S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    23
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 9, 2019
                                ___________
 
 Introduced  by  Sen.  PARKER -- read twice and ordered printed, and when
   printed to be committed to the Committee on  Energy  and  Telecommuni-
   cations
 
 AN ACT in relation to maintaining the continued viability of the state's
   existing large-scale, renewable energy resources

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Legislative findings and  intent.  The  legislature  hereby
 finds and determines:
   1. New York is a national leader in developing and implementing policy
 to  promote the development of renewable energy resources, the growth of
 which has significantly benefited the state in numerous ways,  including
 through  reductions  in  pollutants  that  contribute to climate change,
 associated reductions in adverse impacts on public health, and  substan-
 tial job growth in the clean energy sector.
   2.  In  2016,  more  than  twenty percent of the state's electric load
 (representing 2,354 gigawatt hours) was supplied by renewable  resources
 - solar, wind, hydroelectric, biomass, fuel cells and similar resources.
 To  further promote and incentivize the development of renewable energy,
 the New York state public  service  commission  recently  established  a
 clean  energy standard requiring, among other things, that fifty percent
 of the electric load in  the  state  be  served  entirely  by  renewable
 resources by the year 2030 (i.e., 50 by 30 target).
   3.  A  recent  study  shows  that  New  York's clean energy sector now
 employs more than 85,000 workers at more than 7,500 business  establish-
 ments  spread  out  across  the  state, in both the renewable energy and
 energy efficiency sectors. With implementation of the clean energy stan-
 dard, clean energy jobs are anticipated to grow by more than six percent
 per year or double the growth rate of the entire United  States  economy
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD05544-01-9

 S. 23                               2
 
 in  2016. Proper implementation of the clean energy standard will ensure
 that the state meets these job growth projections.
   4.  To promote achievement of the clean energy standard, and to ensure
 the continued job growth and other benefits attendant to a clean  energy
 economy, New York needs to assure that its existing large-scale, renewa-
 ble  energy sector is provided with adequate price signals and financial
 incentives to remain in operation and to  sell  their  renewable  energy
 attributes in New York, allowing the state to count the resources toward
 the  50  by  30 target and retain the jobs and tax payments supported by
 these generators. Absent these assurances, it would be difficult if  not
 impossible for the state to meet the recently established target.
   5.  New  York's  ability  to  meet  the  clean energy standard will be
 hampered if such  existing  resources  provide  their  wholesale  energy
 products  for  delivery  to  adjacent states, some of which have enacted
 laws that provide for a robust market that provides a stronger  opportu-
 nity  to sell renewable energy attributes than is currently available in
 New York. There is a real and present danger that a significant  portion
 of  New York's existing fleet of large-scale, renewable energy resources
 will participate in the programs offered by these other states and  thus
 will not be available for consideration in terms of meeting the 50 by 30
 target,  and  compete  effectively  with  other renewable classes in the
 clean energy standard.
   6. It also is of paramount importance to ensure the fuel diversity  of
 the state's energy sector for the purposes of providing energy security,
 system  reliability  and  protection  of  consumers from potential price
 spikes or shortages. For this same reason, it is important for the state
 to take measures to ensure the continued viability and competitive posi-
 tion of a wide variety of large-scale, renewable energy resources in the
 state.
   7. Accordingly, the overlying intent of this act is to provide  exist-
 ing  large-scale,  renewable  energy  resources  in  New York state with
 appropriate financial incentives to continue operations for the foresee-
 able future.
   § 2. Definitions.  1. "Large-scale, renewable energy  resource"  means
 an  electric  generating facility that:  (a) sells its energy within the
 New York control area with a generating  capacity  of  25  kilowatts  or
 more;  (b)  is deemed an eligible technology type pursuant to Appendix A
 of the "Order Adopting a Clean Energy Standard"  and,  in  the  case  of
 hydropower,  has  a  generating  capacity less than 50 megawatts; (c) is
 physically located within the jurisdiction of the New  York  independent
 system  operator;  and (d) the associated energy is delivered in accord-
 ance with a New York delivery requirement as described in section  three
 of this act.
   2. "Eligible large-scale, renewable energy resource" means an existing
 large-scale, renewable energy resource that: (a) at the time in question
 is  not  under  a contract for the sale of renewable energy credits with
 the New York state energy research and development authority pursuant to
 the renewable portfolio standard main tier, maintenance tier or  custom-
 sited  tier  program or clean energy standard tier 1 program implemented
 by such authority; (b) is not under an existing  contract  for  sale  of
 renewable  energy  credits with a load serving entity; and (c) is other-
 wise found by the New York state energy research and development author-
 ity to meet deliverability requirements specified in  section  three  of
 this  act,  and  other eligibility requirements specified in subdivision
 one of this section.

