Public Hearing - May 20, 2015

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       1      JOINT HEARING BEFORE THE NEW YORK STATE
              SENATE STANDING COMMITTEE ON ENERGY AND
       2      TELECOMMUNICATIONS
              AND
       3      SENATE STANDING COMMITTEE ON FINANCE
              -----------------------------------------------------
       4
                                 PUBLIC HEARING:
       5
                        UPDATE ON THE ENERGY HIGHWAY AND
       6            REFORM OF THE ENERGY VISION INITIATIVES

       7      -----------------------------------------------------

       8                       Legislative Office Building
                               Van Buren Hearing Room A, 2nd Floor
       9                       181 State Street
                               Albany, New York  12247
      10
                               May 20, 2015
      11                       12:00 p.m. to 3:00 p.m.

      12
              PRESIDING:
      13
                 Senator Joseph A. Griffo
      14         Chairman
                 NYS Senate Standing Committee on Energy
      15         and Telecommunications

      16         Senator John A. DeFrancisco
                 Chairman
      17         NYS Senate Standing Committee on Finance

      18
              PRESENT:
      19
                 Senator Betty Little
      20         Senator Liz Krueger
                 Senator Thomas F. O'Mara
      21         Senator Kevin S. Parker
                 Senator Michael H. Ranzenhofer
      22         Senator Catharine M. Young

      23

      24

      25







                                                                   2
       1
              SPEAKERS:                              PAGE   QUESTIONS
       2
              Richard Kauffman                          6       46
       3      Chairman
              Energy and Finance of New York
       4           Also, Chair of NYSERDA Board

       5      Audrey Zibelman
              Chair
       6      NYS Public Service Commission (PSC)

       7      Gil Quiniones
              President and CEO
       8      New York Power Authority (NYPA)

       9      John Rhodes
              President and CEO
      10      NYSERDA

      11
              Darren Suarez                           132      142
      12      Director of Government Affairs
              The Business Council
      13
              Kevin Schulte
      14      Board Member
              Alliance for Clean Energy New York
      15
              Ted Skerpon
      16      President and Business Manager
              IBEW Local 97,
      17           and, Chairman, New York State
                   IBEW Utility Labor Council
      18
              Phil Wilcox
      19      Business Representative
              IBEW Local 97
      20
              Karyn Burns
      21      Director of Communications and
                   Government Relations
      22      Manufacturers Association of
                   Central New York
      23
              Richard Dewey
      24      Executive Vice President
              New York Independent System Operator
      25







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       1             SENATOR GRIFFO:  Good afternoon.

       2             I am Senator Joe Griffo, Chair of the

       3      Energy and Telecommunications Committee, and I'm

       4      joined by Senator John DeFrancisco, who is Chair of

       5      the Senate Finance Committee.

       6             You'll have to bear with me today.  I'm

       7      fighting a little cold here.  This is my best

       8      Barry White impression, so I may sing a little

       9      "Can't Get Enough of Your Love," maybe, at some

      10      point.

      11                  [Laughter.]

      12             SENATOR GRIFFO:  But I do appreciate everyone

      13      for being here today.

      14             This is a very important area, energy and

      15      telecommunications, and I do appreciate the members

      16      of the Governor's team who are here today.

      17             We will have members that will be coming in

      18      throughout the hearing this morning.

      19             A session is ongoing at this point in time,

      20      as well as another hearing which is across the hall,

      21      so we're going to have members coming back and

      22      forth.

      23             So, I want to open this public hearing of the

      24      joint Committees of Energy, and Finance, and I just

      25      want to, basically, greet everyone again, and this







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       1      here today is an opportunity for us to discuss some

       2      important initiatives in the energy sector: the

       3      Energy Highway, and Reforming the Energy Vision.

       4             We're doing this in the spirit of

       5      transparency and open communication.

       6             It's great to be able to hear from two panels

       7      from the government side and from the industry

       8      regarding these initiatives, to be able to have this

       9      open dialogue where we can talk about what is taking

      10      place.

      11             I would like to just say a few words about

      12      the Energy Highway and the REV before I introduce

      13      the members -- the distinguished members of the

      14      panel.

      15             Our state is incredibly lucky, in my opinion,

      16      to have a broad range of fuel sources that we can

      17      take advantage of to improve our air quality and to

      18      shield our customers from commodity-price

      19      volatility.

      20             I think that using tools to enhance

      21      efficiency, such as demand response, and integrating

      22      even more renewable- and clean-energy sources onto

      23      the grid, are goals that we share, as long as we

      24      never sacrifice reliability, and always keep safety,

      25      security, and cost-containment for ratepayers in the







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       1      forefront of our minds.

       2             New York should move forward strategically to

       3      replace, upgrade, and modernize our generation,

       4      transmission, and local delivery systems.

       5             Our Energy Highway is a measured and

       6      intelligent way to do so.  This is essential, and

       7      should be given a priority on a parallel track with

       8      the Energy Vision.

       9             And respective of REV, I think that

      10      transparency and broad collaboration, especially

      11      with regard to the Phase 2 of the REV proceeding, is

      12      going to be key to the process, and should be an

      13      open, measured, and efficient process.

      14             REV requires intensive cost-benefit analysis

      15      that protects the ratepayer, but also ensures that

      16      the competitive markets and appropriate price

      17      signals are not disrupted.  We need to get it right.

      18             So with that, I want to acknowledge

      19      Senator Betty Little, who is a member of the

      20      Energy Committee, who has joined us, and then turn

      21      it over to Senator John DeFrancisco for some opening

      22      comments.

      23             SENATOR DEFRANCISCO:  I don't have much to

      24      say, other than to confess my, not total, but

      25      substantial, ignorance on these issues.  And I can't







                                                                   6
       1      figure out for the life of me what the

       2      Energy Highway is supposed to do, how much it's

       3      going to cost; and what REV is, and how that changes

       4      anything, as far as what we intended -- what the

       5      government intends to do with it, and what the cost

       6      is.

       7             So that's my focus.

       8             I don't have to make any other introductory

       9      statements, and, if those questions can be answered

      10      during this hearing, it would be wonderful.

      11             SENATOR GRIFFO:  And with that, I will

      12      introduce the members of the panel who are here

      13      today.

      14             Again, I want to express my appreciation to

      15      the Governor, and to all of you for being here, for

      16      your willingness to appear before the two

      17      Committees, and also to engage in this dialogue.

      18             With us today is, Richard Kauffman, who is

      19      chairman of Energy and Finance for New York, and

      20      chair of the NYSERDA board;

      21             Audrey Zibelman, chairwoman of the

      22      New York State Public Service Commission;

      23             Gil Quiniones, president and CEO of the

      24      New York Power Authority;

      25             And, John Rhodes, president and CEO of







                                                                   7
       1      NYSERDA.

       2             So, Mr. Kauffman, I think we'll begin with

       3      you, and I'll let you take it from here.

       4             RICHARD KAUFFMAN:  I'm failing the

       5      intelligence test.

       6             SENATOR GRIFFO:  A master of technology.

       7             UNIDENTIFIED SPEAKER:  It's on.

       8             RICHARD KAUFFMAN:  It's on?

       9             GIL QUINIONES:  Yes.

      10             RICHARD KAUFFMAN:  Okay.  Thank you very

      11      much.

      12             Chairman Griffo, Chairman DeFrancisco,

      13      Senator Little, thank you very much for the

      14      opportunity to be with you, and to discuss our

      15      energy strategy with you.

      16             I think there's some branding issues.

      17             I think when we talk about Reforming the

      18      Energy Vision, or "REV," that's the overall brand,

      19      as it were, for Governor Cuomo's overall strategy to

      20      build a cleaner, more resilient, and more affordable

      21      energy system for all New Yorkers.  And, in concept,

      22      it also includes the Energy Highway.

      23             REV places all of us, the customers, at the

      24      center of everything that we do.

      25             So the question is, Why are we reforming







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       1      energy in New York State, and why take on this

       2      initiative?

       3             REV is motivated by several challenges.

       4             First, high energy costs for customers;

       5             Second, an aging and inefficient power

       6      infrastructure;

       7             And, third, shifting technology and consumer

       8      trends;

       9             And, fourth, the immediacy of climate change.

      10             We have an inefficient and expensive energy

      11      system in New York.

      12             Households pay, roughly, $2500 per year for

      13      energy, well above the national average.

      14             We have an aging infrastructure, and it's at

      15      every point, from large generation facilities, to

      16      transmission, to distribution, that contributes to

      17      high energy bills and is becoming more expensive to

      18      preserve.

      19             Over the past 10 years we have spent

      20      $17 billion just to maintain the system, and we're

      21      on track to spend another $30 billion over the next

      22      decade, again, just to maintain the present system,

      23      and this is just the electricity system.

      24             There's much more capital to be spent to

      25      improve the gas infrastructure.







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       1             Our power grid is not only aging, it has

       2      extremely low capacity utilization, a rate of just

       3      54 percent; meaning, that it's built for the hottest

       4      summer hours of the year, yet ratepayers pay for it

       5      all year long.

       6             Compared to other capital-intensive

       7      industries, this is a low number, and it's getting

       8      worse.

       9             Through adoption of new business models and

      10      technology, other capital-intensive industries have

      11      learned how to be much more capital-efficient, and

      12      each 1 percent improvement from this 54 percent

      13      capacity utilization will yield between 220 and

      14      330 million dollars of annual savings to ratepayers

      15      across the state.

      16             We have the potential to save customers

      17      billions of dollars a year.

      18             Our power grid was built at a time when

      19      electrons could only flow one way, from big power

      20      plants to customers, and when there was no

      21      capability for customers to adjust their demand

      22      based upon pricing.

      23             This dynamic, however, is changing.

      24             Consumer demand is shifting in response to

      25      technology change.  More and more New Yorkers are







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       1      putting solar on their roofs, installing smart

       2      appliances and thermostats in their homes.  The cost

       3      for these distributed solutions are coming down,

       4      often at exponential rates.

       5             These market trends are important because

       6      they can provide customers with greater control and

       7      affordability of their energy.

       8             On top of all of this the climate is

       9      changing.

      10             Since 2010, the state has endured nine

      11      presidentially-declared natural disasters, including

      12      "Sandy," "Irene," and "Lee."

      13             This year we went from one of our toughest

      14      winters to what may be the hottest spring on record.

      15             Our current regulatory framework, our agency

      16      programs, and our policies must evolve to address

      17      and enable these changes.

      18             In some fundamental ways, the regulatory

      19      incentives governing utilities have not changed

      20      since the time of Edison.

      21             And while our energy-efficiency and

      22      renewable-energy programs have helped customers, we

      23      need to change them to do more without burdening

      24      customers with ever-increasing collections and

      25      surcharges.







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       1             We are dedicated to reducing collections by

       2      changing course.

       3             I just want to say that again:  We are

       4      dedicated to reducing collections by changing

       5      course.

       6             Too often government has been the market as

       7      opposed to enabling the market.

       8             The world is changing, and so, too, must

       9      government.

      10             In addition, there are meaningful economic

      11      opportunities that arise with a cleaner energy

      12      system.

      13             The solar industry now employs more people

      14      than the steel industry in the United States.

      15             New York's solar industry grew 40 percent

      16      last year, and now employs the fourth-largest

      17      statewide solar workforce in the nation.

      18             Through New York State's universities and

      19      private-sector labs, we have one of the top

      20      portfolios of innovative energy-technology

      21      intellectual property in the country, and it's time

      22      to move these ideas out of the lab and into the

      23      market.

      24             Every day, utilities and customers spend

      25      millions of dollars on the system.







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       1             We want to be sure that we spend this capital

       2      in building the energy system of today, not just

       3      replicating the one of yesterday.

       4             The energy system of today must be integrated

       5      and combine the benefits of a modern and resilient

       6      central power grid with the flexibility and

       7      innovation of distributed energy resources.

       8             And we see the same kind of relationship in

       9      our commuter networks.

      10             Central data servers and mainframes function

      11      as the backbone of the network, while we have the

      12      benefits and mobility and flexibility associated

      13      with smartphones and PCs.

      14             To be clear, REV is not about promoting

      15      distributed resources at the expense of the central

      16      grid.

      17             It is about integrating distributed resources

      18      where they can help the grid, and building a central

      19      grid which can accommodate the value of distributed

      20      resources.

      21             Put simply, the current business-as-usual

      22      approach is not good for most anyone.

      23             Overall demand for electricity is decreasing,

      24      while demand for peak electricity is increasing, and

      25      customers are reducing their reliance on the grid







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       1      itself.

       2             These trends are only likely to accelerate;

       3      meaning, unless we change our approach, we will have

       4      a system which is more and more costly for

       5      businesses and individuals, and one where there will

       6      be inadequate economic incentives to replace old

       7      generation facilities.

       8             These are not New York problems.  These are

       9      problems that are nationwide.

      10             REV addresses these issues by building a

      11      modern and integrated network able to harness the

      12      reliability benefits of our central grid and the

      13      flexibility benefits of distributed energy

      14      resources.

      15             REV will increase the efficiency of the

      16      central grid;

      17             REV will make our energy system more

      18      affordable and valuable for customers, as well as

      19      provide them with greater choice and control;

      20             REV will provide economic opportunities for

      21      greater private investment in New York, meaning new

      22      projects and new jobs;

      23             And REV will reduce carbon emissions.

      24             To create an integrated power system requires

      25      integrated policy and coordination among the various







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       1      state entities involved with the electricity sector,

       2      and that's my job as the Governor's Energy Czar.

       3             You will hear from NYPA, DPS, and NYSERDA

       4      today.

       5             You will hear that there are transmission

       6      projects under construction that will use

       7      state-of-the-art technology.

       8             You will hear that utilities are already

       9      changing and are being smarter about building their

      10      systems.

      11             In Brooklyn and Queens, rather than build

      12      a billion dollar-plus substation, Con Ed will spend

      13      hundreds of millions of dollars less in

      14      alternative-energy solutions that will cost

      15      customers less money and reduce emissions.

      16             And you will hear, that through the changes

      17      in its policies, NYSERDA is driving tens of millions

      18      of dollars in private-sector capital and building

      19      the grid that touches customers.

      20             The nation is looking to New York.

      21             Nearly every day we meet with innovative

      22      global companies eager to participate in what we're

      23      doing.

      24             Of course, reforming our energy sector is a

      25      big challenge, but, after all, we're New Yorkers and







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       1      we're used to big challenges.

       2             New York has been a pioneer in energy since

       3      Thomas Edison created the nation's first power grid

       4      over 100 years ago.

       5             I want to make it clear:

       6             We're not trying to create a market, or stand

       7      in the way of market forces that are developing.

       8             Instead, we're trying to create a better

       9      framework that will allow market forces to work

      10      better.

      11             And now I'd like to introduce my colleague,

      12      Gil Quinones, president and CEO of New York Power

      13      Authority.

      14             GIL QUINIONES:  Chairman Griffo,

      15      Chairman DeFrancisco, Senator Little, thank you very

      16      much for the opportunity to be before you today.

      17             I have a written testimony, just before

      18      I start my remarks, and I just want to make sure

      19      they are entered into the record.

      20             I will not read my testimony in the interest

      21      of time.  I will, instead, give you an executive

      22      summary of it and touch on the salient points of my

      23      testimony.

      24             With that said, I just want to also point out

      25      that there is an attached appendix to my testimony,







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       1      starting on page 7, listing select infrastructure

       2      projects of the New York Power Authority in various

       3      stages of completion, as well as a map on page 11,

       4      on their approximate locations across our state.

       5             As Richard said, I am here to discuss with

       6      you the role of NYPA, and where NYPA fits in

       7      advancing the overall energy strategy or agenda of

       8      New York State which is called "Reforming the Energy

       9      Vision," or "REV."

      10             I will also discuss specific projects that

      11      NYPA has undertaken to advance many of the

      12      recommendations of the Energy Highway blueprint.

      13             I am pleased would to report as the chair of

      14      the Energy Highway Task Force of the Governor, that

      15      the 13 specific recommendations of the

      16      Energy Highway blueprint has been assigned to the

      17      appropriate agencies, they've been launched, they're

      18      well underway, and they are in various stages of

      19      planning and implementation.

      20             I will also discuss NYPA's projects with its

      21      customers.

      22             We are currently providing innovative

      23      solutions to our customers, solutions that our

      24      customers value.

      25             But before I go and delve into those specific







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       1      examples, I'd like to talk about what's going on

       2      with our power grid.  I think it's an important

       3      background and context before I discuss the specific

       4      example.

       5             I did bring a poster with me.  It's a little

       6      bit further away from you, but it is also on page 6

       7      of my written testimony, exactly the same chart.

       8             SENATOR GRIFFO:  You're testing our eyesight.

       9                  [Laughter.]

      10             GIL QUINIONES:  Sorry about that.

      11             So the grid of today is really the grid that

      12      was developed by Thomas Edison over 100 years ago on

      13      Pearl Street in Lower Manhattan.

      14             It is also the grid that Nikolai Tesla and

      15      Westinghouse envisioned when they invented a way to

      16      transmit electricity long distance from

      17      Niagara Falls to Buffalo.

      18             It is a one-way power-flow system; meaning,

      19      that the left side, shaded on green, involves a

      20      large generation connected to large transmission

      21      systems, and then, moving on to the right, to the

      22      distribution system, all the way to businesses and

      23      residences.

      24             It's a one-way power flow, or a one-way flow

      25      of electrics.







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       1             Our grid, right now as we speak, is changing.

       2      It's changing in many fundamental ways.

       3             On the left side, if you look at the diagram

       4      below the one on top, large-scale renewables are

       5      getting connected.  Large wind farms, for example.

       6      Grid-scale solar.  Batteries are starting to be

       7      integrated on the left-side generation-transmission

       8      portion of the grid.

       9             On the right side, where the distribution

      10      meets the customer, we call it "the edge of the

      11      grid," a lot of exciting innovation is happening on

      12      that side.  Solar panels, batteries, more efficient

      13      devices, building equipment, controls, big-data

      14      analytics, are all developing on that side of the

      15      grid, changing, fundamentally, the grid that Edison

      16      and Tesla invented.

      17             Now, instead of a one-way flow from right to

      18      left, it is now a two-way flow, or even a

      19      multi-flow, grid.

      20             And why is that important?

      21             It's important because, in our vision of REV,

      22      we would like to create an environment and the rules

      23      of the road so that that integrated grid, left to

      24      right, and right to left, is flexible, resilient,

      25      connected, and optimized.







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       1             And why is that?  Why do we want those

       2      characteristics?

