S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6168

                            I N  S E N A T E

                               (PREFILED)

                             January 8, 2014
                               ___________

Introduced  by Sens. MAZIARZ, O'MARA, RANZENHOFER, RITCHIE -- read twice
  and ordered printed, and when printed to be committed to the Committee
  on Energy and Telecommunications

AN ACT to amend the public service law,  in  relation  to  the  regional
  greenhouse gas initiative

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The public service law is amended by adding a  new  section
77-a to read as follows:
  S  77-A. LEGISLATIVE INTENT. THE LEGISLATURE HEREBY FINDS AND DECLARES
THAT IT IS IN THE BEST PUBLIC POLICY INTERESTS OF THE STATE,  ITS  BUSI-
NESSES AND ITS CITIZENS TO ENSURE THAT, TO THE GREATEST EXTENT POSSIBLE,
THE LETTER AND SPIRIT OF ITS ENVIRONMENTAL REGULATIONS AIMED AT REDUCING
CARBON  DIOXIDE  EMISSIONS  AND IMPROVING AIR QUALITY UNDER THE REGIONAL
GREENHOUSE GAS INITIATIVE  (RGGI),  ESTABLISHED  BY  REGULATION  OF  THE
DEPARTMENT OF ENVIRONMENTAL CONSERVATION, ARE ENFORCED FOR ANY GENERATOR
WHO DOES BUSINESS IN THE NEW YORK STATE ENERGY MARKET.
  THIS  POLICY CHANGE IS NECESSARY BECAUSE STATES THAT SURROUND NEW YORK
THAT DO NOT PARTICIPATE IN RGGI, BUT WHO DO EXPORT  POWER  TO  NEW  YORK
STATE, HAVE A DISTINCT COMPETITIVE ADVANTAGE OVER IN-STATE POWER GENERA-
TORS.  WHILE THE GOALS OF THE RGGI PROGRAM ARE LAUDABLE, IN-STATE FOSSIL
FUEL GENERATORS ARE EXPERIENCING SIGNIFICANT INCREASES IN THEIR COSTS AS
A  RESULT  OF  THE NEED TO BUY CARBON DIOXIDE EMISSION ALLOWANCES IN THE
RGGI AUCTION, ESTABLISHED BY REGULATION OF THE NEW YORK STATE ENERGY AND
RESEARCH DEVELOPMENT AUTHORITY. HOWEVER, OUT-OF-STATE FOSSIL FUEL GENER-
ATORS IN NON-RGGI STATES MAY USE THE SAME EXACT  FUEL  AND  PRODUCE  THE
GREATER  EMISSIONS  ASSOCIATED  WITH  THAT  FUEL,  BUT ARE STILL ABLE TO
EXPORT POWER TO NEW YORK AT A CHEAPER PRICE BECAUSE THEY ARE NOT SUBJECT
TO THE COSTS ASSOCIATED WITH RGGI. THIS STATE OF AFFAIRS HURTS  IN-STATE
POWER  GENERATORS,  THREATENS  JOBS  AND  ENCOURAGES  THE IMPORTATION OF
POLLUTION INTENSIVE POWER FROM OTHER STATES.
  THE LEGISLATURE FURTHER DECLARES THAT IT IS IN THE BEST  ECONOMIC  AND
ENVIRONMENTAL  INTERESTS OF THE STATE TO ADOPT POLICIES THAT SUPPORT JOB

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                      [ ] is old law to be omitted.
                                                           LBD11841-02-3