 S. 23                               3
 
   3. "Qualified independent party" shall have the meaning given  to  the
 term in the New York Generation Attribute Tracking System (NYGATS) oper-
 ating rules promulgated by the New York state energy research and devel-
 opment authority.
   4. "Load serving entity" or "load serving entities" means and includes
 all  investor-owned distribution utilities (in their capacity as commod-
 ity suppliers), energy service companies, community  choice  aggregation
 programs  not  served  by  energy service companies, municipal utilities
 under the jurisdiction of the  public  service  commission,  and  retail
 customers  that  self-supply with electricity through the New York inde-
 pendent system operator.
   5. "Renewable energy credit" means  a  tradable,  non-tangible  energy
 commodity  that represents proof that 1 megawatt-hour (MWh) of electric-
 ity was generated from a renewable energy resource. To be  eligible  for
 sale  in  New York state and to meet the procurement obligations of load
 serving entities, each renewable energy credit must be  registered  with
 the New York generation attribute tracking systems.
   6.  "Tier  1"  means  the program designated as tier 1 pursuant to the
 clean energy standard order.
   7. "Tier 2 renewable energy credit" refers to a renewable energy cred-
 it generated by an eligible large-scale, renewable energy resource.
   8. "Order adopting a clean energy standard" means the  public  service
 commission  order dated August 1, 2016, and entered in case number 15-E-
 0302 et seq.
   § 3. Deliverability. Energy from an  eligible  large-scale,  renewable
 energy resource shall be deemed to comply with the New York deliverabil-
 ity  requirement  if  either it is: (a) delivered into a market adminis-
 tered by the New York independent system operator  for  end-use  in  New
 York state; (b) delivered through a wholesale meter under the control of
 a  utility,  public authority or municipal electric company such that it
 can be measured, and such that consumption within New York state can  be
 tracked  and  verified  by  such  entity  or by the New York independent
 system operator; or (c) delivered to a customer in New York state, where
 such delivery shall be subject to independent verification  by  the  New
 York  state  energy  research  and  development authority or a qualified
 independent party.
   § 4. Program for eligible  large-scale,  renewable  energy  resources.
 Notwithstanding  any  other provision of law to the contrary, including,
 but not limited to, any order, rule or regulation  promulgated  pursuant
 to  the public service law, the public authorities law, and/or the state
 administrative procedure act, the public service commission, in  consul-
 tation  with the New York state energy research and development authori-
 ty, shall adopt a program within 120 days of the effective date of  this
 act, to provide support to and for eligible large-scale, renewable ener-
 gy  resources  through  a  market for tier 2 renewable energy credits as
 defined herein to ensure the continued viability of eligible  large-sca-
 le, renewable energy resources for the purpose of meeting the state's 50
 by  30 target. In developing such program, the public service commission
 shall create an obligation on load serving entities to purchase  tier  2
 renewable  energy  credits  from  eligible large-scale, renewable energy
 resources through a process and requirements as fully described below:
   1. Annual targets for tier 2  renewable  energy  credits.  The  public
 service  commission  shall  provide  annual targets and mandates for the
 acquisition of tier 2 renewable energy credits by load serving  entities
 for the years 2019 to 2030 that ensures market demand for tier 2 renewa-
 ble  energy  credits for all resources that become eligible large-scale,