       3             Because, in the end, we all want a power grid

       4      that is reliable, affordable, and environmentally

       5      responsible for all New Yorkers.

       6             So with that, let me cite a few of the

       7      activities that NYPA is doing at the edge of the

       8      grid, on the right side, where the distribution

       9      meets the customer.

      10             An example -- one example is our program

      11      we're calling "K to Solar."

      12             "K to Solar" is a program that we have

      13      launched last year in partnership with the State

      14      Education Department and with NYSERDA, to help

      15      foster and install solar panels in our school

      16      system.

      17             We have 698 school districts, as you know,

      18      and we have already signed up about half of them.

      19      About 300 have expressed interest to work with NYPA

      20      to install solar panels in schools.

      21             And we're not only installing -- you know,

      22      helping them install the panels, but we're also

      23      helping them integrate that -- those type of

      24      installations and concept into their curriculum.

      25             What better way for us to scale up, to really







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       1      foster clean energy and energy efficiency, than

       2      exposing our children, our future leaders, with best

       3      practices in this area.

       4             Another example is Build Smart New York.

       5             In December of 2012 Governor Cuomo signed an

       6      executive order, Executive Order 88, calling on all

       7      public buildings, state buildings, to lower their

       8      energy-use intensity by 20 percent by 2020, to save

       9      in operating costs, to save in their utility bills.

      10             But it's really more than that.

      11             It's not only to lead by example, but the

      12      Governor wanted to inspire a shared vision and a

      13      call to action to the private sector, that if we can

      14      do it in government, that it makes good business

      15      sense in the government sector, that the private

      16      sector should do it as well.

      17             Now, moving on to the left side of the grid,

      18      the Energy Highway, the Energy Highway is focused.

      19      And in the spirit of the Energy Highway, let me cite

      20      the projects that we're doing, from north-south, of

      21      the NYPA Energy Highway.

      22             In Messina, where we have our

      23      St. Lawrence-FDR power project, we're building the

      24      substation of the future.

      25             This will be -- after this project is







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       1      completed, will be the most sophisticated substation

       2      in terms of communication, controls, and protection,

       3      and situational awareness.

       4             Why are we doing it in Messina?

       5             Because most of the wind farms are connected

       6      to our transmission grid in that area, and we're

       7      helping private-sector wind farm developers to

       8      effectively integrate their projects into our

       9      transmission system.

      10             We also intend to replace what we're calling

      11      our "Moses-Adirondack transmission line."  That's

      12      the line that emanates from Messina, heading down

      13      to -- halfway to Marcy, near Utica.  And we're going

      14      to apply the most advanced technology in doing that

      15      upgrade and replacement.

      16             In Marcy, near Utica, where we have our

      17      hub -- transmission hub, we have what we're calling

      18      the "flexible AC," or, "alternating-current

      19      transmission system."  Basically, this is an

      20      equipment that switches power from two transmission

      21      lines, about 200 megawatts in milliseconds.  And

      22      what it does is, during times of congestion, we're

      23      able to help out in creating a reliable grid in that

      24      area.

      25             And, lastly, we're going to apply smart-grid







                                                                   22
       1      technology to a transmission line that we're calling

       2      "Marcy South," which is from Marcy, near Utica, all

       3      the way down to the Lower Hudson Valley.

       4             It's an existing transmission line where

       5      we're going to be putting smart technology, and

       6      we're going to be able to transmit, or transfer,

       7      power from upstate to downstate without upgrading or

       8      changing the lines, which is applying smart-grid

       9      technology and increasing the utilization and the

      10      efficiency of that line, mitigating any impact to

      11      adjacent landowners.

      12             So those are the type of projects that we

      13      have been undertaking to advance the Energy Highway.

      14             And aside from, or excluding, our normal

      15      life-extension and modernization programs, our

      16      normal capital and operation and maintenance

      17      projects at NYPA, we are planning to invest over

      18      $1 billion over the next 10 years in smart-grid,

      19      smart-generation, and transmission technology, as

      20      well as advanced asset-management systems, to make

      21      sure that we build the foundation, and we usher the

      22      grid into the grid of the future, into the new

      23      Energy Highway of the state of New York.

      24             That concludes my testimony, and I would like

      25      now to transfer the baton to my friend, and







                                                                   23
       1      chairwoman, Audrey Zibelman.

       2             AUDREY ZIBELMAN:  Thank you, Gil.

       3             Good afternoon, Senators.

       4             As you know -- thank you.

       5             Am I good?

       6             I also might have a problem, a vertical

       7      problem, but I'll stand up -- I'll sit up.

       8             Good afternoon, Senators.

       9             As you know, the commission, the Department

      10      of Public Service, played a significant role of

      11      implementing the regulatory portions of both the

      12      Highway and of REV.

      13             My remarks today will focus on how many of

      14      the objectives of the Energy Highway are already in

      15      place and helping to achieve our goals, and, also,

      16      on the core regulatory aspects of the REV

      17      proceedings.

      18             As Gil noted, modernizing the power and gas

      19      distribution systems for the twenty-first century is

      20      a core aspect of the energy policy.

      21             We need delivery systems that are flexible,

      22      that can deal with the changing nature of

      23      generation, that are efficient, and that they're

      24      capable of accommodating both today's world and the

      25      future world.







                                                                   24
       1             And as you will note in my written testimony

       2      that we've submitted, on appendix -- in the

       3      appendix, the commission over the last several years

       4      has actually approved billions of dollars of

       5      investments in both transmission and in generation.

       6             But what I want to do today is really focus

       7      on two of the projects that I know are of most

       8      interest to the Senate.

       9             One is the AC transmission project, and that

      10      project, which was announced several years ago, the

      11      objective was to increase 1,000 megawatts of

      12      additional transfer capability between the western

      13      part of New York to the eastern part and to the

      14      south.

      15             This was to allow to us take advantage of

      16      underutilized generation, to make the system

      17      actually more efficient, and also take advantage of

      18      new wind resources to make sure we can use them

      19      throughout the state.

      20             Of particular significance of this project is

      21      that we used the a competitive process, and now we

      22      have four different developers who have now put in

      23      more than 21 different projects that the commission

      24      is considering.

      25             We, also, in response to both the desire of







                                                                   25
       1      the local community, and also the Governor's intent

       2      to reduce local land impact, asked the developers

       3      last year to refine their projects to see how we can

       4      meet the needs by minimizing land impact.

       5             We are now in the process of reviewing these

       6      proposals so I can't opine on the eventual outcome,

       7      but what I can tell you, is that the effort of using

       8      both, competition, and on getting the developers to

       9      rethink the projects so that they can think about

      10      how to minimize land impact, we're going to be in a

      11      much better position, if we decide to choose one of

      12      these projects, to know that we have hit the best

      13      solution for customers.

      14             The other projects I wanted to talk about are

      15      the TOTS projects.

      16             These are three major transmission projects,

      17      including the Marcy line that Gil referred to, and

      18      these were projects that we asked for, to make sure

      19      that the system would remain reliable in the event

      20      of an Indian Point shutdown.

      21             What is particularly good about these

      22      projects, it's 600 megawatts of additional

      23      transmission.  And the commission, through its

      24      analysis, found that even if Indian Point does not

      25      shut down, having these projects in place, having







                                                                   26
       1      the transmission in place, is going to help us

       2      reduce the cost of power in New York.

       3             So it's, basically, we call it a "no-regrets

       4      project."

       5             The other thing I wanted to mention, and

       6      I would be remiss if I didn't, is the significant

       7      efforts that the commission has made with respect to

       8      the replacement of old gas infrastructure.

       9             As you know, there's a significant concern

      10      that because of the number of pipeline that we have

      11      that is, we call, "leak-prone," not that they're

      12      leaky, but they're older pipe and they are prone to

      13      safety violations, we need to replace it.

      14             We're also concerned, of course, about

      15      methane leakage.

      16             The commission has over the last several

      17      years endeavored to improve and accelerate the

      18      replacement of leak-prone pipe.  And I'm very

      19      pleased to note that, with our most recent efforts

      20      to take a look at how to ensure that the investments

      21      could be entered into in a non-disrupted way, we're

      22      now in the good position of having reduced the time

      23      of replacement from, initially, where it was

      24      60 years and higher in some utilities, to that,

      25      within 20 years, we expect all the leak-prone pipe







                                                                   27
       1      in the state to be replaced.

       2             Turning next, then, I wanted to talk about

       3      the REV proceeding.

       4             And on page 6 of the written testimony, we

       5      have what is known as "a load-duration curve."

       6             And if you turn to that chart, as you see, is

       7      that what it shows is that, all the hours of the

       8      year, how much electricity is consumed in New York.

       9             What you'll see there, that is, on average,

      10      in New York, we consume about 19,000 megawatts of

      11      energy.  So it's for every hour of the year, over

      12      the last 2011 -- or '12, '13, and '14.

      13             But what you'll also see, in the left-hand

      14      corner, on those high summer days, because that's

      15      when we peak in our system, we can consume in the

      16      order of 34,000 megawatts a year, but that's only

      17      for less than 80 hours a year.

      18             So what that means, and this is, essentially,

      19      what Richard was talking about when he talked about

      20      the inefficiency of the system, is that because

      21      electricity can't be readily stored, for those last

      22      80 hours of the year, we need to have generation,

      23      transmission, and distribution that, for the rest of

      24      the year, just sits idle, just in case we peak

      25      during those periods.







                                                                   28
       1             So what REV is about is saying, Well, wait a

       2      minute.  If we can use investments in CHP (combined

       3      heat and power) plants, and behind-the-meter solar,

       4      if we can become better users of electricity, we can

       5      cut that peak.

       6             And what that amounts to is, between 1.2 to

       7      1.7 billion dollars a year's of savings in what we

       8      pay for electricity, just by becoming bigger users.

       9             So if there's any message about REV, it's

      10      about, how do we become better users?

      11             Not to reduce what's in the grid, but

      12      actually become better users of it and help us save

      13      money.

      14             So let me turn, then, to the key elements of

      15      the regulatory process, and we broke it down into

      16      two tracks.

      17             Track 1 is what we call -- is really more

      18      about regulatory policy, and it would say, moving

      19      forward, when we have the ability to use distributed

      20      energy resources, what should be the role of the

      21      distribution utility? what should be the role of

      22      retailers? what should to be role of customers? what

      23      should to be role of suppliers?

      24             And then, in Track 2, once we sort of say,

      25      well, what does this new climate look like? is,







                                                                   29
       1      well, what's the regulatory rate-making changes that

       2      need to be made in order to accommodate these

       3      changes?

       4             We issued a Track 1 order in February, and

       5      what we did is, is that the staff produced a white

       6      paper, where they identified what these policy

       7      changes could look like.

       8             We received numerous, almost 1,000 pages, or

       9      more, of written comments.

      10             We had many technical meetings and public

      11      meetings.

      12             And, in large part, many -- everyone who came

      13      to us said, Yes, we do need to make a change.  We

      14      may quibble about the details, but we need to make a

      15      change.

      16             And so it ended up in the order, the

      17      commission identified what I call -- what I think is

      18      best described as a "five-point game plan" of the

      19      elements that need to be changed.

      20             The first is, is the changing the role of the

      21      utility business model, where, traditionally, you

      22      think of the role of the distribution utility to

      23      deliver energy to the meter as much as a consumer

      24      might use.

      25             It's to really say, Well, wait a minute.  If







                                                                   30
       1      we have customers who have invested in things like

       2      rooftop solar and storage, or smart thermostats, we

       3      have customers who have combined heat and power

       4      plants, or have fuel cells that they've invested in,

       5      how can we use those resources, both, to maintain

       6      the rely about it and the resiliency of the system

       7      in -- on blue-sky days or in storm situations, but

       8      also to reduce the peak, and to, basically, avoid

       9      costs in the system.

      10             So part of it is to say that the role of the

      11      distribution utility is really to integrate these

      12      resources so they become part and parcel of how we

      13      manage the system and make the system more

      14      efficient.

      15             The second piece was to say, Well, how are we

      16      going to make this better and tell people about the

      17      opportunities?

      18             So one of the things that is very clear, and

      19      we heard for -- many people who came to these

      20      proceedings, is the need to make information

      21      available.

      22             So when you think about it, you know, when

      23      you go to the gas pump, you know how much you're

      24      paying for gas.

      25             In terms of electricity, you really don't







                                                                   31
       1      know anything until you pay the bill at the end of

       2      the month.

       3             So how do we make information available to

       4      customers about how they can save money on

       5      electricity?

       6             Secondly is, if somebody wants to invest in a

       7      behind-the-meter generation, but where's the best

       8      place to put it?

       9             So that kind of information today the

      10      utilities know, but others don't.

      11             So part of REV is to make sure that there's

      12      transparency so people can make these decisions.

      13             The third is to build on the successes.

      14             We know this is a major transformation,

      15      moving from a one-way grid to a two-way grid, as Gil

      16      talked about, is going to take time, so we need to

      17      learn how to do this.

      18             So, we're doing projects.

      19             As Richard mentioned, the Brooklyn-Queens

      20      project.

      21             We're looking at how to reduce demand in

      22      Brooklyn rather than -- by building a substation.

      23             And we've asked all the utilities to come

      24      forward with demonstrations, working with third

      25      parties, to say, How do we build this business model







                                                                   32
       1      where utilities can actually now start partnering

       2      with folks to develop out business models that will

       3      help us, both, meet all our goals, but do it in a

       4      less -- a more cost-effective way.

       5             And then the fourth piece that we also said

       6      is, is that we need to do this, as well as maintain

       7      our objectives around energy efficiency and

       8      renewables.

       9             John will be talking in a bit about what

      10      we're doing with respect to the role of NYSERDA and

      11      utilities on energy efficiency.

      12             The other things that we have certainly done

      13      is implement the New York Sun Program.

      14             And we've also asked staff and NYSERDA to

      15      re-look at how we procure grid-based renewables so

      16      we can do it better.

      17             The last, and most important, piece of REV is

      18      for customers, and so one of the major things that

      19      we talk about is, How are we going to make the power

      20      system better for customers?

      21             And if you take customers, they're sort of

      22      not all of, certainly, one of ilk.

      23             So one is, in terms of large industrial and

      24      commercial customers, a lot of these customers, even

      25      today, most industries, hospitals, data centers, all







                                                                   33
       1      have invested in backup generation.

       2             They have all said to us, Look, if you can

       3      give us the price signal and we can reduce our

       4      demand and get compensated for it, we're happy to do

       5      that.

       6             So that's the benefit to them.  It reduces

       7      their energy bills.

       8             It's also a benefit to the grid because what

       9      we're doing is consuming less and, therefore, not

      10      having to pay for the energy during the most

      11      expensive times of the day -- year.

      12             So one of the things we've done is, we've

      13      asked all the utilities to put in what are known as

      14      "demand-response tariffs," where they'll actually

      15      compensate consumers who are willing to voluntary

      16      reduce their consumption, maybe by using internal

      17      generation, maybe by shifting their use to a

      18      different time, to help us maintain the reliability

      19      of the system and also make it more economic.

      20             We've also directed and said we will create

      21      what we call "self-direct energy-efficiency

      22      programs."

      23             Particularly, a lot of our large industrial

      24      and commercial customers have said they will

      25      voluntarily invest in energy efficiency, and if they







                                                                   34
       1      can do it themselves, they would rather do it

       2      themselves than pay into a system-benefits charge.

       3             So we have a program going to allow that to

       4      happen.

       5             We've also looked at how to change our

       6      standby rates, and these are the rates that people

       7      charge if they have combined heat and power.  The

       8      utility will charge them a standby rate just in case

       9      they need -- just in case their system goes out.

      10             And we've said, Well, wait a minute.  We need

      11      to make these prices work so that they don't become

      12      prohibitive against investment, because we want

      13      these investments to occur.

      14             The other -- another thing we've done in REV

      15      is to take a look at how to protect the interests of

      16      mass-market and low-income customers.  We wanted to

      17      give customers a strong voice.

      18             We've developed, at the Governor's request, a

      19      position of the consumer advocate.

      20             We've already, with this consumer advocate,

      21      begun a process to look at reducing the bills so

      22      that there's a standard discount to make it easier

      23      for low-income folks to pay their bills.

      24             The other thing that we're doing is really

      25      going after retailers.







                                                                   35
       1             One of the things that we know is that, in

       2      order for competitive markets to work, people have

       3      to have confidence.  And there's been a significant

       4      concern about a number of retailers, or "ESCOs," who

       5      have behaved in practices that people simply don't

       6      want to see.

       7             So we're going after these retailers to make

       8      sure that the people who participate in the market

       9      understand that our business practices are there to

      10      protect consumers.

      11             We also have a number of protections in place

      12      for low-income customers, and have asked NYSERDA to

      13      work with the utilities, to make sure that when it

      14      comes to energy efficiency, low-income customers

      15      have the same opportunity as everyone else.

      16             And, lastly, we've put in programs around

      17      community aggregation and community solar.

      18             "Community aggregation" is so that people can

      19      pool together to buy supply and get economies of

      20      scale at municipal level.

      21             And "solar" is so that, when you have people

      22      who live in either motel -- in apartment buildings,

      23      or, in fact, have roofs that they can't put solar

      24      in, they have a chance to invest and get the

      25      advantages with -- themselves.







                                                                   36
       1             The next part of the REV proceeding is what

       2      we call "Track 2," and that's where we'll be making

       3      the rate-making changes.

       4             So, today, as you know, the traditional

       5      mechanism of regulating utilities is for them to

       6      make money by investing in capital.

       7             One of the things that we want to do is say,

       8      moving forward, we want utilities to be -- to get

       9      value, not just in investing in a new plant, but in

      10      helping make the system more efficient.

      11             And that's -- that is sort of the same as

      12      Richard was talking about, making the system more

      13      productive.

      14             So what will be happening there is, staff

      15      will be putting together a white paper, identifying

      16      the regulatory changes and the rate-making changes,

      17      so that the utilities' interests are really in

      18      concert with their customers' interests of making

      19      the system lower cost and more efficient and

      20      reliable.

      21             And that what we will do is, is that once the

      22      staff issues the white paper of these changes, we'll

      23      have both a commentary process, I have no doubt

      24      we'll have additional what we call "technical

      25      conferences," we'll invite comments on it.







                                                                   37
       1      Certainly, invite your comments on the changes that

       2      we're proposing for rate-making.  And then the

       3      commission will be making a decision on that by the

       4      end of the year.

       5             Once we make these changes on the policies of

       6      rate-making, utilities will then move forward, and

       7      when they file rate cases, we'll implement these new

       8      policies in the rate cases, and those, again, of

       9      course, are public processes.

