Senate Bill S8384

                                 
BILL NUMBER: S8384

SPONSOR: PARKER
 
TITLE OF BILL:

An act to amend the public service law, in relation to providing net
revenues from utility-owned large-scale renewable generation projects to
low-income customers and authorizes utility companies to own such
projects

 
PURPOSE OR GENERAL IDEA OF BILL:

In order to meet the state's renewable energy goals, set forth by the
Climate Leadership and Community Protection Act (CLCPA), this legis-
lation authorizes New York's electric utilities to own a limited number
of large-scale renewable generating facilities in New York state.
Further, this legislation requires that all net revenues from the sale
of electricity and the production of renewable energy credits (RECs)
from utility-owned large-scale renewable generating facilities be
provided to low-income customers in the form of bill credits.

 
SUMMARY OF PROVISIONS:
              

Section one is legislative findings and intent.

Section two adds a new section 66-q to the public service law (PSL) to
explicitly authorize New York's energy utility companies to own and
operate renewable energy generating facilities and requires that all of
the net revenues from the sale of electricity and the production of RECs
from such renewable facilities be provided to low-income customers in
the form of bill credits (in addition to any other program or benefit
offered to such customers).

Section two also requires the utility-owned renewable generation facili-
ties covered by the legislation are subject to Public Service Commission
(PSC) oversight.

This section also sets forth standards for utility-owned renewable
generating facilities. Such standards require that the renewable power
generated at such facilities remain in New York State for the benefit of
New Yorkers and that such power not be exported out of state.

Further, section two states that utility-owned renewable generation
facilities be built pursuant to a competitive third-party bidding proc-
ess. This will ensure that New York maintains a robust private energy
developer market.

Section two also requires that prevailing wage and Buy America laws are
followed, and that the facility be owned and operated in a manner that
provides beneficial cost and rate impacts for customers.  This section
also limits the amount of renewable generation capacity that can be
owned by utility companies in New York to twenty-five percent of the
total generation capacity needed to achieve the State's renewable energy
goals.

Finally, section two directs that the Commission shall issue such
orders, rules and regulations as may be necessary and appropriate to
implement this legislation and further directs the commission (within 60
days after the bill becomes law) to commence a proceeding necessary and
appropriate to implement the provisions of this new section of the
public service law.

The bill is effective immediately.

 
JUSTIFICATION:

The primary objectives of this legislation are to aid New York State in
meeting its 70% renewable energy by 2030 and 100% zero-emission elec-
tricity by 2040 goals (as mandated by the CLCPA) and ensure that low-in-
come customers share in the benefits of the clean energy future by
providing them with electric bill credits.

It is vitally important that low-income customers are not left behind in
the clean energy transition. These customers' involvement in energy
efficiency programs and their adoption rate for distributed energy
resources is very low. Generally, low-income customers do not have
access to on-site solar and are under-represented in community distrib-
uted generation. If these adoption levels continue, low-income customers
could experience increased energy bills from the energy transition,
while not reaping many of its benefits.

The need for this legislation is immense and immediate.

Only 3.5% of the electric energy production in New York State is from
existing non-hydro renewables (i.e., wind, solar, and biomass) compris-
ing approximately 2,100 MW built under the existing model with NYSERDA
contracts, since 2005. In order to meet the ambitious and critically
important renewable energy goals of the CLCPA, it is estimated that the
State will need to add new renewable generation at a rate four times
faster than the past sixteen years. This Herculean task will require an
all hands-on-deck approach, one that this legislation seeks to further.

Since 1998 regulated utilities have been discouraged by the Public
Service Commission from owning and operating electric generation in New
York even though utilities have considerable expertise in renewables.

This legislation strikes the right balance between bringing additional
market participants into the fold to help the state achieve its clean
energy goals while ensuring the continuation of a robust private devel-
oper market. This is achieved in two ways: first, by requiring that all
renewable generation facilities built pursuant to this legislation be
done by a third-party private developer pursuant to a competitive
bidding process. Secondly, the legislation imposes a total limit on the
amount of generating capacity utilities would be authorized to own
reserving the rest to other market participants.

Further, this legislation ensures that labor is respected through the
applicability of prevailing wage and Buy America requirements.

 
LOWER COST FOR CUSTOMERS

This legislation both directly lowers costs for low-income customers
through bill credits but also lowers overall costs for all utility
customers by limiting the return on projects to a regulated rate set by
the Public Service Commission, utilizing utilities' lower capital cost
through high credit ratings, and retaining residual value of projects
after a 20-year cost recovery period.
 
BETTER RESULTS FOR NEW YORK STATE

Under this legislation, customers retain value for the life of the
facility and utilities would be prohibited from selling energy and
renewable credits to other States. Further, utility-owned renewables
would earn a regulated rate of return for 20 years and then would oper-
ate in New York without any premium for the next 20+ years.

Additionally, New York utilities have a long-term interest in the state
and will not "flip" projects unless required to divest by the PSC, in
which case proceeds of the sale of such projects would go to customers.

 
PRIOR LEGISLATIVE HISTORY:

New Legislation

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
Immediately.