S. 6168                             2

RETENTION AND CREATION IN THE POWER GENERATION SECTOR IN  THE  STATE  OF
NEW  YORK,  AND TO SEEK TO LIMIT POLLUTION AND ENVIRONMENTAL DEGRADATION
WHETHER IT EMANATES FROM WITHIN THE STATE OR  FROM  ANOTHER  STATE.  THE
COMMISSION  WORKING WITH THE NEW YORK STATE ENERGY RESEARCH AND DEVELOP-
MENT AUTHORITY AND THE FEDERALLY DESIGNATED BULK  SYSTEM  OPERATOR,  ARE
THE  STATE  ENTITIES  WITH  THE  EXPERTISE AND AUTHORITY TO RECTIFY THIS
PROBLEM THROUGH APPROPRIATE REGULATORY ACTIVITY.
  THEREFORE, THIS LEGISLATION  DIRECTS  THE  COMMISSION  TO  INITIATE  A
STAKEHOLDER  PROCESS,  CONSISTENT  WITH  SECTION SEVENTY-SEVEN-B OF THIS
ARTICLE, WITH THE GOAL OF THE COMMISSION ISSUING AN ORDER AIMED AT ELIM-
INATING ANY UNFAIR FINANCIAL OR ENVIRONMENTAL ADVANTAGE THAT AN  OUT-OF-
STATE POWER GENERATOR MAY ENJOY BECAUSE THE STATE IN WHICH IT IS LOCATED
DOES NOT PARTICIPATE IN THE RGGI PROGRAM.
  S 2. The public service law is amended by adding a new section 77-b to
read as follows:
  S  77-B.  REGIONAL  GREENHOUSE  GAS  INITIATIVE; EFFECT ON ELECTRICITY
MARKETS. 1. THE COMMISSION IS HEREBY AUTHORIZED AND DIRECTED TO  DEVELOP
A  MECHANISM FOR THE PURPOSE OF ELIMINATING, OR MINIMIZING TO THE GREAT-
EST EXTENT PRACTICABLE, THE COMPETITIVE ADVANTAGES IN THE STATE'S  ELEC-
TRICITY  MARKETS  THAT  OUT-OF-STATE POWER GENERATORS HAVE OVER IN-STATE
POWER GENERATORS DUE TO NEW YORK STATE'S PARTICIPATION IN  THE  REGIONAL
GREENHOUSE  GAS  INITIATIVE,  ESTABLISHED  BY REGULATION OF THE NEW YORK
STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION.  SUCH MECHANISM SHALL BE
DEVELOPED PURSUANT TO A STAKEHOLDER PROCESS THROUGH A PROCEEDING  TO  BE
ESTABLISHED  BY THE COMMISSION WITHIN ONE MONTH OF THE ENACTMENT OF THIS
SECTION.  THE COMMISSION MAY, IN ITS DISCRETION, CONSULT  WITH  THE  NEW
YORK  STATE  ENERGY RESEARCH AND DEVELOPMENT AUTHORITY AND THE FEDERALLY
DESIGNATED BULK SYSTEM OPERATOR SERVING NEW YORK STATE'S ELECTRIC SYSTEM
IN DEVELOPING SUCH MECHANISM.   WITHIN  SIX  MONTHS  OF  THE  COMMISSION
HAVING ESTABLISHED A PROCEEDING PURSUANT TO THIS SECTION, THE DEPARTMENT
SHALL  ISSUE  A  REPORT,  BASED  UPON  THE  STAKEHOLDER  PROCESS IN SUCH
PROCEEDING, THAT DESCRIBES THE MECHANISM,  ITS  FUNCTION,  ITS  POSITIVE
ATTRIBUTES, AND ANY OF ITS ANTICIPATED NEGATIVE CONSEQUENCES, AS WELL AS
HOW  THOSE  CONSEQUENCES  COULD  BE  MINIMIZED OR MITIGATED. SUCH REPORT
SHALL BE PROVIDED FOR PUBLIC STAKEHOLDER REVIEW  AND  COMMENT  DURING  A
THREE  MONTH  PERIOD.   WITHIN ONE MONTH OF COMPLETING THE PUBLIC STAKE-
HOLDER REVIEW AND COMMENT PERIOD ON SUCH REPORT,  THE  COMMISSION  SHALL
REVISE  SUCH  MECHANISM,  AS  NEEDED AND TAKING INTO ACCOUNT SUCH PUBLIC
STAKEHOLDER COMMENTS, AS THE COMMISSION DEEMS TO BE IN THE PUBLIC INTER-
EST AND CONSISTENT WITH THE LEGISLATIVE  INTENT  EXPRESSED  PURSUANT  TO
SECTION  SEVENTY-SEVEN-A  OF  THIS  ARTICLE. WITHIN THREE MONTHS OF SUCH
MECHANISM HAVING BEEN REVISED, AS NEEDED, AND MADE AVAILABLE  TO  STAKE-
HOLDERS  IN  SUCH PROCEEDING, THE COMMISSION SHALL ISSUE AN ORDER IMPLE-
MENTING SUCH MECHANISM NO LATER THAN JULY FIRST, TWO THOUSAND SIXTEEN.
  2. FOR THE PURPOSES OF THIS SECTION  AND  SECTION  SEVENTY-SEVEN-A  OF
THIS ARTICLE, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  A. "COMPETITIVE ADVANTAGE" SHALL MEAN ANY ADVANTAGE OR BENEFIT, FINAN-
CIAL  OR  OTHERWISE,  THAT EXISTS FOR AN OUT-OF-STATE POWER GENERATOR IN
CONNECTION WITH THE IMPOSITION  OF  THE  REQUIREMENTS  OF  THE  REGIONAL
GREENHOUSE  GAS  INITIATIVE,  ESTABLISHED  BY REGULATION OF THE NEW YORK
STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, ON IN-STATE POWER GENER-
ATORS. A  "COMPETITIVE  ADVANTAGE"  MAY  INCLUDE,  AMONG  OTHER  THINGS,
AVOIDED  COSTS  SUCH  AS  INFRASTRUCTURE IMPROVEMENTS, TAXES, PENALTIES,
COSTS OF ENVIRONMENTAL  COMPLIANCE,  AND  ADMINISTRATIVE  AND  REPORTING
COSTS.

S. 6168                             3

  B.  "IN-STATE POWER GENERATOR" SHALL MEAN A POWER GENERATOR PHYSICALLY
LOCATED IN NEW YORK STATE.
  C.  "OUT-OF-STATE  POWER GENERATOR" SHALL MEAN A POWER GENERATOR PHYS-
ICALLY LOCATED IN A STATE OR PROVINCE THAT DOES NOT PARTICIPATE  IN  THE
REGIONAL GREENHOUSE GAS INITIATIVE, ESTABLISHED BY REGULATION OF THE NEW
YORK  STATE  DEPARTMENT  OF  ENVIRONMENTAL CONSERVATION, THAT IS SELLING
POWER IN NEW YORK STATE.
  S 3. This act shall take effect immediately.