      10             So that's now the end of my comments.

      11             I'm going to turn it over to John Rhodes, the

      12      president and CEO of NYSERDA, to talk about what

      13      we're doing there.

      14             JOHN RHODES:  Thank you, Audrey.

      15             And I, too, join my colleagues in thanking

      16      you, Senator Little, Chairman Griffo,

      17      Chairman DeFrancisco, for the opportunity to present

      18      my remarks today.

      19             They will focus on NYSERDA's role in REV, on

      20      some key elements of our proposed clean-energy fund,

      21      and on our commitment -- continued commitment to

      22      better customer service and to transparency.

      23             We've talked about how the objective of REV

      24      is to build an integrated network that will be able

      25      to harness the reliability of the central grid and







                                                                   38
       1      the flexibility of distributed energy resources in

       2      order to become cleaner, more resilient, and more

       3      affordable.

       4             As you've heard from my colleagues, we're

       5      strengthening our transmission system, and we're

       6      changing the regulations to promote how distributed

       7      solutions may find their way into the grid.

       8             However, even with these reforms and

       9      investments, market gaps will persist in the near

      10      term, and this is where NYSERDA comes in.

      11             Our role is to address those gaps and

      12      accelerate private investment in clean energy into

      13      those gaps.  NYSERDA's role is as an enabler of

      14      markets.

      15             Through the clean-energy-fund proposal that

      16      we have before the commission, we intend to focus on

      17      identified market gaps and use our limited public

      18      dollars to address those.

      19             This will give us better bang for the buck.

      20      That will allow us to reduce collections.

      21             In addition, the clean-energy fund will

      22      reduce customer energy costs by supporting increased

      23      deployment of energy efficiency, reducing bills, and

      24      distributed generation, such as solar and wind.

      25             We achieve this greater impact for a dollar







                                                                   39
       1      across our programs, leading to greater levels of

       2      clean energy than current program approaches.

       3             These new approaches will increase the flow

       4      of private capital into the clean-energy sector in

       5      New York; and, so, will simultaneously increase

       6      jobs.

       7             New York Sun is a concrete example of this

       8      strategy in action.

       9             The previous solar program was successful,

      10      but did not provide the certainty and long-term

      11      predictability that the market needed.

      12             So through concerted attention to multiple

      13      barriers to prevent the adoption of solar, we have

      14      developed a new program that provides greater market

      15      certainty to developers, so they have the rationale

      16      to invest; uniformity across the state so that the

      17      same approaches work in every part of the state; and

      18      resulting in greater predictability and transparency

      19      in program design.

      20             And they have also become considerably -- we

      21      have worked on becoming much more customer-friendly,

      22      leading to much better customer orientation and much

      23      better customer adoption.

      24             We're already seeing the positive results of

      25      this work.







                                                                   40
       1             In 2014, we installed 105 megawatts of solar,

       2      which was double what was installed in the prior

       3      year.  And we have a pipeline of 450 megawatts,

       4      which was a real multiple of what we've had.

       5             And as Richard mentioned, we've seen an

       6      expansion of solar jobs, the solar job market, to

       7      7,200 jobs; up 40 percent, up 2,000 jobs, over 2013.

       8             The clean-energy fund significantly

       9      reinforces New York State's commitment to accelerate

      10      the growth of clean energy, to improve its economic

      11      competitiveness, and to protect the environment.

      12             It's designed to deliver on three long-term

      13      outcomes.

      14             The first outcome will be significant

      15      reductions in greenhouse-gas emissions from

      16      New York's energy sector.

      17             Next, new investment opportunities will

      18      attract private capital to investing in clean energy

      19      in New York.

      20             And, finally, we'll see greater levels of

      21      scale for clean energy in the state economy.

      22             We intend to achieve those outcomes through

      23      the clean-energy fund, through four portfolios of

      24      programs.

      25             First, there's the New York Bank --







                                                                   41
       1      Green Bank, which is a financing entity designed to

       2      draw in interest from the private-sector financial

       3      community to invest in energy efficiency and clean

       4      energy.

       5             A key structural element of the New York

       6      Green Bank is the ability to recycle funds as

       7      investments demonstrate progress and are repaid.

       8             The money goes out, it comes back in, and it

       9      can go out again.

      10             Second, we've already discussed New York Sun,

      11      a portfolio element that provides a comprehensive

      12      approach to the rapidly expanding solar market in

      13      New York.

      14             By focusing systematically on known barriers,

      15      the initiative is on track to deliver 3 gigawatts of

      16      solar by the time it's done; and, more importantly,

      17      to lead to a market where costs are reduced so that

      18      subsidies are no longer needed and solar can

      19      flourish in New York without the need for state

      20      support.

      21             Third, we will continue to invest in market

      22      development of energy efficiency and clean energy,

      23      as these are demonstrated to be the single most

      24      cost-effective approaches to reducing customer

      25      energy use and, therefore, customer energy bills.







                                                                   42
       1             And, finally, we have a technology and

       2      business innovation portfolio that will enhance

       3      New York's participation in the clean-energy

       4      economy, and we will continue to pursue our

       5      successful strategies that spur companies, that spur

       6      investment, and spur jobs throughout the state.

       7             We plan to build on the strong foundation

       8      that we've developed at NYSERDA over the past

       9      decades, but we know that new approaches are needed

      10      to achieve the energy savings and bill savings and

      11      greenhouse-gas reductions that are imperative to the

      12      state's future.

      13             In short, we have done well, but we can and

      14      will do better.

      15             One metric, existing programs have realized a

      16      private-sector funding leverage of 2 1/2-to-1.  For

      17      every dollar we put in, the project puts in 2 1/2.

      18             We believe that with our new approaches and

      19      our new clean-energy-fund model we can increase that

      20      ratio to 6-to-1.

      21             Likewise, we are going to achieve better bang

      22      for the buck, and one way to measuring the bang is,

      23      how much does it cost to reduce each ton of

      24      carbon dioxide?

      25             Current approaches result in the cost of







                                                                   43
       1      $190.

       2             Our intended future approaches can reach a

       3      level of $50, a reduction of nearly 75 percent.

       4             Besides improving our impact, we're also

       5      committed at NYSERDA to insert -- ensuring that the

       6      customer experience with these programs is

       7      continually improving.

       8             We're focused on a more customer-friendly

       9      approach to our programs, as well as to

      10      administrative interim procedures that facilitate

      11      contracting and other engagement with the market,

      12      and we've already made very good gains in this

      13      effort.

      14             For instance, in our single highest-volume

      15      program, applications for residential solar, the

      16      applications are now approved within 3 days, down

      17      from 28 days at the beginning of 2014.

      18             In energy efficiency, in our home performance

      19      with Energy Star Program, our most significant

      20      energy-efficiency program, approvals now typically

      21      occur on the same day, down from around 13 days in

      22      early 2014.

      23             An application by a homeowner to receive a

      24      free audit can now be completed online by a typical

      25      homeowner in less than five minutes.







                                                                   44
       1             We have trimmed 50 days from the process for

       2      approving projects in our new-construction program,

       3      and we're just getting started.

       4             We've consolidated 17 shop windows, points of

       5      entry into NYSERDA in our commercial programs, down

       6      to one.

       7             We have gone from being 100 percent

       8      paper-based procurement, to being nearly 100 percent

       9      electronic-based procurement, and we're beginning to

      10      roll out electronic contracting and award letters.

      11             And we just started a new program,

      12      New York Prize, which doesn't have any prior

      13      experience so there's no benchmark.

      14             We just turned around our first contract for

      15      that for the Town of Monroe in 10 days.

      16             And there's more we can do, and we're going

      17      to keep doing it.

      18             Finally, as a public-benefit corporation,

      19      NYSERDA understands the need and importance of full

      20      disclosure of its investments made on behalf of the

      21      public, and for transparency in the effectiveness of

      22      our approaches.

      23             Through existing legislative, administrative,

      24      and regulatory requirements, NYSERDA has and will

      25      continue to build a robust reporting regime,







                                                                   45
       1      including financial statements that look back at the

       2      years, annual budgets and plans that look forward,

       3      program reports that are annual and quarterly on our

       4      different programs.

       5             Also, in the State's recent budget language,

       6      we were required to produce more detail on our

       7      operations, so we're going to build on our work to

       8      date with -- to meet these new requirements,

       9      semiannual reports, that include more detailed

      10      reporting, with regional breakdowns by county and by

      11      utility-service territory, for solicitations, for

      12      awards, for expenditures, and for commitments.

      13             And we stand fully prepared to meet these new

      14      requirements.

      15             Thank you.

      16             RICHARD KAUFFMAN:  Senators, I hope you see

      17      that there are technology, market, and customer

      18      forces that are challenging the current grid system.

      19             I hope you will also see that we're embarked

      20      on integrated policies that can turn these

      21      challenges into opportunities.

      22             These policies are pro-consumer, pro-growth,

      23      pro-innovation, and will reduce carbon emissions.

      24             We're dedicated to transparency, to enacting

      25      REV in a public manner subject to comments, review,







                                                                   46
       1      and reporting.

       2             We welcome your feedback, input, and

       3      participation in realizing these goals for the

       4      benefit of all New Yorkers.

       5             So, thank you very much again for the

       6      opportunity to be with you, and we look forward to

       7      your questions.

       8             SENATOR GRIFFO:  Well, thank you all very

       9      much for the presentation.

      10             I also want to welcome:

      11             Senator Liz Krueger, who is a ranking member

      12      of the Senate Finance Committee.  Thank you for

      13      being here;

      14             And, Senator Mike Ranzenhofer, who has joined

      15      us, too, who is also a member of the Senate Finance

      16      Committee.

      17             I know the members have a number of

      18      questions.

      19             I'm going to start with one or two, then

      20      we're just going to bring it down the line, and come

      21      back, because I think this is a great opportunity

      22      for us to -- to have that opportunity to have that

      23      dialogue right now.  Some of it may be repetitive,

      24      but I think it's important to ensure that we have a

      25      complete and accurate understanding of what we've







                                                                   47
       1      discussed here.

       2             Chairwoman Zibelman, you talked about the

       3      AC transmission proceeding.

       4             I know that, originally, there was supposed

       5      to be a conference scheduled for mid-June.

       6             Is that still scheduled?

       7             AUDREY ZIBELMAN:  Thank you, Senator.

       8             There is going to be a conference this

       9      summer.  It will not -- it's not going to be

      10      scheduled in June, but we're going to have it later

      11      this summer.

      12             Our next point in this process, is that the

      13      staff has been reviewing all of the proposals, and

      14      they've been reviewing it from a number of different

      15      versions.  So, we're in the process of doing that.

      16             Staff will be coming out with its

      17      recommendations and its ranking of these proposals.

      18             We're then going to be having conferences.

      19      We expect it will be three days, where each part --

      20      where parties get to present and hear from each

      21      other, and cross-examine, if you will.

      22             And then what -- next, we'll have is some

      23      written comments and reply comments, with the

      24      expectation that, by the end of the year -- before

      25      the end of the year, it will be back in front of the







                                                                   48
       1      commission for a decision.

       2             SENATOR GRIFFO:  So you don't have a specific

       3      date, but you will be bringing it to the relative

       4      parties?

       5             AUDREY ZIBELMAN:  It will be.  We're getting

       6      to that.  We're narrowing it to that point.

       7             SENATOR GRIFFO:  Any reason for the delay?

       8             AUDREY ZIBELMAN:  Just --

       9             SENATOR GRIFFO:  I mean, any specific reason?

      10             AUDREY ZIBELMAN:  -- it is just the

      11      complexity.

      12             When you have 21 different projects, one of

      13      the things that has to be reviewed, for example, is

      14      every project needs to -- will be reviewed for every

      15      hour of the year, across the system, to see its

      16      impact.

      17             Those, in itself, they just take time to make

      18      the computer runs.

      19             We're looking at the economics.

      20             We're looking at how it achieves -- affects

      21      cost.

      22             We're looking at how it achieves the

      23      transfer.

      24             We're looking at other attributes of the

      25      project, such as the environmental impacts.







                                                                   49
       1             All of those things take time.

       2             Normally, you know, you would expect that to

       3      be a multi-year process.

       4             The fact that we're looking at 21 different

       5      projects in a 6- to 8-month period is pretty

       6      phenomenal.

       7             So it's -- I think, from that perspective,

       8      it's right on track, and accelerated.

       9             SENATOR GRIFFO:  And can you continue to

      10      provide us with the status of the cost-benefit

      11      analysis for the REV process?

      12             AUDREY ZIBELMAN:  Yes.

      13             So what we will do -- what we've done, is the

      14      commission did a generic cost benefit on REV,

      15      looking at the -- as I said, the relative advantages

      16      of being able to be more efficient users of

      17      electricity.

      18             We've also required a specific

      19      cost-benefit-analysis approach for every major

      20      investment associated with REV.  And, of course, as

      21      we're looking forward, the utilities will be filing

      22      rate cases, and we'll be looking at the costs and

      23      the benefits in those.

      24             So, all of this will be within the vise of

      25      making sure we're achieving what we want to do,







                                                                   50
       1      which is a more efficient and affordable system.

       2             SENATOR GRIFFO:  And I appreciate you being

       3      so succinct too.  Thank you very much.

       4             AUDREY ZIBELMAN:  Sure.

       5             SENATOR GRIFFO:  You've been great.

       6             Do you anticipate an increase in delivery

       7      rates that would be necessary in order to achieve

       8      the REV, at this point?

       9             I mean, I know you're looking at this, but --

      10             AUDREY ZIBELMAN:  I think that, you know,

      11      it's -- that is an interesting question.

      12             What we're really looking for, frankly, is a

      13      reduct- -- is looking at how it affects overall

      14      bills.

      15             You know, we need to make investment in

      16      delivery.

      17             The analysis we have on a business-as-usual

      18      basis, is that we're talking about a $30 billion

      19      investment that we would have to make just to

      20      maintain the system.

      21             So we're going to need to make investment, in

      22      any event.

      23             The question is, where you make an

      24      investment, and making sure the investment is there

      25      to help reduce the overall bill.







                                                                   51
       1             If, in fact, and, again, it would be

       2      presumptuous of me to say so, that you're going to

       3      see increases in the delivery bill.  They should be

       4      accompanied with reductions in the overall bill.

       5             And I think the ultimate issue is, the

       6      customer pays the overall bill, and what are we

       7      doing there to help make sure electricity as a whole

       8      is affordable?

       9             SENATOR GRIFFO:  Do you see that added in

      10      some form of a surcharge, potentially, on those

      11      utility bills?

      12             AUDREY ZIBELMAN:  No.  We would see it as,

      13      part of the revenue requirements of the utilities is

      14      looking at, how do we make certain that the system

      15      is delivering what we want it to do?

      16             SENATOR GRIFFO:  And do you believe that, if

      17      we have any saving on the commodity side, and avoid

      18      a transmission-delivery cost, that that may be

      19      enough to offset some of those increases,

      20      potentially?

      21             AUDREY ZIBELMAN:  We would expect that.  And,

      22      also, we expect value to customers.

      23             So, you know, one of the things that we're

      24      talking about is creating what we call a "two-way

      25      market."







                                                                   52
       1             So not only are you looking at the potential

       2      of making sure that the investments that are made

       3      are more efficient, we're also looking at the

       4      opportunity for customers to actually get

       5      compensated for being able to supply services to the

       6      grid.

       7             So, net-net, the advantage is, is that we

       8      call them "pro-sumers," is that people who actually

       9      can actively work in the market and look at how they

      10      can manage consumption.

      11             For example, we have businesses or buildings

      12      in New York that have already invested in ice

      13      storage, that allows them to make ice at night,

      14      rather -- and melt it during the day.

      15             Bank of America is one example.

      16             How do they get compensated for that today?

      17      Because that's a huge advantage to the system.

      18             And how do we incent those types of

      19      investments, when people can shift load and help us

      20      reduce costs.

      21             So, we look at this as a combination of,

      22      both, making certain that the resources are more

      23      affordable, or -- and then, also, that people get

      24      paid for the services they provide.

      25             SENATOR GRIFFO:  Thank you.







                                                                   53
       1             I'm going to -- I have a number of other

       2      questions for all the panel, but I am going to turn

       3      to Senator DeFrancisco, and let us go down the line

       4      here with the other members, and then we'll come

       5      back.

       6             AUDREY ZIBELMAN:  Sure.

       7             SENATOR DEFRANCISCO:  This is pretty

       8      complicated stuff, and -- but my head is swirling

       9      around here, so I'm going to try to simplify it as

      10      best I can, because I'm simple-minded.

      11             Mr. Kauffman, first of all, you're the energy

      12      czar.

      13             A plan for energy in New York State, there

      14      was a draft plan a year ago; correct?

      15             There's still a draft plan today.

      16             Has there been public comments, has there

      17      been anything from the community, to try figure out

      18      whether that draft plan is good, bad, or

      19      indifferent?

      20             RICHARD KAUFFMAN:  Does this still work?

      21             SENATOR DEFRANCISCO:  Yes.

      22             RICHARD KAUFFMAN:  So there has been

      23      substantial public comment on the state energy-plan

      24      draft.  My colleague, John Rhodes, can give you more

      25      details on that.







                                                                   54
       1             But the short answer is yes.  And we expect

       2      that that -- that the final draft of the plan will

       3      be released shortly.

       4             SENATOR DEFRANCISCO:  Okay.  But I'd like to

       5      continue with you for a minute.

       6             Is the comment period over now for that draft

       7      plan?

       8             RICHARD KAUFFMAN:  The comment period is

       9      over, yes.

      10             SENATOR DEFRANCISCO:  Okay.  So what is

      11      the -- is there a reason nothing, as far as the

      12      final report, has happened in over a year?  Is there

      13      a rationale?

      14             Is it the concept that REV is now what we're

      15      going towards and, therefore, this draft plan is

      16      going to be substantially changed?

      17             RICHARD KAUFFMAN:  No.  No, no.

      18             I think that, as -- Senator, as you point

      19      out, this is complicated stuff, and so there --

      20             SENATOR DEFRANCISCO:  Yeah, but you're the

      21      czar.

      22             RICHARD KAUFFMAN:  Well --

      23             SENATOR DEFRANCISCO:  I'm just a lowly

      24      senator.

      25                  [Laughter.]







                                                                   55
       1             RICHARD KAUFFMAN:  Well, things didn't work

       2      out so well for the czars.

       3             They worked out better for the senators.

       4                  [Laughter.]