 S. 23                               4
 
 renewable energy resources during such timeframe for purposes of achiev-
 ing the 50 by 30 target. The targets to be  established  by  the  public
 service  commission  should  reflect  the  quantity  of renewable energy
 generation  that  is  serving  total  electric  load  in New York state,
 excluding generation from facilities owned by the power authority of the
 state of New York and excluding hydropower from generators with a capac-
 ity greater than 50 megawatts.
   2. Load serving entities' tier 2 renewable energy  credit  obligation.
 Each  load  serving  entity shall be responsible for acquiring a defined
 quantity of tier 2 renewable energy credits based upon the total tier  2
 load  serving  entity  obligation  target  allocated to all load serving
 entities proportional to the  load  each  serves;  i.e.,  determined  by
 multiplying each load serving entity's actual load for the prior year by
 the  percentage  GWh  target  for  that  year. The New York state energy
 research and development authority shall publish each load serving enti-
 ty's annual obligation for each annual compliance period on its  website
 or  by  other  appropriate  means by December 1 of the year prior to the
 year such published annual obligation shall apply.
   3. Tier 2 renewable energy credit price. By each December 1  prior  to
 the annual compliance period, the public service commission shall estab-
 lish  a  tier 2 renewable energy credit price to be set at 75 percent of
 the weighted average cost per renewable energy credit that the New  York
 state  energy research and development authority paid to acquire renewa-
 ble energy credits from resources under the clean energy standard tier 1
 program in the prior calendar year.
   4. Financial hardship. Those eligible  large-scale,  renewable  energy
 resources for which the tier 2 renewable energy credit price is insuffi-
 cient  may  seek additional financial assistance from the New York state
 energy research and development authority  through  contracts  having  a
 minimum  duration of ten years for the purpose of ensuring the continued
 viability and availability of such resources toward meeting the 50 by 30
 target.  The New York state energy research  and  development  authority
 shall  apply  the  following  criteria in determining the eligibility of
 such eligible large-scale, renewable energy resources  to  receive  such
 financial assistance, which shall be paid as an increment above the tier
 2 renewable energy credit price determined pursuant to subdivision three
 of this section:
   (a) A showing of financial hardship;
   (b) The basis for and reasonableness of expected operating and capital
 costs.  This evaluation may include, among other things, a comparison to
 prior years' costs and a comparison to costs of like generation;
   (c) The existence of any other cash sources available  to  the  large-
 scale, renewable energy resource, such as: (i) tax benefits; (ii) subsi-
 dies;  (iii)  contracts; and (iv) other sources, including restructuring
 financing;
   (d) Whether market rules are increasing the costs of the  large-scale,
 renewable  energy resource and, if so, whether any steps can be taken to
 reduce such costs;
   (e) Whether the large-scale, renewable energy resource's real property
 tax assessment is consistent with the assessments imposed  in  similarly
 situated facilities elsewhere, and if not, what action has been taken to
 address such assessment;
   (f)  Whether the large-scale, renewable energy resource is required to
 operate as part of a package of assets that is financially viable  as  a
 whole;

