which only renewables that came online on or after January 1, 2015 are eligible to generate credits. The PSC had inconsistently included in its estimates of available renewables such sources as rooftop solar panels and other behind-the-meter, “customer-sited tier projects” that actually wouldn’t qualify to sell RECs—something the Empire Center warned about in its analysis of the standard.
The PSC’s November 17 order explained that these renewables that will go “toward the overall goal”—also known as ”50 by 30”—but won’t count toward the amount of renewables that load-serving entities have to purchase, severely shrinking the available supply of renewable energy from which they could buy.
As part of the standard, the PSC had previously excluded entire classes of new renewables such as hydroelectric dams, and meanwhile, did appear to recognize just how cost-prohibitive renewables had been in the New York market, as evidenced by the state adding effectively no new wind turbines during 2015 despite considerable state and federal subsidies.
A big change
“It should be understood,” the commission wrote in its November 17 document, “that this clarification is not a change in result.”
But it is: for starters, the move will collectively save ratepayers $19.4 million1 in 2017 as utilities and others aren’t forced to buy as many credits as anticipated. In fact, based on NYSERDA’s REC price, total compliance with the renewable mandate will next year cost all ratepayers combined just over $1 million.
The change reduces, by 94 percent, the PSC-driven demand for RECs that was supposedly set in place on August 1.
The PSC’s November 17 meeting transcript show the lengths to which the commission and the Department of Public Service went to conceal the magnitude of the change. Asked by PSC chairwoman Audrey Zibelman to explain what was being voted on, PSC deputy counsel Paul Agresta told commissioners:
In the C.E.S. order there was a number stated of 0.6 percent and it wasn’t clear by the way it was stated in the order what that number was meant to be.
But the PSC had said exactly what it was, on page 14 of the Clean Energy Standard:
In this Order, the Commission requires each New York LSE to serve their retail customers by procuring new renewable resources, evidenced by the procurement of qualifying RECs, acquired in the following proportions of the total load served by the LSE for the years 2017 through 2021.
The PSC had good reasons to marginalize the move: it completely undercuts the commission’s primary thrust for renewables. The Clean Energy Standard is supposed to drive investment in renewables by guaranteeing that when the owners sell power into the grid at a loss, the REC system will make them profitable in years to come. The PSC had created an artificial demand to send investors a green light to enter the New York market, and then voted to wipe out the bulk of the artificially-created demand—a yellow light, to be sure.
It’s not clear just how far the PSC will have to scale back its renewable goals after 2017. The commission in August laid out the first five years of mandatory REC purchases needed to take the state from getting about 25 percent of its electricity from renewables in 2015 to 50 percent in 2030—requiring more than a 1-point increase each year. The PSC’s 2017 requirement, 0.6 percent, climbed to 4.8 percent in 2021—under the old math. It’s not clear how that extrapolates out from the new, negligible .035 percent requirement in 2017—or how that ultimately ramps up to bring the state to 50 percent over the following 12 years.
The move is an important reminder to investors that the standard was never voted on by the state Legislature, so there’s no guaranteeing what the future holds for it. Cuomo’s own PSC appointees were willing to ease up on its renewable mandate, and future PSC members—possibly under another governor—could further reduce or eliminate the mandate altogether as a way to lower energy costs and make the state more competitive.
NYSERDA intends to sell RECs at $21.16 per MWh. The PSC reduced its 2017 mandate by a total of 917,858 MWh .