       5             RICHARD KAUFFMAN:  So -- so the -- what the

       6      state energy plan -- we really want the state energy

       7      plan to be quite comprehensive, and to refer to

       8      things that we have been working on.

       9             For example, the commission has asked NYSERDA

      10      to prepare a proposal for support of large-scale

      11      renewables, and so we wanted to be sure that the

      12      state energy plan anticipated or connected to that,

      13      because, otherwise, what happens is, you have a

      14      state energy plan which is incomplete.

      15             So it is not that we -- the concepts that we

      16      have been talking about and pursuing since I've

      17      arrived in the administration over two years ago,

      18      are the same principles and philosophies that we've

      19      been pursuing from the beginning, and so there's

      20      nothing new or surprising in the state energy plan.

      21             SENATOR DEFRANCISCO:  So REV is something

      22      consistent with the Energy Highway, which was what

      23      was announced earlier on in the Governor's

      24      administration?

      25             RICHARD KAUFFMAN:  That's correct.







                                                                   56
       1             SENATOR DEFRANCISCO:  Okay.

       2             So are -- with respect to REV -- well, the

       3      Energy Highway, isn't the main purpose of the

       4      Energy Highway is to deliver high-voltage power

       5      through the major lines throughout the city --

       6      throughout the state?

       7             RICHARD KAUFFMAN:  That's one part of it,

       8      yes.

       9             SENATOR DEFRANCISCO:  Okay.  And is it fair

      10      to say that you need the major lines to fit in all

      11      the local REV components in order to make this work?

      12             RICHARD KAUFFMAN:  That's correct.

      13             SENATOR DEFRANCISCO:  Okay.

      14             And how would you characterize the condition

      15      of the high-powered lines that are on the

      16      Energy Highway?

      17             RICHARD KAUFFMAN:  Of the current system, or

      18      the system that is going to be built?

      19             SENATOR DEFRANCISCO:  No, we don't -- it

      20      doesn't help us, the one that's going to be built.

      21             RICHARD KAUFFMAN:  Right.  I think I've

      22      already said, Senator, that the current grid is

      23      aging and needs to be improved.

      24             SENATOR DEFRANCISCO:  Okay.  If that's the

      25      case, shouldn't we be improving that Energy Highway







                                                                   57
       1      now before it becomes non-usable, since it's going

       2      to take a while to get this REV in place; correct?

       3             RICHARD KAUFFMAN:  Well, so, I think we're --

       4      we are -- I hope that you have not taken away from

       5      any of our comments that we're putting our brake --

       6      putting a brake on building the grid infrastructure

       7      that's going to support the integration of

       8      distributed resources, because that's not true.

       9             SENATOR DEFRANCISCO:  And is there a timeline

      10      that you have now in place that's going to show the

      11      schedule for improving the Energy Highway as you're

      12      studying and implementing REV over a period of

      13      several years?

      14             RICHARD KAUFFMAN:  Audrey, do you want to

      15      talk about that?

      16             AUDREY ZIBELMAN:  Sure.

      17             So we have a number of different projects.

      18             In our Appendix 6, we talk -- Appendix A,

      19      I have a number -- we have a number of projects that

      20      we've listed that the commission has approved around

      21      transmission.

      22             The TOTS projects, were projects that we

      23      identified as --

      24             SENATOR DEFRANCISCO:  Excuse me one minute.

      25      I don't want to cut you off, but, I'm looking for a







                                                                   58
       1      timeline.

       2             All those projects say, by this year we'll

       3      have this; this year we'll have that; this year

       4      we'll have that.

       5             AUDREY ZIBELMAN:  Sure.

       6             So the 2000 -- the TOTS projects, which would

       7      be the 600 megawatts that we're looking to have in

       8      place to protect against in the -- an Indian Point

       9      shutdown, will be in place in 2014 -- '16.  Summer

      10      of 2016.  They've already been approved.

      11             Other projects are already under

      12      construction.

      13             And then on the AC projects, again, because

      14      that's proceeding as still pending in front of me,

      15      the expectation is, is that we will be in a position

      16      to select a winner by the end of this year.

      17             We will then need to go through what's known

      18      as an "Article 7 siting process" which will finalize

      19      the approval process, and then from there you would

      20      begin construction.

      21             So that would take a bit while, but the

      22      objective would be to start, you know, as soon as

      23      possible.

      24             SENATOR DEFRANCISCO:  Okay.  And does your

      25      chart, I didn't study it, but does it show on a map,







                                                                   59
       1      the timelines on the various pieces that you just

       2      mentioned?

       3             AUDREY ZIBELMAN:  It does not.

       4             That is information that I believe we can get

       5      for you --

       6             SENATOR DEFRANCISCO:  I would appreciate

       7      that, because I just want to see where the

       8      deficiencies are likely to be.

       9             Did you have anything to add?  Because

      10      Mr. Kauffman referred to you in a minute.

      11             JOHN RHODES:  He talked about the -- he

      12      talked about the state energy plan and the process.

      13             I will just only echo what he said, which is,

      14      when we received considerable comments, I believe

      15      the number is 50,000 comments, on a broad range of

      16      topics.  And we're presenting a broad range of

      17      views.  Those have been reflected in the plan as we

      18      refine the draft, as has the current thinking that

      19      Richard mentioned, around integrating large-scale

      20      renewables and clean-energy-fund thinking, and

      21      certain aspects of REV that have become more clear

      22      over the time, so that the state energy plan will be

      23      comprehensive and on target when it is issued

      24      imminently.

      25             SENATOR DEFRANCISCO:  Okay.







                                                                   60
       1             And the -- what's difficult for us,

       2      especially during the budget process, is that all of

       3      these various proposals come out, and there's others

       4      that were out there, that never quite got completed

       5      before budget.

       6             So now here we're policymakers, and we're

       7      trying to figure out what's going on.  And, a

       8      plan -- an energy plan is supposed to be in place by

       9      the time the budget is coming out.  And -- or at

      10      least before the end of session.

      11             And what are we supposed to do under those

      12      circumstances to set policy?

      13             Does anybody have a hint for the Senate?

      14             Okay.

      15             I have the same feeling.

      16             It's very difficult to do that.

      17             RICHARD KAUFFMAN:  Was that a question?

      18             SENATOR DEFRANCISCO:  Yeah.

      19             RICHARD KAUFFMAN:  Okay.  Well, we're always

      20      happy to engage at any point with you or your staff,

      21      to give you any details on our thinking about

      22      policy.  We don't have to have a big hearing.  We're

      23      always available.

      24             SENATOR DEFRANCISCO:  That's great, but the

      25      report was supposed to come out in December of 2014;







                                                                   61
       1      correct?

       2             RICHARD KAUFFMAN:  And there's other material

       3      that's available all the time.

       4             I will submit it to you.

       5             SENATOR DEFRANCISCO:  All right.

       6             Now, correct me if I'm wrong, the New York

       7      Green Bank, the New York Sun, are both subsidized by

       8      the taxpayers; correct?

       9             RICHARD KAUFFMAN:  That's not correct,

      10      actually.

      11             SENATOR DEFRANCISCO:  Okay.  How are they

      12      paid for?

      13             RICHARD KAUFFMAN:  The -- these come from

      14      collections.

      15             SENATOR DEFRANCISCO:  "Collections" meaning,

      16      what?

      17             RICHARD KAUFFMAN:  From ratepayers.

      18             SENATOR DEFRANCISCO:  Well, isn't that

      19      subsidized by ratepayers?

      20             RICHARD KAUFFMAN:  Well, when you say

      21      "subsidized" --

      22             SENATOR DEFRANCISCO:  Well, it's helped paid

      23      for by the taxpayers.  In fact, that's where the

      24      money comes from: surcharges.  Correct?

      25             RICHARD KAUFFMAN:  It comes from utility







                                                                   62
       1      bills, yes.

       2             SENATOR DEFRANCISCO:  Okay.  Utility bills

       3      that are paid for by utility consumers?

       4             RICHARD KAUFFMAN:  That's correct.

       5             SENATOR DEFRANCISCO:  Okay.

       6             Now, that being the case, and we're talking

       7      about doing things efficiently, and, hopefully,

       8      lowering the costs for taxpayers, in your

       9      computations, as far as some of these innovative

      10      programs that are trying to be put together, does it

      11      take into account that we want to lower taxpayers'

      12      rates and, somehow, be in a position to stop some of

      13      these additional surcharges?

      14             And, if so, are there any computations

      15      anywhere about what the cost would be of some of

      16      these innovations now that are called "REV"?

      17             RICHARD KAUFFMAN:  Okay.  If I might, and

      18      I think that I said it a couple times during my

      19      remarks, that we're committed to reducing

      20      collections.

      21             And the other thing that I tried to --

      22      I think that you've heard from several of us, is the

      23      objective of our policies, in almost every respect,

      24      is to find a way to improve costs.

      25             So what are the ways in which we can improve







                                                                   63
       1      costs?

       2             It is not just about collections.

       3             We're mindful of the fact that when we

       4      increase collections on customers, we're adding to

       5      customer bills.

       6             And, so, let's start from there, because

       7      that's where you started.

       8             When John Rhodes talked about doing things to

       9      animate markets, he talked about the kind of payback

      10      and the bang for the buck that we expect to get on

      11      those collections.  He talked about an improvement

      12      of the ratio of private-sector funds-to-ratepayer

      13      funds going from 2 1/2 to 6 times, and that's a

      14      measure of getting much more value, so that we

      15      believe that by the policies that NYSERDA is

      16      embarking, we're going to be able to draw in much

      17      more capital from the private sector, do more, while

      18      collecting less from ratepayers.

      19             That's one way in which we're going to,

      20      through our policies, put more money back in the

      21      hands of customers.

      22             When we talk about capital efficiency, as we

      23      said before, those 80 hours, there is capital

      24      inefficiency in the system that ratepayers have to

      25      pay for all year long.  And we have the potential to







                                                                   64
       1      save customers billions of dollars a year through

       2      the policies that we have proposed to -- that we are

       3      proposing here.

       4             So we're absolutely committed in what we're

       5      doing to reduce customer bills in the aggregate,

       6      which is a function of energy efficiency, better

       7      capital efficiency, and reduction in ratepayer

       8      collections.

       9             SENATOR DEFRANCISCO:  And is there any

      10      calculations you made, or pro forma, or anything,

      11      that basically shows how you get into billions of

      12      dollars?

      13             RICHARD KAUFFMAN:  I think you just heard

      14      some calculations that were presented here, and I'll

      15      turn over other comments to Chair Zibelman.

      16             SENATOR DEFRANCISCO:  I mean, are there

      17      calculations?

      18             You're estimating billions of dollars, and my

      19      question is, How did you compute that?

      20             And what were the -- you mentioned the

      21      components, but, is there any estimated calculation

      22      that you have to show that this is real?

      23             AUDREY ZIBELMAN:  Thank you, Senator.

      24             Yes.

      25             So the way that we come up with our







                                                                   65
       1      calculations is that the staff of the Department of

       2      Public Service looks at published information that

       3      comes out of the market -- the wholesale market, and

       4      we look at what the prices of energy are in these

       5      top 100 hours.

       6             And you have to remember that a lot of these

       7      power plants, for example, they will not be run many

       8      of the hours of the year, so they need to make up

       9      one year's worth of revenue requirements in just a

      10      few short hours.

      11             That's what drives the prices up during this

      12      demand, because people have to be able to recover

      13      their costs, and that means that every generator

      14      that's running during that hour gets this highest

      15      price.

      16             That's what we look at, and when we sit and

      17      look at that, and we take a look at the amount of

      18      transmission and the distribution, that's what we're

      19      saying is, if we can make our usage more efficient.

      20             That's not saying that you're not going to

      21      have a bulk power grid, but it's saying you're not

      22      going to have plants that you're going to run.

      23             It would be like running a hotel, that you

      24      say, I'm only going to use the rooms two weeks a

      25      year.  The rest of the year, I'm going to have staff







                                                                   66
       1      sitting there, and I've got to pay for them, but I'm

       2      not going to use it.

       3             That's what we want to make more efficient,

       4      so that's a big piece of those calculations.

       5             We also know, when we move power from a power

       6      plant to a consumption, there are losses in the

       7      system.  These are physical losses.

       8             We calculate those out.

       9             So these are all based on, really,

      10      engineering calculations of what the cost is of

      11      waste in the system that you could avoid by,

      12      basically, making your usage much more efficient.

      13             And, again, we're never going to say that

      14      we're just going to have distributed resources.

      15             We're always going to have a bulk power

      16      system.

      17             The challenge, and this is really what

      18      markets are all about, is how to make it as most

      19      efficient as possible.

      20             That's what we're looking to do with REV.  .

      21             SENATOR DEFRANCISCO:  Okay.

      22             And last question on this point, I'm just

      23      trying -- what I'm looking for, if you can do it,

      24      I'm trying to figure out, we're going to have this

      25      in place, this in place, we've got a timeline -- at







                                                                   67
       1      least that's what we're planning on, a timeline; and

       2      if there's some type of assuming that the timeline

       3      is met, what are the savings?  What is the result of

       4      this plan?

       5             Because it would seem important to know

       6      whether or not the plan has some kind of

       7      calculations behind it, to try to understand that

       8      this is not just, it's going to save billions of

       9      dollars, but when we get this online, we estimate,

      10      this is our estimate on this.  Get this

      11      online...that's the type of thing.

      12             I don't know if you've done that, but it

      13      would seem like something that would make sense.

      14             AUDREY ZIBELMAN:  So, yes.

      15             So let me tell you how we'll work.

      16             So as I said, the next -- once -- now we have

      17      the -- sort of the idea, we want to make it more

      18      efficient.

      19             Now the next question is, How?  Right?

      20             So what we will be doing, what we call our

      21      "Track 2," is identifying real metrics of what we

      22      want to achieve.

      23             So, for example, if we have a metric around

      24      for utilities that say, "We want you to reduce your

      25      peak by a certain amount of megawatts, and we expect







                                                                   68
       1      a certain amount of savings," what we will be doing

       2      is measuring, exactly, did we achieve the goal, and

       3      did we achieve the savings?

       4             And, so, within the utility rate plans, like

       5      we always do, we'll be identifying, what are the

       6      outcomes? and how are we achieving them?

       7             And if we're not achieving them, what are we

       8      going to do?

       9             Because, again, the goal here, of course, is

      10      to make it work better.  And that's -- and if we're

      11      not measuring it, obviously, we shouldn't be doing

      12      it.

      13             SENATOR DEFRANCISCO:  Okay.

      14             Positively, last question.

      15             Mr. Rhodes, there was an order by the PSC,

      16      dealing with the Green Bank, back on December 19,

      17      2013, and this quote caught my eye, and I just think

      18      it's an important quote, along the lines I've been

      19      asking.

      20             "NYSERDA further asserts" -- you're

      21      asserting -- "that this model of public-private

      22      financing will reduce the need for ratepayers to

      23      continue funding grant and incentive programs at the

      24      currently levels.

      25             "The Green Bank will be able to deploy its







                                                                   69
       1      capital in successive rounds of financing, and to

       2      redirect it as the clean-energy financing markets

       3      evolve, without the need for additional rate-based

       4      contributors.

       5             "NYSERDA also states that the Green Bank will

       6      earn sufficient market returns on its investments to

       7      become self-supporting; thus" -- well, there's a

       8      caveat here -- "if successful, the Green Bank may

       9      allow a partial shift away from the subsidy model

      10      for clean-energy funding."

      11             And I assume those assertions were part of

      12      the basis for the ultimate order.

      13             So, from December 19, 2013, has there been

      14      any such savings?

      15             Or -- and, secondly, what calculations did

      16      you use to make that assertion?

      17             JOHN RHODES:  So the assertion was based on

      18      the recognition that if -- so one point was

      19      "self-sustaining" in that assertion, which is, that

      20      once we have the money collected and it's used to

      21      capitalized the Green Bank, and then it goes out to

      22      support a clean-energy project, and the clean-energy

      23      project repays the money, it can go back out again.

      24             So in contrast to other kinds of ways that

      25      NYSERDA disperses money, this money comes back.







                                                                   70
       1             So that's the point about self-sustaining.

       2             Then about -- and then the other point about

       3      self-sustaining is that we need to charge money for

       4      the value that the Green Bank provides to its

       5      partners, two reasons:

       6             One, is to keep the Green Bank whole.

       7             The more important reason, is to make sure

       8      that we're actually providing value, because if

       9      someone is willing to pay for something, then it

      10      probably does have value.

      11             And so those are the bases on which we made

      12      those assertions.

      13             We actually calculated numbers around

      14      leverage and recycling, and other metrics, that are

      15      in the report that's associated -- the business plan

      16      that's associated with those comments.

      17             And we can share them with you.

      18             SENATOR DEFRANCISCO:  That would be good.

      19             And so I'm just trying to figure out, just

      20      for now, was your -- has your assertion panned out

      21      in the last year and a half?

      22             That the taxpayers are less subject to this

      23      program's subsidies, or whatever you want to call

      24      them, and that has panned out over the last year and

      25      a half, since in report?







                                                                   71
       1             JOHN RHODES:  I would say so.

       2             SENATOR DEFRANCISCO:  And you've got some

       3      numbers to show that?

       4             JOHN RHODES:  We can describe where the

       5      Green Bank is in its --

       6             SENATOR DEFRANCISCO:  Well, if you can give

       7      numbers that confirm your assertion, that would be

       8      much more comfortable than knowing where the

       9      Green Bank is.

      10             JOHN RHODES:  Okay.

      11             All right?

      12             Okay.  Thank you.

      13             SENATOR GRIFFO:  Thank you,

      14      Senator DeFrancisco.

      15             We were joined briefly by

      16      Senator Cathy Young, who has now left to go to

      17      another meeting.

      18             I'm also joined here by the ranking member of

      19      the Energy and Telecommunications Committee,

      20      Senator Kevin Parker; and, also, another member of

      21      the Energy Committee, Senator Tom O'Mara.

      22             I want to thank them both for being here too.

      23             I want to quickly, before I turn to

      24      Senator Little, follow up on the Green Bank.  Maybe,

      25      Mr. Kauffman, you can answer this one.







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       1             When you look at the projects that we were

       2      talking about, and I think it was 2014, there were

       3      7 inaugural projects that were identified.  2015,

       4      there was a creamery in Orange County.

       5             Can you give us more specifics on exactly

       6      where we have seen activity there, relative to

       7      projects and financing, beyond that?  Or is that it

       8      so far?

       9             RICHARD KAUFFMAN:  Well, the Green Bank is in

      10      the process of going from the term sheet through to

      11      closing, and continues to work with private-sector

      12      partners that are coming in with new ideas.