 S. 23                               5
 
   (g)  Whether  the  large-scale,  renewable  energy  resource generates
 enough revenue, based on expected output, to cover its  operating  costs
 and enjoy a reasonable return;
   (h)  Whether  the generation facility generates enough revenue to make
 necessary capital improvements;
   (i) Whether  the  large-scale,  renewable  energy  resource  generates
 enough  revenue  to  cover its fixed costs, including: (i) debt service;
 (ii) property taxes; (iii) security costs; and (iv) other costs;
   (j) Whether the large-scale, renewable energy resource  has  attempted
 to make use of other renewables programs available to it, such as volun-
 tary green markets; and
   (k)  The regional economic importance of the resource. This evaluation
 may include job creation and retention, regional spending for  fuel  and
 other  goods and services, contribution to local tax base, fuel diversi-
 ty, greenhouse gas reduction, enhanced  forest  health,  flood  control,
 municipal  water  supply,  ecological stewardship and other non-economic
 factors on a region-specific basis.  Any contract entered into  with  an
 eligible  large-scale, renewable energy resource pursuant to this subdi-
 vision shall include a reasonable return, and take the form of  a  fixed
 price  increment  to  the  tier 2 renewable energy credit price that the
 generator is receiving  from  a  load  serving  entity  or  a  financial
 contract  for  differences to adjust based on fluctuations in the tier 2
 renewable energy credit price. The totality of all  increments  provided
 to resources pursuant to this subdivision shall be recovered from deliv-
 ery  customers in the same manner as in the renewable portfolio standard
 program maintenance tier.
   5. Procedures.  To  implement  the  tier  2  renewable  energy  credit
 program,  the public service commission shall also adopt within 120 days
 of the effective date of this act the following procedures  and  related
 requirements:
   (a)  The public service commission shall establish procedures consist-
 ent with the procedures developed under the clean energy standard tier 1
 program to determine the eligibility of  large-scale,  renewable  energy
 resources to participate in the program adopted pursuant to this act and
 to  certify  such  eligible large-scale, renewable energy resources. All
 resources that have previously been found by the New York  state  energy
 research and development authority to meet the eligibility and delivera-
 bility  requirements  in force under the renewable portfolio standard or
 clean energy standard programs shall be deemed to meet  eligibility  and
 deliverability requirements of this act.
   (b) The public service commission, with the assistance of the New York
 state  energy research and development authority, shall develop an equi-
 table process by which load serving entities acquire  tier  2  renewable
 energy  credits  from  eligible large-scale, renewable energy resources,
 which may include the designation of the New York state energy  research
 and  development  authority as the central procurement entity for tier 2
 renewable energy credits, whereby the New York state energy research and
 development authority would ensure the registration of all tier 2 renew-
 able energy resources from generators in New York  generation  attribute
 tracking systems, purchase the required targeted amount of tier 2 renew-
 able  energy credits, and re-sell the tier 2 renewable energy credits to
 load serving entities on an annual basis in order  to  facilitate  their
 collective efficient compliance. The public service commission, with the
 assistance of the New York state energy research and development author-
 ity,  shall also develop and implement protocols in the event that there
 is an oversupply or undersupply  of  tier  2  renewable  energy  credits

 S. 23                               6

 offered  for  sale, relative to the tier 2 renewable energy credit obli-
 gation applied to the load serving entities, provided that the protocols
 should recognize and prioritize the realization of economic benefits  in
 New York from generators located in New York.
   (c)  The  public  service commission shall develop procedures by which
 eligible large-scale, renewable energy resources  may  obtain  contracts
 from  the New York state energy research and development authority under
 subdivision four of this section in accordance with the requirements  of
 the  state  administrative  procedure  act.  Such procedures shall, on a
 case-by-case basis, authorize  eligible  large-scale,  renewable  energy
 resources  to  petition  the  public service commission for a finding of
 financial hardship, which finding shall be based  upon  a  determination
 that  the  established  tier  2  renewable  energy credits determined in
 accordance with subdivision three of this section  are  insufficient  to
 ensure  the  viability  of  the  resource. The public service commission
 shall make a final decision with respect to  such  contract  within  120
 days after a hardship petition is received.
   (d)  Each  load  serving  entity shall demonstrate compliance with the
 requirements of this section through an annual compliance filing  pursu-
 ant  to  a  process established by the public service commission that is
 consistent with the compliance filing requirements established  pursuant
 to the tier 1 program.
   § 5. This act shall take effect immediately.