      13             And so I think it's in -- I think it's very

      14      important to understand that this is a specialized

      15      finance company.  It's very similar in a lot of ways

      16      to a private-sector finance entity, and, so, in that

      17      it is not in the subsidy business.  And as a result,

      18      it -- these are complex financial transactions that

      19      take a while to close.

      20             This is not unusual.

      21             The other Green Banks that have been set up

      22      takes them about a year to -- from announcement of

      23      transactions to closing; so we're very much on

      24      track.

      25             But I will -- we can share with you, as we've







                                                                   73
       1      shared with the DPS staff, the nature of the

       2      projects, and you can see, with the transactions

       3      that have been announced, exactly how they fulfill

       4      the strategy of the Green Bank, which is to fill in

       5      a financing gap, and to provide much more

       6      substantial leverage on this capital than what the

       7      capital would have been used for in the former

       8      grants.

       9             SENATOR GRIFFO:  And in the initial

      10      capitalization order at the PSC, the bank was to set

      11      up two advisory committees.

      12             Have them -- have they both been established?

      13             And can you give an idea how people are

      14      brought to that advisory committee, who may be on

      15      that, even by segments of industry, or --

      16             RICHARD KAUFFMAN:  John, do you want to talk

      17      about that?

      18             SENATOR GRIFFO:  John?

      19             JOHN RHODES:  I believe that there were two

      20      committees, but only one advisory committee, that

      21      were envisioned by the Green Bank.

      22             SENATOR GRIFFO:  Just to get some idea of

      23      what this is, for people --

      24             JOHN RHODES:  Okay.  So the advisory

      25      committee, which consists of -- includes outsiders







                                                                   74
       1      from the Green Bank who are generally very seasoned

       2      executives with financing-transaction background in

       3      the relevant sectors.  And I believe the membership

       4      of the advisory committee is public, and we can

       5      certainly share it with you.

       6             SENATOR GRIFFO:  And can you tell me how

       7      they're appointed as members the advisory committee?

       8             Who makes that appointment?

       9             How are they selected?

      10             JOHN RHODES:  We have -- it is a -- it is --

      11      there's a nomination process, and, ultimately, the

      12      vetting of those -- of the candidates comes to me,

      13      and I issue the invitation.

      14             SENATOR GRIFFO:  And you're relying on

      15      private investors; correct, to be a part of the

      16      Green Bank?

      17             JOHN RHODES:  Correct.

      18             SENATOR GRIFFO:  And it was established

      19      administratively; correct?

      20             JOHN RHODES:  Yes.

      21             SENATOR GRIFFO:  So, as a result of that, can

      22      we have any assurances of continuity?

      23             What if there was a change, how would that

      24      work, potentially?

      25             JOHN RHODES:  I'm sorry?







                                                                   75
       1             SENATOR GRIFFO:  If it was a --

       2             JOHN RHODES:  A change?

       3             SENATOR GRIFFO:  Yeah, if there was a change

       4      in administration, or something like that, what

       5      ensures that this goes on?

       6             Because if you're relying on private

       7      investors, there has to be some sense of continuity,

       8      obviously.  There's no assurance of that.

       9             Would that cause a reluctance -- I'm just

      10      trying to understand, would that cause a reluctance,

      11      potentially, for private investors?

      12             JOHN RHODES:  The -- I --

      13             RICHARD KAUFFMAN:  Are you talking about with

      14      respect to the advisory board, or with respect to

      15      for the activities of the Green Bank?

      16             SENATOR GRIFFO:  Both, actually.

      17             I mean, the activities of the bank itself,

      18      because it was established administratively, was it

      19      not?

      20             JOHN RHODES:  So I think that one of the

      21      hallmarks of the Green Bank, as of New York Sun, as

      22      of --

      23             SENATOR GRIFFO:  It's not statutory; correct?

      24             JOHN RHODES:  Correct.

      25             -- but we're -- we are -- we are promising







                                                                   76
       1      predictability.

       2             And it's clear that the level of

       3      predictability that we have already established,

       4      with the orders that are in place and the initial

       5      capitalization that is in place, is sufficient to

       6      generate a lot of promising discussions about

       7      transactions, and quite a volume of what is called

       8      "deal flow" --

       9             SENATOR GRIFFO:  All right.

      10             JOHN RHODES:  -- with a serious partner.

      11             SENATOR GRIFFO:  I'm going to turn it over to

      12      Senator Little.

      13             SENATOR LITTLE:  Thank you.

      14             And thanks for all your written comments.

      15             This is probably a huge oversimplification of

      16      the goals of REV, but, is it that, like the

      17      homeowner trying to reduce their demand charges, the

      18      entire state is trying to, through infrastructure

      19      improvements and other means, to reduce the

      20      demand -- high demand that the state has?

      21             AUDREY ZIBELMAN:  That is a wonderful -- is

      22      this on?

      23             That's a wonderful summary.

      24             SENATOR LITTLE:  Okay.  I got it, then.

      25             Thank you.







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       1             But I wanted to talk about the

       2      Energy Highway, and, I represent the North Country,

       3      a lot of rural areas, and we have a lot of wind, and

       4      we're certainly getting a lot of solar.

       5             Somehow, not many of our volunteer fire

       6      departments are loading up with solar panels all

       7      over.

       8             But the biggest problem we have, and what

       9      I've heard, is that the capacity for the

      10      transmission to the areas that really could use this

      11      power isn't there, coming from the North Country.

      12             But, Gil, you mentioned the Messina line.

      13             So, are you expecting that, like, from the

      14      North Country -- Clinton, Franklin county -- that

      15      energy to move to that direction, and then go down

      16      towards the Utica area?

      17             Is that --

      18             GIL QUINIONES:  So we have a line called

      19      "Moses-Adirondack," that goes from Messina --

      20             SENATOR LITTLE:  I saw both of those.

      21             GIL QUINIONES:  -- also called "Taylorville

      22      line."  It goes from Messina, headed about halfway

      23      towards Utica.  It's 73 years old, and it requires

      24      upgrade and replacement.

      25             And while we're doing that, we are also







                                                                   78
       1      working with all the wind farms that are connecting

       2      to our grid to make sure that when they build their

       3      substation, that they can effectively connect to

       4      that line that currently exists, and when we rebuild

       5      it, it can carry more of those -- power from the

       6      wind farms from the North Country.

       7             We're also looking at upgrading our line that

       8      goes east-west, actually interconnects us to

       9      Vermont.  It's called our "PV 20 line," part of our

      10      life extension and modernization.  And that upgrade

      11      should also help the wind farms in the

      12      North Country.

      13             The last thing that we're doing up there's

      14      we're separating circuits and sectionalizing our

      15      transmission system so that we avoid the bottlenecks

      16      that you're talking about.

      17             So we have done one, we call the

      18      "Moses-Willis tower separation" of the circuits, and

      19      sectionalizing that circuits.

      20             Over time, we also need to apply technology

      21      in that process.  And we're installing a lot of

      22      sensors to be able to really figure out how much

      23      power the lines are carrying at any moment.  That's

      24      called "dynamic line-rating technology."

      25             And so we're doing current technology, and







                                                                   79
       1      exploring better technology over time, to solve the

       2      problems that you have.

       3             SENATOR LITTLE:  And isn't there a line that

       4      comes, like, directly south of

       5      Plattsburgh-Gary (ph.)?  It's south, almost like the

       6      Northway, or something, big transmission line?

       7             But is the capacity -- the basic question is,

       8      is the capacity beginning to improve?

       9             And I know you're saying --

      10             GIL QUINIONES:  Yeah, right now there is

      11      still capacity to integrate wind in the

      12      North Country.

      13             SENATOR LITTLE:  Okay.

      14             GIL QUINIONES:  But it's -- we need to

      15      improve it.  You know, as we replace aging

      16      infrastructure, instead of just replacing like in

      17      kind, our view is, we should replace it with the

      18      most effective and efficient technology out there.

      19             SENATOR LITTLE:  Because there is interest in

      20      more wind in the North Country, and there's

      21      certainly a lot more capacity for wind farms, and

      22      they have helped in agricultural areas.

      23             They've certainly helped to keep taxes down,

      24      as many of those areas have lost a lot of other

      25      businesses, and all.







                                                                   80
       1             The other question I had for you on the

       2      transmission is the Champlain project.

       3             I keep seeing that they're moving along, and

       4      moving along.

       5             Our biggest issue with the Champlain project

       6      is it's from Quebec to New York City, I understand,

       7      to replace the Indian Point power that New York City

       8      may eventually not have, but no one can connect into

       9      it.  There's no connection ability from any of these

      10      power sources in the North Country.

      11             But is it online, as the newspapers are

      12      reporting?

      13             And do you expect it's going to be able to be

      14      completed?

      15             RICHARD KAUFFMAN:  The project has all its

      16      permits from the state and federal entities, and

      17      it's really, at this point, a market decision by the

      18      developer as to whether or not that project --

      19             SENATOR LITTLE:  The cost is enormous, isn't

      20      it?

      21             RICHARD KAUFFMAN:  That's for the developer

      22      to worry about, and to figure out whether the

      23      developer wants to proceed based upon the market.

      24             SENATOR LITTLE:  Uh-huh.  Okay.

      25             All right.  Thank you.







                                                                   81
       1             That's on the transmission.

       2             Another one, even in Warren County, where we

       3      have a double H camp wanting to have more solar to

       4      operate the camp.  It only operates -- well, it

       5      operates part-time in the winter, but a big thing in

       6      the summer.  And, you know, National Grid doesn't

       7      have the transmission-ability lines in there.

       8             So that's a huge issue, going forward.

       9             The other one would be, to the chairman of --

      10      Zibelman, on the PSC, wind, solar, water, very, very

      11      important renewables, and they're a great fit for my

      12      communities in the North Country.  But so is

      13      biomass, and I don't see lot of attention given to

      14      biomass and a lot of consideration.

      15             Actually, we have one project, a plant in

      16      Chateaugay.  It's a small plant.  I can remember

      17      getting it up and running, or getting something for

      18      it, when I first got into the Senate, telling people

      19      I had 18 jobs.  And, of course, people from

      20      Long Island looked at me, like, so what?  McDonald's

      21      has 18 jobs.

      22             But in the North Country it is an important

      23      thing.

      24             And they -- I thought, they're looking to get

      25      a maintenance tier support.  And I understand they







                                                                   82
       1      do have a purchase agreement, or a possible purchase

       2      agreement, for the power they produce, but they

       3      haven't made it to the PSC meetings yet.

       4             Do you have any status on that you could

       5      share?

       6             AUDREY ZIBELMAN:  I know that both sides

       7      have -- Chateaugay and the purchaser have met with

       8      staff.

       9             Staff is reviewing it, and we expect it, you

      10      know, to be brought in front of the commission, but

      11      I don't -- I can't you give you a specific date.

      12             But it's -- I know it's in the works, and

      13      staff is working it.

      14             SENATOR LITTLE:  That's really important to

      15      that community, in that we lost the

      16      Chateaugay Correctional Facility.  It's closed.

      17             And, really, 18, 20, 30 jobs are like

      18      500 jobs someplace else.

      19             So, as soon as that could get before the PSC,

      20      I would really appreciate it, and hope that that can

      21      happen.

      22             AUDREY ZIBELMAN:  Okay.  Thank you.

      23             SENATOR LITTLE:  All right.

      24             And thanks for all the information.  You

      25      certainly have provided more reading for us.







                                                                   83
       1             So, good.  Thank you.

       2             SENATOR GRIFFO:  Thank you, Senator Little.

       3             Chair Zibelman, I might want to just follow

       4      up on that.

       5             What type of environmental benefits do you

       6      envision being monetized to help support the build

       7      out of the distributed energy resources?

       8             AUDREY ZIBELMAN:  Senator Griffo, one of the

       9      things that we asked our staff to do was to develop

      10      a model for a benefit-cost analysis, including, you

      11      know, all the value streams associated with

      12      distributed energy resources, some of the technical

      13      issues I talked about, but also to take a look at

      14      the environmental attributes and how we would model

      15      those into the system.

      16             The staff is now in the process of developing

      17      what we -- a white paper, a concept of an approach.

      18             We've asked them to file that in front of the

      19      commission.  As we always do, we will solicit

      20      comments and input.

      21             I'm sure we will get lots from all sides, and

      22      then the commission will make a determination about

      23      how best to model all -- you know, all relevant

      24      attributes when we're comparing one from another.

      25             SENATOR GRIFFO:  Would one of the benefits be







                                                                   84
       1      lower carbon emissions, potentially?

       2             AUDREY ZIBELMAN:  That would be one of the

       3      things that I know staff is looking at, how to model

       4      that in.

       5             There's, obviously, complexity associated

       6      with that because we're part of RGGI and how we do

       7      it.

       8             SENATOR GRIFFO:  And then would we place that

       9      same value of the carbon emissions if we were

      10      looking at this at both the ISO and at the utility

      11      distribution level too?  Would that be considered as

      12      a possibility?

      13             AUDREY ZIBELMAN:  It would -- in a

      14      benefit-cost analysis you would take a look at all

      15      the benefits, all the costs, and make a

      16      determination on how to best move forward.

      17             SENATOR GRIFFO:  Okay.  Thanks.

      18             Senator Ranzenhofer.

      19             SENATOR RANZENHOFER:  Thank you.

      20             First of all, thank you, Chairman Griffo and

      21      Chairman DeFrancisco, for convening the hearing, and

      22      the panel for obviously being here today.

      23             You know, a lot of times when we're dealing

      24      with subjects, we say this is not rocket science.

      25             But this actually is rocket science.  This is







                                                                   85
       1      very complicated stuff.  So, I'm still trying to get

       2      my arms around this.

       3             So I have some very -- questions that are

       4      specific to my district.

       5             I represent the Buffalo-to-Rochester area,

       6      and the concerns I hear mainly from people that are

       7      involved in manufacturing is not only the high cost

       8      of energy, but the peaks and valleys, where, all of

       9      a sudden, they will get an energy bill where it just

      10      doubles their costs.

      11             And I just wanted to know, you know, what you

      12      have going on in my area, in that area, which is

      13      going to improve there -- there a lot, not just for

      14      themselves, but, obviously, the more successful they

      15      can be, the more people they can employ.

      16             You know, we -- you know, we're somewhere

      17      between Senator Little's district and the

      18      Long Island district in terms of how many jobs are

      19      important.

      20             Every job is important, but, you know, a lot

      21      of these companies would like to add jobs, but

      22      their -- the predictability of their energy costs

      23      really, you know, cause them to hesitate.

      24             So if you can just update me on what you have

      25      going on in my area, and then I have some just







                                                                   86
       1      general questions for you after that.

       2             GIL QUINIONES:  Senator, as you know, the

       3      Power Authority is right there in Western New York.

       4             We have economic-development programs that

       5      provide low-cost power (hydropower) to attract and

       6      retain businesses in -- within the 30-mile radius of

       7      the Niagara Power Project.

       8             We have two programs, Expansion Power, and

       9      Replacement Power, as well as the statewide program

      10      Recharge New York.

      11             So that's one tool --

      12             SENATOR RANZENHOFER:  I'm not really talking

      13      about programs.

      14             I'm talking about in terms of updating

      15      systems.

      16             GIL QUINIONES:  Oh.

      17             And -- so aside from that, one of the areas

      18      that we're looking in Western New York is, when

      19      we -- it's time for us to upgrade, you know, life

      20      extension and modernization of our transmission

      21      system in that area, one of the -- the focus that

      22      NYPA has is, how do we make the system more robust

      23      and more effective and efficient?

      24             So, we're in the middle of planning that.  We

      25      do not have a specific project to present to you







                                                                   87
       1      right now.

       2             We are evaluating options, but as we narrow

       3      down those options, we will be happy to brief you

       4      about of them.

       5             SENATOR RANZENHOFER:  And what type of

       6      timeline are we talking about, kind of going back to

       7      some of Senator DeFrancisco's questions?

       8             You know, when I go back into the district

       9      and I say, you know, I was in a hearing today, and

      10      advised by the panel members that they're working on

      11      projects, and, you know, you'll let me know when you

      12      have it, I mean, what kind of timeline are we

      13      talking about where they can actually see some

      14      reduced energy costs based on what you're doing?

      15             GIL QUINIONES:  Well, the selection should be

      16      done this year of what project we would propose to

      17      do.

      18             After that, there is a process that we have

      19      to go through with the Public Service Commission,

      20      where, if it requires siting with the New York

      21      Independent System Operator and the federal

      22      Energy Regulatory Commission.

      23             Typically, a transmission project, depending,

      24      if it's a new project, it can be five years to

      25      seven years.  But if it's just a modification, say,







                                                                   88
       1      application of smart-grid technology on the existing

       2      system, it can be a lot shorter, similar to what

       3      we're doing with the Marcy South line, the one that

       4      I described, that emanates from Marcy, all the way

       5      to the Lower Hudson Valley.

       6             So depending on the final design scheme that

       7      we come up with, it could be two years.  It could be

       8      five to seven years if it requires siting and it

       9      requires to go to the federal regulatory process.

      10             SENATOR RANZENHOFER:  Okay.  And is there

      11      anyway of expediting that, or is that a pretty

      12      standard timeline that you just referred to?

      13             GIL QUINIONES:  We always try to expedite it,

      14      but it's a public process and it's a regulatory

      15      process.

      16             SENATOR RANZENHOFER:  Okay.

      17             Mr. Kauffman, in -- I was reading through

      18      your comments today, and you had mentioned in here

      19      that the average household pays $2500 per year for

      20      energy.

      21             So when all is said and done, you know, if

      22      someone who's watching this out wherever they're

      23      watching it, you know, what do you expect the

      24      average household energy cost to be as a result of

      25      everything that you're doing, five years down the







                                                                   89
       1      line?

       2             If it's $2500 per year right now, you know,

       3      when I tell my constituents, when I go back to the

       4      district, that, you know, they're doing all these

       5      things.  Right now you're paying $2,500 a year.  In

       6      five years you are going to pay....

       7             You know, what is that number going to be, so

       8      somebody has some, you know, comfort that all of

       9      this is going to have significant savings for them?

      10             RICHARD KAUFFMAN:  Well, thank you, Senator,

      11      for the question.

      12             I think what I'd like to do is to come back

      13      with you, to give you, on a household basis, that

      14      exact number, the calculation of that number.

      15             SENATOR RANZENHOFER:  Well, I mean, you

      16      mentioned it in your testimony here.

      17             I mean, is there -- I mean, is there some

      18      number that you are looking to achieve after all is

      19      said and done?

      20             RICHARD KAUFFMAN:  Well, we're -- we are

      21      looking to achieve very substantial cost savings, as

      22      we've talked about, from the different areas of both

      23      energy efficiency and improved capital efficiency

      24      and reduction in collections.  I mean, those are in

      25      the aggregate.







                                                                   90
       1             And, so, you're asking for a household

       2      number.

       3             I'd like to take that and reflect on that and

       4      return to you.

       5             SENATOR RANZENHOFER:  Okay.  I mean, do you

       6      have in terms of a percentage?

       7             I mean, you're going through this process.

       8             I mean, is there some -- you know, and before

       9      you start the process, I imagine that you list your

      10      goals, and, actually, you know, you list them here,

      11      of more affordable energy; you know, lower the cost;

      12      improve the aging infrastructure.

      13             You know, you have four or five goals or

      14      objectives that you're trying to achieve.

      15             So if -- you know, for instance, if the

      16      average energy household is $2500 per year right

      17      now, and you were to say, "Well, you know, we hope

      18      to get it down, you know, to $2450," someone looking

      19      at that may say, Well, you know, that's not really a

      20      significant savings.

      21             So, when you go into the process, I mean, do

      22      you have a thought in mind of where you want to be

      23      at the end of the day?

      24             I mean, you very clearly know where you are

      25      right now.  You have said so in your written







                                                                   91
       1      testimony.

       2             I mean, where are you trying to get to, you

       3      know, other than -- I know you're using "significant

       4      savings," but, you know, an average person hearing

       5      that, Well, what does that mean?

       6             And that's what I'm trying to get an

       7      understanding, so when I go back into my district,

       8      I can tell them, you know, what -- you know, what is

       9      a "significant savings" for -- you know, for them.

      10             I mean, what does the energy czar feel a

      11      "significant savings" is to make this all

      12      worthwhile?

      13             I mean, I know there are other goals to

      14      modernize, and, you know, clean energy, and things

      15      like that.

      16             But in terms of, on the financial side, you

      17      know, what are you really trying to accomplish at

      18      the end of the day in terms of savings?

      19             Whether you get there or not is another

      20      story, but, you must have some sort of idea of where

      21      you're trying to get at the end of this process.

      22             RICHARD KAUFFMAN:  Well, again, Senator,

      23      I hope we're not talking past each other because, of

      24      course, we've -- and here in our comments we've

      25      talked about a number of different numbers, about,







                                                                   92
       1      improved, what each percentage increase in capacity

       2      utilization means.

       3             I talked about 220 to 330 million dollars for

       4      every percentage point.

       5             Chair Zibelman talked about a reduction of

       6      energy costs for -- for shaving the peak of the top

       7      80 hours.

       8             So, we absolutely have calculations in the

       9      aggregate.

      10             And you're just asking us to -- which I think

      11      is fair, to come up with it, translate it, by

      12      household.

      13             And so as I said, we're happy to take that

      14      homework assignment back and revert to you.

      15             SENATOR RANZENHOFER:  Okay.  So I guess today

      16      I'm not going to get a number from you.

      17             RICHARD KAUFFMAN:  Right.

      18             SENATOR RANZENHOFER:  That would be fair to

      19      say.

      20             Today, anyway.

      21             Okay.

      22             Another question I have for you, and this is

      23      just really for my own information, you talk about,

      24      you know, "more and more New Yorkers are putting

      25      solar on their roofs," and, "the costs are coming







                                                                   93
       1      down significantly."

       2             So I drive through my district, and maybe,

       3      you know, this is a statewide thing, I just don't

       4      see, you know, just from my own observation, you

       5      know, more and more people using solar.

       6             Now, again, I don't know what you mean in

       7      terms of number, you know, "more and more

       8      New Yorkers."

       9             You know, so, obviously, if you had two

      10      people one year, and you had five people the next

      11      year, that would be more, but I don't think that's

      12      what you're referring to.

      13             So, I mean, what type of numbers are -- do

      14      you refer to when you say "more and more New Yorkers

      15      are using solar"?

      16             Because the second half of that question is,

      17      you know, when I -- when we talk about it just out

      18      in the community, the general comment is, Well, if

      19      I am, you know, this many years old, and I'm going

      20      to have the house for this amount of time, and this

      21      is the cost, you know, am I going to be able to

      22      recoup my investment?

      23             And the comment is that, very often, Well,

      24      it's still very expensive, and I would have to live

      25      here for, you know, 20 years.  And I think the







                                                                   94
       1      average person owns a home for 7 years.

       2             So I'm trying to -- you know, if you could

       3      just tell me, or define for me, you know, what is

       4      the increase in the usage of solar on the roofs?

       5             And what has been the, what you refer to, you

       6      know, the cost of these distributed solutions?

       7             One of them, I presume, is the roofs are

       8      coming down off at an exponential rate.

       9             So where -- you know, where were we? where

      10      are we now? in terms of this exponential reduction

      11      in cost, and this increase in people using solar on

      12      the roofs?

      13             Because I -- just my own personal experience

      14      of being in my district, I just don't see that.

      15             RICHARD KAUFFMAN:  You must have a different

      16      district than Senator Little, because she just

      17      talked about --

      18             SENATOR RANZENHOFER:  Yeah.

      19             RICHARD KAUFFMAN:  -- you must not have as

      20      many firemen in your district.

      21             SENATOR RANZENHOFER:  Well, we do have a lot

      22      of firemen, and we do have a lot of firehouses.

      23             But that's the beauty of New York State, is,

      24      every district, and, you know, I can't tell them,

      25      Well, in Senator Little's district they're doing







                                                                   95
       1      this.

       2             People want to know what's going on in my

       3      district when I'm there.

       4             RICHARD KAUFFMAN:  Of course.

       5             SENATOR RANZENHOFER:  So if you could --

       6             RICHARD KAUFFMAN:  Well, actually what

       7      I would like to do is turn this to my colleague

       8      John Rhodes who can tell you more -- he did talk in

       9      the aggregate, again, about the pipeline of solar in

      10      the state, and so he can talk to you about the

      11      progress that we're making with New York Sun.

      12             SENATOR RANZENHOFER:  Good.

      13             Okay.  Thanks, John.

      14             JOHN RHODES:  So I think I mentioned in my

      15      testimony that we've already seen a doubling of

      16      installations from last year to this year.

      17             So, this year -- sorry -- in 2014 we

      18      installed over 100 megawatts of solar, which is

      19      double what it was the prior year.

      20             We have 450 megawatts of solar in the

      21      pipeline.  That means it will be built out over

      22      time.

      23             New York Sun, I -- it would be reasonable to

      24      think that by the time we're done with New York Sun,

      25      8 or 10, or 6, years from now, we're estimating that







                                                                   96
       1      the run-rate will be around 500 megawatts per year.

       2             So it's just a -- it's not exponential, but

       3      it's a 5x, 6x multiplication of what's happening

       4      now.

       5             I want to caution that not all solar happens

       6      on rooftops, so some of it will be, you know, larger

       7      installations, ground-mounted, and the like.

       8             But, five -- but those are meaningful

       9      numbers.

      10             The other point I would make is that one of

      11      the really strong developments in solar is the

      12      advent of a -- of financing, which is really turned

      13      the calculation from, I have to buy the solar array

      14      and put it on the roof and wait for 20 years, or

      15      10 years, of cost savings to pay me back, to one

      16      where it's financed.

      17             It's actually no money down, or very little

      18      money down, and I'm cash-positive from day one.

      19             And that is, in fact, one of the, you know,

      20      really promising developments, in terms of business

      21      model, that is leading to the acceleration of solar.

      22             SENATOR RANZENHOFER:  Okay.  But --

      23             JOHN RHODES:  I can give you more numbers,

      24      and I will do so, about the progress of the program.

      25             SENATOR RANZENHOFER:  Okay.  And that's the







                                                                   97
       1      exponential reduction in terms of the financing, as

       2      opposed to the capital outlay in the beginning?

       3             JOHN RHODES:  I think so, yes --

       4             RICHARD KAUFFMAN:  No, I'm sorry.

       5             There's been significant cost declines in the

       6      panels, and those cost declines have been seven --

       7             AUDREY ZIBELMAN:  6 to 8 percent a year.

       8             RICHARD KAUFFMAN:  -- yeah, it's 6 to

       9      8 percent per year, but it's -- but on a compound --

      10      that's true over a long period of time.  But I think

      11      it's something, like, 70 or 80 percent the last

      12      3 years.

      13             I mean, enormous cost declines, and then --

      14      and those are the panel costs.

      15             And then you have the other costs of

      16      installation and financing, and those costs have

      17      gone down as there's more and more installation.

      18             And beyond the solar, and this is the point

      19      about the other distributed solutions, battery costs

      20      are declining -- also declining rapidly.

      21             The thing that's really important to

      22      understand, and I think members of your district,

      23      the people that are in the manufacturing business,

      24      will understand this, is that, that you're right,

      25      that when you look at the penetration in the markets







                                                                   98
       1      in the aggregate, these are small penetrations, but

       2      because they're growing rapidly, the economics that

       3      come from manufacturing things at scale are

       4      enormous.

       5             And so that's one of the things that we're

       6      seeing as the solar industry and as the battery

       7      industry begin to get to scale, the

       8      manufacturing-cost declines are really enormous.

       9             And so that's one of the things that we're

      10      trying to anticipate and prepare for in our policy.

      11             It's not that we're trying to -- as I said

      12      before, it's not that we're trying to create a

      13      market.

      14             We're trying to create a framework so that we

      15      wind up not costing ratepayers a lot more money for

      16      building an infrastructure that can't take into

      17      account the changes that are -- that are coming.

      18             SENATOR RANZENHOFER:  Okay.  Thank you.

      19             My thanks to the panel.

      20             And thank you, Chairman.

      21             SENATOR GRIFFO:  Thank you, Senator Nozzolio.

      22             Gil, you talked about --

      23             SENATOR RANZENHOFER:  Senator Nozzolio?

      24                  [Laughter.]

      25             SENATOR GRIFFO:  I mean, Senator Ranzenhofer.







                                                                   99
       1             Senator Nozzolio's in the other room.

       2      I just --

       3             SENATOR RANZENHOFER:  I don't know.  I don't

       4      know how to take that.

       5                  [Laughter.]

       6             SENATOR GRIFFO:  You see now, you talked

       7      about czars.  But I'm a Senator from Rome, and we've

       8      had some tough times in the Roman Senate.

       9             SENATOR RANZENHOFER:  You know, I do have to

      10      leave for another meeting, so don't take any

      11      offense.

      12                  [Laughter.]

      13             SENATOR GRIFFO:  Gil, would you consider

      14      hydro an important part of clean energy?

      15             GIL QUINIONES:  Hydro --

      16             SENATOR GRIFFO:  Hydropower, yes, the

      17      water -- hydro --

      18             GIL QUINIONES:  Hydropower is clean energy,

      19      of course.

      20             NYPA is the largest, you know, state-owned

      21      public power.  70 percent of what we produce is

      22      clean hydroelectric power.

      23             SENATOR GRIFFO:  And we talked today about,

      24      you know, the Energy Highway was the beginning of

      25      this process, along with Reforming the Energy







                                                                   100
       1      Vision, right now.

       2             What's your belief -- you've been around for

       3      a long time -- I mean, are we making the progress

       4      needed in the Energy Highway?

       5             I mean, should we be accelerating and

       6      investing more right now to build those lines?

       7             I know you have a number of projects you've

       8      talked about, and when we talk about the sources of

       9      clean energy and hydro being very important.

      10             GIL QUINIONES:  We are on a good path.

      11             I mentioned about the NYPA projects.

      12             Chairwoman Zibelman talked about what -- the

      13      proceedings that she -- they have at the PSC with

      14      the investor-owned utilities and private-sector

      15      developers.

      16             I think we're on a good path.

      17             We need to keep going and keep the momentum

      18      moving forward.

      19             SENATOR GRIFFO:  Senator Krueger.

      20             SENATOR KRUEGER:  Thank you, Mr. Chair.

      21             I want to thank all the panelists.

      22             I apologize for coming in late.  Session ran

      23      longer than we thought.

      24             I've read through your testimony, and, I've

      25      listened to my colleagues' questions, and they've







                                                                   101
       1      covered many of the questions I think we would all

       2      have around your sort of broad assignment, except

       3      for the part of the assignment which is reduction of

       4      carbon emissions.

       5             So yesterday some of us held a hearing on

       6      climate change in New York, and there were a series

       7      of scientists who testified, and when I asked them

       8      what the sort of number one and two things the State

       9      of New York could be doing to help address issues of

      10      climate change and the impacts it's having on the

      11      state now and in the future, I was basically told

      12      reduction of carbon dioxide emissions (CO2), and

      13      that that was heavily from both vehicles and

      14      buildings, so that we had to do significant

      15      reduction.

      16             So, in all of the proposed changes, and your

      17      proposals are large and will, no doubt, be very

      18      impactful, and they're obviously complicated, and

      19      people have different feelings about different parts

      20      of what you've proposed so far, and I am also

      21      looking forward to your report come June, and more

      22      detail, what are we doing about ensuring a

      23      continuation beyond the end of 2016 for large-scale

      24      renewable initiatives, going forward?

      25             Because we have a sunset of the renewable







                                                                   102
       1      portfolio standards, and I don't know whether part

       2      of your grand plan for the state includes new

       3      commitments to meeting renewable and sustainable

       4      standards of energy, going forward.

       5             RICHARD KAUFFMAN:  So, thank you very much,

       6      Senator Krueger, for your question, and for your

       7      ongoing commitment to climate-change issues.

       8             So, you know, there's a lot in what we're

       9      doing that will accelerate our progress towards

      10      reducing carbon emissions.

      11             So the system, as it's currently structured,

      12      we talked about how capital inefficient it is, and

      13      how expensive it is, and getting more expensive for

      14      customers, and why we want to build this integrated

      15      grid, because it will reduce costs, but it will also

      16      improve energy efficiency significantly, because we

      17      need to move beyond, frankly, the programs that we

      18      have had in place because they're not doing enough.

      19             We have to accelerate progress towards

      20      climate change.

      21             And so this is one of these, I think, good

      22      things, where the environment and the economy are

      23      often cast as in opposition.

      24             This is one of the cases where, by the things

      25      that we're going to do are not only going to save







                                                                   103
       1      customers money and promote economic growth, it's

       2      going to have the effect of deploying more renewable

       3      energy and deploying more energy efficiency, and

       4      creating markets of these things.

       5             Now, with respect to the large-scale

       6      renewables, I think we did briefly touch on that at

       7      a couple of points.

       8             So, there's an options paper that will be

       9      advanced in the next -- by June 1st, that will

      10      provide a lot of clarity, as to at least a point of

      11      view, as to how we should support large-scale

      12      renewables in the state.

      13             SENATOR KRUEGER:  And the State of New York

      14      has a committed goal of 80 percent

      15      greenhouse-gas-emission reduction below 1990 levels

      16      by 2050.

      17             That was an executive order, Number 24.

      18             Are we on target for that?

      19             Any chance we can get there before 2050?

      20             How do your, you know, big-picture, big-scale

      21      plans, tie into meeting that target?

      22             SENATOR GRIFFO:  John, do you want to?

      23             JOHN RHODES:  We believe the directions we're

      24      proposing put us on track to that target.

      25             We say that, recognizing that we need to







                                                                   104
       1      do -- as I think you've heard throughout the panel,

       2      that we need to do more than we've been doing.

       3             We need to find a way to make faster progress

       4      and do so with more impactful use of dollars.

       5             SENATOR KRUEGER:  And my -- some of my

       6      colleagues asked you some of the specifics around

       7      the Green Bank and long-term, you know, I guess, the

       8      ability to ensure that it can continue as an

       9      investment vehicle to move big green projects

      10      forward.

      11             Is there anything that would prevent the

      12      state pension funds from being invested in green

      13      projects through the Green Bank?

      14             Or is the absence of statute leave you in

      15      a -- like an inability to actually come up with that

      16      answer?

      17             RICHARD KAUFFMAN:  Well, I don't know about

      18      the specifics of the State.

      19             One of the things that we -- since we are not

      20      in the subsidy business, we are originating assets

      21      that are -- they're not rated assets from a rating

      22      agency, but there would be investment-grade type of

      23      assets for those that are financially-oriented, that

      24      would generate a return of 67 percent, which is a

      25      pretty good interest rate for investment-grade type







                                                                   105
       1      of assets.

       2             So there are -- there have been some

       3      conversations from different entities that have

       4      said, Can we -- is there an opportunity for us to

       5      participate?

       6             And so, you know, the answer is, you know,

       7      possibly.

       8             That would be something that we would

       9      consider doing, although nobody has come forward to

      10      give us any money as of yet.

      11             But the more funds that we would have would

      12      mean more opportunities to do more.

      13             SENATOR KRUEGER:  To oversimplify, the idea

      14      of the Green Bank is that there will be a mechanism

      15      where private investment can be directed at energy

      16      projects that meet the State's goals, but also are

      17      both energy efficient, sustainable, and, of course,

      18      hopefully, lower the cost, with more options in the

      19      state of New York for consumers?

      20             RICHARD KAUFFMAN:  That's correct.

      21             SENATOR KRUEGER:  That's correct.

      22             So I am one of the people who actually thinks

      23      the State of New York ought to be divesting from

      24      fossil fuels with our pension funds.

      25             That is a controversial issue, and not a







                                                                   106
       1      question for you per se.

       2             But one of the questions I get, Well, then,

       3      what would you have them invest in instead that

       4      addressed, you know, a better outcome?

       5             And I think perhaps one of the answers are,

       6      energy projects that meet sustainability and

       7      climate-change targets.

       8             But I'm not actually proposing today, okay,

       9      everybody, you know, write a statute that allows

      10      that, but maybe write a statute that allows that

      11      possibility for pension funds to be able to be

      12      invested in large-scale, good public-policy goals

      13      here in the state of New York for energy.

      14             Say, a proposal, as opposed to a question for

      15      you.

      16             I know someone answered the question before

      17      about alternative energy to replace Indian Point.

      18      I think there was a specific answer, but I think

      19      I missed it.

      20             What -- are -- is the State of New York

      21      committed to closing Indian Point at this time?

      22             Do you have a time frame, and a replacement

      23      strategy?

      24             RICHARD KAUFFMAN:  So the Governor has

      25      repeatedly said that he wants to close Indian Point.







                                                                   107
       1      Even before he was Governor he was saying that.

       2             SENATOR KRUEGER:  Yes, I remember that.

       3             RICHARD KAUFFMAN:  So as you know, Entergy,

       4      who's the owner and operator of Indian Point, is

       5      seeking a 20-year license from the NRC.  And the

       6      State opposes this relicensing, and we are in

       7      litigation on multiple fronts, opposing the

       8      relicensing, and this involves state entities,

       9      including the Department of State, DEC, and the

      10      Attorney General's Office.

      11             SENATOR KRUEGER:  And what is your plan for

      12      replacement of the energy?

      13             RICHARD KAUFFMAN:  So in terms of

      14      replacement, so the State has done a contingency

      15      plan, and so the good news behind that contingency

      16      plan is that there are lots of developers that are

      17      prepared to commit capital to provide replacement

      18      power.

      19             And as we were just talking about, the REV

      20      policies will encourage energy solutions across the

      21      state to offset impact of Indian Point shutdown.

      22             SENATOR KRUEGER:  Thank you.

      23             Mr. Chair.

      24             SENATOR GRIFFO:  Thank you, Senator Krueger.

      25             Mr. Kauffman, as the core load increases







                                                                   108
       1      downstate relative to natural gas services, do you

       2      anticipate that there may be need for an increased

       3      pipeline capacity into that region?

       4             RICHARD KAUFFMAN:  Okay, I didn't hear -- I'm

       5      sorry, I didn't the first part.

       6             SENATOR GRIFFO:  The core load increases in

       7      the natural gas services.

       8             RICHARD KAUFFMAN:  Oh, the core load.

       9             I think that I'll turn that over to

      10      Chair Zibelman.

      11             AUDREY ZIBELMAN:  Yes.

      12             So, one of the things that we are actually

      13      doing, that we talked a little bit about in our

      14      testimony, is integrated planning around both

      15      natural gas and electricity.

      16             So we certainly think that, from the economic

      17      perspective, additional pipeline capacity into the

      18      state will be useful.  Right now, the state has a

      19      pipeline capacity.  It gives us an advantage of

      20      low-cost natural gas.

      21             And that as we increase, really, demand for

      22      natural gas as a resource, that's necessarily going

      23      to give us an opportunity to look at investments.

      24      And there are pending investments now in front of

      25      the DEC.







                                                                   109
       1             The commission itself, this commission,

       2      doesn't approve that.  That's more of a DEC-FERC

       3      issue.

       4             SENATOR GRIFFO:  Do you anticipate that that

       5      pipeline capacity could be available for use in the

       6      power sector, such as that transmission level, or in

       7      distributed energy resources?

       8             AUDREY ZIBELMAN:  Absolutely.

       9             SENATOR GRIFFO:  Okay.  Thanks.

      10             Senator Parker.

      11             SENATOR PARKER:  Thank you, Senator Griffo.

      12             Let me actually begin by thanking you,

      13      Senator Griffo, Senator DeFrancisco, for convening

      14      us and bringing us together on this important

      15      conversation.

      16             Certainly, I want to thank the panel for your

      17      time and your patience in answering every question.

      18             I only have five or six hundred questions

      19      this afternoon.  I'll submit the rest in writing

      20      afterwards.

      21                  [Laughter.]

      22             SENATOR PARKER:  But I do want just to thank

      23      you for being here, and being patient.

      24             And, really, thank the Governor for this

      25      REV initiative.







                                                                   110
       1             Some of you may know, some of you may

       2      remember, that myself and Kevin Cahill, in 2009,

       3      when I was the chair of the Energy Committee,

       4      actually put forward the first bill to actually

       5      require the State to do planning.  And I feel like

       6      REV is kind of like the illegitimate stepchild of

       7      that legislation.

       8                  [Laughter.]

       9             SENATOR PARKER:  But, no --

      10             UNIDENTIFIED SPEAKER:  Thanks, dad.

      11                  [Laughter.]

      12             SENATOR PARKER:  But, no, but, truthfully,

      13      the notion of planning for our energy future is

      14      really critical.

      15             One of the things that happened when I first

      16      got here is that, when David Paterson, then the

      17      Democratic leader of the conference, made me the

      18      chair of a task force on alternative-energy futures;

      19      right?

      20             And so this notion of not just planning out

      21      our energy needs, but also looking at the future of

      22      alternative energy in the context of those energy

      23      needs, I think is critical.

      24             And I see -- you know, my sense is that REV

      25      is trying to accomplish exactly that.







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       1             And I have some -- hopefully, some more basic

       2      questions, and I think Senator Ranzenhofer expressed

       3      what a lot of us feel, that this, literally, is

       4      rocket science, but we're trying to understand it in

       5      some very plain ways.

       6             So let me say, I think that the work that the

       7      Green Bank and New York Senate is doing is actually

       8      incredible.  And I wanted to thank Mr. Kaufman,

       9      very much, for being involved with that.

      10             The solar conference that I brought to

      11      Brooklyn just two weeks ago, that really was well --

      12      you know, well received, you know, over 400 business

      13      people from around the country coming to talk about

      14      how they increased the production of solar energy

      15      and solar resources in the state, and I think it's a

      16      good start and, certainly, an important part of our

      17      energy mix as we go forward.

      18             I have, though, been dealing with some

      19      questions around capacity over the summer.

      20             So I've seen a couple of different capacity

      21      reports that have indicated to me that, and as we

      22      talk about climate change, Senator Krueger, and

      23      I know that some of Mr. Kauffman's remarks, talk

      24      about climate change, and the Governor has been

      25      famous for saying that we're having 100-year storms







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       1      every 2 years, that we are looking not just at, you

       2      know, crazy winters like we had this year, but then,

       3      also, a significant heat wave this summer.

       4             It's been indicated to me that, in

       5      New York City, that we're not going have enough

       6      capacity to meet demand, and that the result of that

       7      may be brownouts in places like Brooklyn.

       8             So can you, in fact, speak to that, and let

       9      me know what the plan is?

      10             AUDREY ZIBELMAN:  Senator Parker, thank you.

      11             For the coming summer, we've done an analysis

      12      for the needs in terms of both locationally and

      13      statewide.

      14             There is sufficient capacity to meet the

      15      demand for this summer.

      16             As sort of we move forward into the future,

      17      of course, what we looked at is, I mean, we just

      18      don't plan for the next year, but we look out for

      19      the next several decades, and we do see a need for

      20      additional capacity additions.

      21             And that's one of the reasons we are pursuing

      22      both the transmission and -- as well as taking a

      23      look at what we can do on the demand side.

      24             The study that the New York ISO has

      25      performed, and I know you have a witness from the







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       1      New York ISO this summer, also confirms that, for

       2      the coming summer, there's sufficient capacity

       3      locally and statewide.

       4             SENATOR PARKER:  Okay.  And how is that

       5      demand going to be met?

       6             AUDREY ZIBELMAN:  It's being met, largely,

       7      through generation, supply.  There's, also, we have

       8      1,000 -- 1100 megawatts, roughly, of demand response

       9      in this state that we count on.  We also count on

      10      reserves from other states.

      11             Right now, we've a surplus.  So what we

      12      planned for is 117 percent of peak demand.  Our

      13      actual supply portfolio in New York is at

      14      124 percent.

      15             So for the coming summer, we're in good

      16      shape, but, clearly, over time, you want to -- we

      17      have old plants that can, potentially, retire.

      18             And one of the things we want to do in the --

      19      you know, is make sure that we have maintained

      20      sufficient reserves, both, in terms of supply, and,

      21      also, distributed generation that you can use to

      22      manage demand.

      23             SENATOR PARKER:  Okay.

      24             If that changes in anyway, can somebody give

      25      me a call, so I can let me constituents know to get







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       1      candles, or something.

       2                  [Laughter.]

       3             AUDREY ZIBELMAN:  If that changes in any way,

       4      everybody will hear me.

       5             SENATOR PARKER:  Okay.

       6             All right, great.  That's good to know.

       7             I also have some questions, again, I think,

       8      hopefully, straightforward, about reliability and

       9      resiliency.

      10             Again, you know, on the heels of "Sandy,"

      11      we're really, really concerned about that.  I know

      12      that this has been a top priority for REV.

      13             Can you talk about -- and I'm specifically

      14      interested -- I mean, you can talk about the entire

      15      state because, obviously, the state has been dealing

      16      with issues of storms, and what that has meant in

      17      terms of access to electricity in particular.

      18             But can you talk -- speak a little bit about

      19      how REV is addressing what we see the greater need

      20      for, resiliency and reliability in our grid, and in

      21      our infrastructure, generally.

      22             AUDREY ZIBELMAN:  Sure.

      23             So there's, I would say, two aspects of it.

      24             One, of course, is maximizing the

      25      availability of clean energy to reduce carbon-energy







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       1      efficiency, and things like that.  So, that's a

       2      forward look to make sure that we're doing those

       3      types of things.

       4             But the other piece is using distributed

       5      energy better.

       6             So one of the things that we identify in the

       7      REV order of Track 1, is the ability to use

       8      distributed energy to maintain mission-critical

       9      load, and we also identify the opportunities,

      10      because we have improved technology to develop what

      11      we call "microgrids," which is basically the ability

      12      to use parts of the system, and can operate

      13      independently, and also support resiliency.

      14             So the commission, in its Con Ed rate case,

      15      looked at the opportunity to use distributed energy

      16      to create greater resiliency.

      17             And NYSERDA, through the New York Prize, and

      18      other activities, is helping accelerate that by

      19      looking at how we can develop microgrids throughout

      20      the system.

      21             So, to me, it's -- as we -- as to us, as

      22      we've said in policy, this is the "am" (ph.)

      23      solution.  This is not just environment or

      24      economics.  It's not just the bulk power grid versus

      25      distributed energy resources.







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       1             It's really how we take all the benefits of

       2      technology can operate in concert to create both

       3      more resiliency and flexibility on the grid, and

       4      then, also, ensure that not only are we able to

       5      create a more reliable system on blue-sky days, but

       6      also recover from major storms in a much faster way.

       7             SENATOR PARKER:  And I'm not exactly sure

       8      about this.

       9             So, how does -- so we have another

      10      "Superstorm Sandy," how does using more solar and

      11      more -- more solar, and more, you know, wind

      12      turbines, and water turbines, how does that help us

      13      be more resilient, you know, post-aid, the next

      14      storm?

      15             AUDREY ZIBELMAN:  So, Commissioner Parker,

      16      it's not just using solar, wind -- and wind

      17      turbines.

      18             SENATOR PARKER:  Okay?

      19             AUDREY ZIBELMAN:  Certainly, those are

      20      resources that you're going to have on the grid.

      21             You can also have combined heat and power,

      22      storage, thermal, efficiencies, things like that,

      23      geothermal.

      24             More importantly, as Gil was saying, you have

      25      more intelligence on the network.







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       1             One of the things that we need to have is a

       2      smarter grid so that we see, when someone's out,

       3      that they're out, but, also, that we can isolate

       4      portions of the system so that we can keep the

       5      lights on in different areas so that people have

       6      places to go to be safe, et cetera, but also greater

       7      visibility, and then a hardening.

       8             So the other aspect of what we're doing, and

       9      we certainly require Con Ed to do, and we're doing

      10      in Long Island, is actually hardening the system so

      11      it can withstand storms better.

      12             So these -- none of these are individual

      13      solutions that you can say, Hey, that's it.  We're

      14      just going to do that.

      15             They all work in combination.

      16             SENATOR PARKER:  Great.  Great answer.

      17             And as it relates to microgrids, which is --

      18      I'm really excited to hear you talk about

      19      microgrids, and, particularly, creating more smart

      20      grids in addition to that.

      21             What do you -- where is REV on -- this is

      22      also related to resiliency and reliability, and

      23      particularly because, in New York City, we have a

      24      large number of people who are in public housing,

      25      many of which who were the victims who lasted the







                                                                   118
       1      longest in terms of being in the dark and the most

       2      inconvenienced, because if you live on a tenth-floor

       3      walk-up in a public-housing project, you know, with

       4      no lights, and you're now walking through a dark

       5      cavern, you know, outside of losing your food, and

       6      everything else.

       7             What is the thoughts -- or, how does REV

       8      speak to maybe the notion of maybe microgrids around

       9      some of our housing -- public-housing assets?

      10             AUDREY ZIBELMAN:  Yes, I'm going to let Gil

      11      talk specifically about what (unintelligible) doing.

      12             GIL QUINIONES:  Thank you, Senator Parker.

      13             One of the activities that NYPA is doing

      14      right now is to explore the feasibility of a

      15      microgrid at Red Hook, NYCHA housing.

      16             And if we can find a solution that can be

      17      replicated to other NYCHA housing locations that are

      18      also vulnerable to, you know, storms in future, that

      19      will be the goal.

      20             But, we would be happy to brief you at some

      21      point when we complete that feasibility study.

      22             I have heard previews of it from my

      23      engineering staff.

      24             I haven't had a chance to look at the

      25      complete report, but once I do, we would be more







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       1      than happy to share that with you.

       2             SENATOR PARKER:  How soon do you think that

       3      might be?

       4             GIL QUINIONES:  It could be weeks, not

       5      months.

       6             SENATOR PARKER:  Okay, great.

       7             And what do you think about the same notion

       8      around some of our hospitals, which, again, suffered

       9      through the same?

      10             Are we doing feasibility studies for

      11      hospitals as well?

      12             GIL QUINIONES:  We've -- in hospitals, we've

      13      done a little bit more than feasibility studies.

      14             In fact, Coney Island Hospital, we helped

      15      them upgrade their boiler, and then chiller systems.

      16      Raised them so that they are above the flood levels.

      17      Built protective walls so that, just in case another

      18      storm comes by and floods the Coney Island Hospital,

      19      they should be in much better shape than they were

      20      during "Superstorm Sandy."

      21             SENATOR PARKER:  Now, would -- but would a

      22      microgrid be appropriate for them, and would that

      23      help their situation?

      24             GIL QUINIONES:  It depends.

      25             Many hospitals have what's called







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       1      "co-generation systems," or combined heat and power,

       2      because they have a need for the steam that is a

       3      byproduct of local generation.

       4             And we are exploring a number of those, not

       5      just in hospitals, but also in water and wastewater

       6      facilities across the state.

       7             SENATOR PARKER:  Okay.  Thank You.  That

       8      helps.

       9             Mr. Rhodes, really quick, so one of inside

      10      jokes that no one ever talks about outside, is the

      11      fact that NYSERDA is a great place to raise money,

      12      but not a good place to spend money.

      13             And I wanted to hear what your thoughts were

      14      around how we're going to better market the

      15      resources of NYSERDA so that people actually know.

      16             I mean, I've been sitting in the Democratic

      17      Conference when people have said, Yeah, we really

      18      ought to do this kind of program.

      19             And I'm, like, Yeah, NYSERDA already does

      20      that.

      21             And they're, like, Really?

      22             And these are people who have been -- who are

      23      legislators who have been here for a long time, who

      24      actually, you know, have some wherewithal about how

      25      to access government resources.







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       1             So if they don't know, I'm clear that the

       2      people who represent my district and the people of

       3      Brooklyn are not as aware as we'd like them to be.

       4             JOHN RHODES:  So I guess there -- thank you,

       5      Senator, for that question.

       6             I think that there are three main things that

       7      we're doing.

       8             I think I mentioned how we're becoming easier

       9      to do business with.  This isn't so much about the

      10      awareness point, but if you're aware of NYSERDA, now

      11      we're pretty easy to deal with, so that is going to

      12      increase demand for the programs that we offer, and

      13      are going to offer.

      14             The second point is, that we've talked about

      15      enabling the market and working with -- and working

      16      to address gaps and barriers.  That means we have to

      17      do the work to figure out where it is that there

      18      would be appetite for the kinds of things that we

      19      would do, and develop programs that would be -- that

      20      would find uptake.

      21             And this is really the classic definition of

      22      "marketing," which is to build a product that people

      23      want.

      24             And then the final thing is, that we're

      25      talking about enlisting the private sector.







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       1             In my comments today, I've talked a little

       2      bit about -- I've emphasized enlisting the private

       3      sector as a source of investment money.

       4             It's also true that the private sector is

       5      where a lot of the boots on the ground are in terms

       6      of sales forces that can go out.

       7             One of the terrific things about New York Sun

       8      is that, rather than NYSERDA promoting solar, we now

       9      have a whole sector of solar installers who are

      10      promoting solar.  And so that is the third tool in

      11      the toolkit.

      12             SENATOR PARKER:  Let me interrupt you for a

      13      second.

      14             As it relates to that, what are you doing in

      15      terms of incorporating MWBEs in the context of

      16      your expanded market and your enlisting of

      17      private-sector resources?

      18             JOHN RHODES:  We are -- we're paying

      19      attention to that factor, and we're trying to expand

      20      it as much as is possible.

      21             SENATOR PARKER:  Okay.  We should have a

      22      specific conversation about that in another chat.

      23             JOHN RHODES:  I've noted that.  I took that

      24      as an action.

      25             SENATOR PARKER:  Okay.  Thank you.







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       1             If I can have one more question?

       2             SENATOR GRIFFO:  Sure.

       3             SENATOR PARKER:  In addition to the

       4      workarounds, I guess, you know, making it easier,

       5      I'm really interested in utility scale.

       6             I think, ultimately, you know, utility scale

       7      is the answer, uhm, you know, to what we're going to

       8      need to do, whether it's -- I'm not just talking

       9      about solar.

      10             I'm just talking about whatever renewable and

      11      sustainable resources that we're going to be using,

      12      and I think this is both, from an industry

      13      perspective, but also energy as a commodity, we need

      14      to be looking at utility scale.

      15             And I wanted to see where REV was in terms of

      16      looking at that, because, ultimately, as we -- you

      17      know, having been person who drafted, you know, the

      18      bill on, you know, green-collar jobs, I think that

      19      was critical, and I think it was important for the

      20      time.

      21             But, if we go down that path, you know, to

      22      the extreme end, we get to a point where, you know,

      23      you have a bunch of people who don't have

      24      distributed resources on their rooftops.

      25             And I know we're talking about shared solar,







                                                                   124
       1      and those other things.

       2             But you also, you know, obviously, is --

       3      you're going to be pushing back on the utility who,

       4      eventually, especially with net metering, you know,

       5      get to a point where the break-even point is bad for

       6      them, and then the people are stuck on the grid, you

       7      know, have an increasing bill instead of a

       8      decreasing bill.

       9             And my sense is that, you know -- you know,

      10      utility scale, you know, alternative energy, is the

      11      answer.

      12             I'm not sure of whoever agrees with that.

      13             You know, places like California have done

      14      things like a minimum charge on a bill, and a couple

      15      of other things they've done.

      16             So I just wanted to kind of see what your

      17      thoughts are.

      18             And, really, while I -- I mentioned it,

      19      really, on both issues, where, how do we make sure

      20      that we don't get to this place where, you know,

      21      poorer communities are stuck on the grid with very

      22      high bills; but, also, where utility-scale projects

      23      are our priority.

      24             RICHARD KAUFFMAN:  So if I might, thank you,

      25      Senator Parker, for your question, because I think,







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       1      in a very clear way, you've highlighted why we need

       2      to make the changes that we're proposing to make, or

       3      in the process of making, because we've said this

       4      several times, there are changes that are going on

       5      with respect to technology, and how customers are

       6      acting, and we don't want to -- and we want to build

       7      this integrated network, because if we don't build

       8      the integrated network, the kinds of issues you

       9      described become a bigger and bigger problem.

      10             We wind up with, who bears the cost of the

      11      system, and how the -- and inequities that can

      12      occur, and so we want to think about it on a network

      13      basis.

      14             It can't just be that a project is good for a

      15      customer, but has no benefit for the system as a

      16      whole.

      17             And so that's part of the -- really, at its

      18      essence, what we're trying to do when we talk about

      19      building out a network.

      20             And so we're not -- so the elements -- the

      21      elements of changing the incentive structures are

      22      such that we're not going to -- we're not going to

      23      dictate -- it's going to be less about dictation of

      24      answers, and more about creating market structures

      25      and price signals that will permit distributed







                                                                   126
       1      resources of, potentially, very large scale in areas

       2      where it's going make sense for -- where it's going

       3      to make sense for the grid.

       4             That's the way in which we build a grid which

       5      is going to be both more energy efficient and more

       6      capital efficient, and be more equitable to all

       7      ratepayers.

       8             SENATOR PARKER:  And if I could, just a quick

       9      statement, and, again, I want to thank everybody for

      10      their answers, and just the patience that you've

      11      shown myself and the rest of my colleagues.

      12             And I want to thank Chairwoman Zibelman for

      13      the pay raise to commissioner, earlier.

      14                  [Laughter.]

      15             SENATOR PARKER:  It seems to me that there's

      16      a lot of work of be done as it relates to REV as we

      17      go forward.  And, as much as we know the Governor

      18      likes to do things unilaterally, he -- I would

      19      advise that he does have some willing partners in

      20      the Legislature that would love to work with all of

      21      you, and with the Governor, to make sure that we

      22      are, you know, making -- you know, that we're

      23      dealing with the issues of climate change in a

      24      responsible way, that we're reducing our dependence

      25      on fossil fuel and using more reliable, sustainable







                                                                   127
       1      energy sources.

       2             We're certainly all vested in a more

       3      resilient and reliable grid system, and energy

       4      system, and, certainly, want to just extend a

       5      partnership to -- and that it would great if there's

       6      a set of legislative recommendations that we can

       7      work on with you to make sure that these ideas that

       8      come out of REV become, you know, a lasting part of

       9      not just -- of just this administration, but as we

      10      go forward, if there are things that are good ideas

      11      that we can work on them and, you know, make them,

      12      you know, part of the statute of the state of

      13      New York.

      14             And, certainly, I think the members of the

      15      Senate certainly would like to, you know, as you see

      16      from the questions you've gotten, certainly want to

      17      be a partner in those things.

      18             And I hope you'll lean on that front.

      19             SENATOR GRIFFO:  Thanks, Senator Parker.

      20             I just have a few quick questions on

      21      follow-up.

      22             Chair Zibelman, can you give me a status of

      23      the PSC proceeding on the national gas

      24      infrastructure?

      25             AUDREY ZIBELMAN:  The status of natural gas







                                                                   128
       1      infrastructure --

       2             SENATOR GRIFFO:  On the proceeding.

       3             AUDREY ZIBELMAN:  -- the commission issued an

       4      order in April, in which we're looking at the idea

       5      of coming up with a financing mechanism so that we

       6      can continue to finance natural gas infrastructure

       7      without having to file a rate case.

       8             And that was, we issued a request for

       9      comments.  I can't tell you the exact dates that

      10      comments are due, but they're going through the

      11      comment process to get back.

      12             But in addition to that, within each rate

      13      case, we've actually looked at, when utilities come

      14      in as accelerating replacement of natural gas, as

      15      well as incentives for convert- -- so people can

      16      convert from natural gas.

      17             And it's a combination of these activities

      18      that we've been able to actually increase the amount

      19      of natural gas infrastructure in this state.

      20             SENATOR GRIFFO:  I also want to compliment

      21      some of the state agencies relative to the

      22      clean-power plan, because they're all on the same

      23      page.  I think that's good.  And we should receive

      24      credit in New York for what we've done to reduce the

      25      carbon footprint.







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       1             And I know we're watching the big case before

       2      the Supreme Court.

       3             And I would just make a request there,

       4      because that is going be important as to whether

       5      FERC has jurisdiction over demand response or if

       6      it's the State's right.

       7             So if you could provide the Committee with

       8      any filings or motions or outlines that you may have

       9      relative to what your involvement will be in that,

      10      we would appreciate that to keep us informed.

      11             AUDREY ZIBELMAN:  Certainly.

      12             SENATOR GRIFFO:  And then the final thing,

      13      because I think this is very important, because when

      14      we talk about weighing public policy versus the cost

      15      to ratepayers and consumers, we talk about the new

      16      position at the PEC [sic], which I believe is being

      17      called "chief consumer advocate"?  Is that correct?

      18             We have a number of these similar type

      19      positions within various areas of the

      20      administration, and the attorney general's office.

      21      For instance, we have the consumer-protection

      22      division of the Department of State.  We have at the

      23      NYSO, the consumer-interest liaison.  The AG's

      24      Office, bureau of consumer fraud.

      25             And now, this, what we're talking about at







                                                                   130
       1      the PSC.

       2             Is there a way that we could look at

       3      everything and make a determination, not only that

       4      they could collaborate or communicate, but maybe we

       5      look at how this best can work?

       6             Is it best in the format that is currently

       7      presented?  Or is there a better way to look at that

       8      because there are a number of similar activities

       9      taking place across various agencies?

      10             I don't know wants to take that, but just,

      11      generally, because, again, it's important to all of

      12      us, I think, when we talk about consumer issues.

      13             AUDREY ZIBELMAN:  We can take that as a

      14      homework assignment, and come back.

      15             SENATOR GRIFFO:  Okay.  It's a good

      16      assignment.

      17             I -- anyone else?

      18             Senator Krueger?

      19             SENATOR KRUEGER:  No.  Thank you.

      20             SENATOR GRIFFO:  Senator DeFrancisco?

      21      Senator Parker?

      22             I just want to, again, extend my appreciation

      23      to the Governor for facilitating the energy

      24      subcabinet to be here today.

      25             Each and every one of you have extensive







                                                                   131
       1      knowledge and experience on these issues.

       2             And this is an important issue.  It may be

       3      technical, it's complicated, but it's extremely

       4      challenging.

       5             And there are things we didn't get to today.

       6             I wanted to talk about the -- what we're

       7      doing in measures to protect the power grid, not

       8      only against natural disasters, but also acts of

       9      terror.

      10             So I know that no on these facilities, and

      11      that will be another conversation at another time,

      12      because I want to be sensitive to all of your time

      13      today.

      14             But I do really, again, sincerely appreciate

      15      your willingness and your access to have this

      16      exchange, because this is going to be important, not

      17      only on REV and the Energy Highway, which are two

      18      very important issues, as Senator Parker indicated,

      19      that we want to have the continuing dialogue, but

      20      also involvement and input in, but all aspects of

      21      energy policy right now, which is going to be

      22      critical to the state, for our future, and to the

      23      residents of this state.

      24             So I again want to thank you all.

      25             And, Senator DeFrancisco?







                                                                   132
       1             SENATOR DEFRANCISCO:  Ditto.

       2                  [Laughter.]

       3             AUDREY ZIBELMAN:  Thank you.

       4             SENATOR GRIFFO:  Thank you all.

       5             SENATOR GRIFFO:  We'll proceed with the next

       6      panel that will be called down right now.

       7             This panel is from the industry, and it will

       8      include:

       9             Darren Suarez, director of government affairs

      10      for The Business Council;

      11             Kevin Schulte, board member of the

      12      Alliance for Clean Energy New York;

      13             Ted Skerpon, president and business manager

      14      of the IBEW Local 97, and, chairman for

      15      New York State IBEW Utility Labor Council;

      16             Phil Wilcox, business representative,

      17      IBEW Local 97;

      18             Karyn Burns, the director of communications

      19      and government relations for the

      20      Manufacturers Association of Central New York;

      21             And, Richard Dewey, the executive

      22      vice president of the New York Independent System

      23      Operator.

      24             If you could all please come down, we'll

      25      begin Panel 2 shortly.







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       1                  (Pause in the proceeding.)

       2             UNIDENTIFIED SPEAKER:  Are we ending at 3:00?

       3             SENATOR GRIFFO:  Well, that all depends;

       4      right?  I would hope so.

       5             I've learned a lot from Senator DeFrancisco,

       6      and he likes -- he runs his meetings very, very

       7      well.

       8             So, I would ask all of the panelists here

       9      to -- if you have testimony and you can avoid

      10      reading it, but include it as part of the official

      11      record, we would appreciate that, and you could

      12      summarize, and then we can have opportunities to

      13      have a conversation.

      14             I know Karyn has asked to go first because

      15      she has a family commitment.

      16             KARYN BURNS:  I apologize, yes.

      17             SENATOR GRIFFO:  Without objections.

      18             Then we'll go to Mr. Dewey, Mr. Wilcox.

      19      Okay?

      20             Karyn, I know you'll be brief.

      21             SENATOR DEFRANCISCO:  Excuse me.

      22             Can I add to that, you know, we hear so much

      23      stuff that goes around in circles and circles and

      24      circles, and I'm not criticizing any one group

      25      because everybody does it.







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       1             Can you just tell us, straight up, what the

       2      damn problem is, and how you think it should be

       3      solved?  And that goes for the Business Council as

       4      well.

       5             So if we can do that, this would be

       6      wonderful, and maybe we'd all understand what we're

       7      talking about.

       8             All right?

       9             Go ahead.

      10             SENATOR GRIFFO:  There he is.

      11             UNIDENTIFIED SPEAKER:  You got it.

      12             SENATOR GRIFFO:  All right.  Karyn.

      13             KARYN BURNS:  We'll just have --

      14             SENATOR GRIFFO:  Karyn, just identify

      15      yourself, and then, quickly.

      16             KARYN BURNS:  Yes.

      17             Yes, and I did submit some testimony, so,

      18      please feel free to read it afterwards.

      19             Thank you very much, and I appreciate your

      20      accommodations for me leaving a little bit early.

      21             I'm Karyn Burns, and I'm the vice president

      22      of communications and government relations at MACNY

      23      (the Manufacturers Association.)

      24             We're based in beautiful Syracuse, New York.

      25      We're comprised of about 330 manufacturing companies







                                                                   135
       1      within about 33 counties, and we represent about

       2      55,000 hard-working jobs -- or, people.

       3             I'm actually here today with my colleague,

       4      John Lawyer (ph.), who is our vice president of

       5      purchasing solutions.

       6             And the reason that I brought him today here

       7      is because, you know, to your point, Senator, and a

       8      lot of it was discussed today, the big issue here

       9      with manufacturers is the cost of energy, and that

      10      often is comprised not with the energy itself, but

      11      the taxes and the added fees and the assessments

      12      that are included on top of it.

      13             So as we go through, you know, the REV

      14      process, and I believe it was Senator Ranzenhofer

      15      who mentioned it, you know, asked it, straight up,

      16      saying, What is this impact going to be on

      17      manufacturers, generally speaking?

      18             And that's what I'm here today to ask.

      19             I wish I -- I mean, to the Senator's point

      20      earlier, I wish we had an answer, I wish we would

      21      know how much this is all going to cost; but, quite

      22      frankly, that answer's not there.

      23             I don't think anyone knows it, and that's

      24      something that needs to be taken into consideration.

      25             We can certainly appreciate that the intent







                                                                   136
       1      is, obviously, to save money down the road, but

       2      that's obviously going to be at a cost to something,

       3      somebody.  And, if history's going to repeat itself,

       4      it's going to be on the taxpayers.  Particularly in

       5      the energy-intensive manufacturing sector, that's

       6      something that they simply can't afford.

       7             We already are working on, you know, added

       8      fees to energy as it is.

       9             We do have some great programs, as we talked

      10      about earlier, which include many

      11      economic-development programs, such as

      12      Recharge New York, and it is a reduction of fees --

      13      or, sorry, reduction on the cost of energy, which is

      14      wonderful.

      15             But something like this, we just need to be

      16      able to, you know, make an assessment, how much it's

      17      going to cost, and, just be cautious.

      18             I don't know if you wanted to add anything?

      19             SENATOR DEFRANCISCO:  I don't think he does,

      20      really.

      21             SENATOR GRIFFO:  Mr. Dewey --

      22             SENATOR DEFRANCISCO:  Okay.  Who's next?

      23                  [Laughter.]

      24             SENATOR GRIFFO:  Mr. Dewey has had

      25      double-duty today.  He appeared at the







                                                                   137
       1      cyber security hearing, and he's here now, so,

       2      I want to thank you.  I want to thank you for

       3      hosting the tour of the Assembly and the Senate

       4      Energy Committees this Monday.

       5             RICHARD DEWEY:  Sure, sure.

       6             Thank you.

       7             Thank you for having me, Chairman Griffo,

       8      Chairman DeFrancisco, and Senator Parker.

       9             My name is Rich Dewey.  I'm the executive

      10      vice president of the New York Independent System

      11      Operator.

      12             The New York ISO is an independent non-profit

      13      corporation that performs three key functions for

      14      New York consumers.

      15             First and foremost, we maintain the

      16      reliability of the bulk-power network, the

      17      transmission grid.

      18             We also administer the wholesale energy

      19      markets.  We try to do so in the most efficient

      20      manner for consumers.

      21             And, we also are responsible for planning

      22      New York's energy future, both from a reliability

      23      and from a demand standpoint.

      24             And as such, we act as a non-voting member of

      25      the New York State Energy Planning Board.







                                                                   138
       1             As an independent resource, we strive to be

       2      that authoritative source of information for market

       3      participants, regulators, and policymakers.

       4             We have no vested interest in the specific

       5      outcomes, and we have no financial interest in any

       6      of the participants who take -- who play a role

       7      within the market.

       8             As the executive vice president, I'm

       9      responsible for operations, markets, and planning;

      10      the three key functions.

      11             I have a bachelor's degree from

      12      Clarkson University, and a master's degree in

      13      engineering from Syracuse University.

      14             And, I'm pleased to be able to speak with you

      15      today.

      16             You have my testimony that we submitted.

      17             Just a very high-level summary, some of the

      18      key points I want to talk about:

      19             The New York electric consumers are -- today

      20      enjoy benefits of 15 years of competitive markets.

      21             We have a system that's operated to some of

      22      the strictest reliability standards in the country.

      23             We have the most efficient energy markets in

      24      the country at the wholesale level.

      25             We produce price signals that have led to







                                                                   139
       1      10,000 megawatts of new generation, located at the

       2      right location.

       3             And, we have made some -- we've enjoyed some

       4      efficiency improvements within the markets

       5      themselves that have led to significant reductions

       6      in emissions from the generation fleet.

       7             So, we've made some tremendous progress in

       8      those 15 years.

       9             As we sit here, we're a bit at a crossroads,

      10      and we've heard a lot about the aging

      11      infrastructure, the transmission system.

      12             We need to continue to understand what those

      13      necessary investments are.

      14             Much of the transmission network, which is so

      15      important, from moving power from where it is most

      16      cheaply generated, down to the load centers where it

      17      is most urgently needed, it is at least 35 years

      18      old, and, very soon, will be reaching end of life.

      19             At the same time, there's new technology

      20      that's being introduced that gives us a lot more

      21      options at the local level and the distribution

      22      level, and we really need to understand how to best

      23      integrate that into -- into the system.

      24             The topology of New York's power grid is

      25      important to understand.







                                                                   140
       1             Two-thirds of the load, or the consumption,

       2      is in the southeastern part of the state,

       3      New York City and Long Island, but the vast majority

       4      of the efficient, inexpensive, and most of the

       5      renewable supply is in the northern part of state.

       6             So, it's absolutely imperative for successful

       7      markets and for reliable operation of the system to

       8      be able to move as much of that power across the

       9      state as we possibly can.

      10             The Energy Highway blueprint recommends

      11      actions and policies that would help make this

      12      happen.

      13             We applaud the efforts of the Governor and

      14      the Public Service Commission in advancing this

      15      forward.

      16             And, we think it's absolutely important to

      17      improve reliability;

      18             Transport more clean power to the load

      19      centers;

      20             Improve access to the renewables, which we

      21      all learned about, the majority of them are upstate;

      22             And then, also, to maximize fuel diversity of

      23      the generation fleet, another important aspect to

      24      maintain our reliability, where we don't find

      25      ourselves dependent on any one fuel type or any one







                                                                   141
       1      fuel source.

       2             At the same time, we see benefits to some of

       3      the improvements at the local level.

       4             Some of the technology enhancements that

       5      could enable the introduction of microgrids and

       6      distributed energy resources near the load centers

       7      could improve reliability of those particular areas

       8      at the distribution level.

       9             And, at the same time, the introduction of a

      10      lot of the market concepts that have enabled us to

      11      achieve significant efficiencies at the wholesale

      12      level could be applied at the distribution level,

      13      and there's some opportunity there.

      14             We're work closely with both the

      15      Public Service Commission on these initiatives.  As

      16      the independent source of information, we perform

      17      studies and analyses to help inform decision-makers

      18      about the cost, the reliability aspects, and some of

      19      the risks of the various pieces of those two

      20      proceedings.

      21             We believe it's an exciting future.  We think

      22      that there's an opportunity here for a "best of both

      23      worlds," where we've got an improved and robust

      24      transmission information -- or, transmission system

      25      that can help open the playing field for all of the







                                                                   142
       1      resources -- all of the generating resources, and

       2      give them access to additional markets.

       3             We also think this is an opportunity to

       4      leverage some of the new technologies that are

       5      available, to help modernize the local distribution

       6      grids, help improve the customer experience, and,

       7      also, add value, from both a market and reliability

       8      standpoint.

       9             I thank you for the opportunity to speak with

      10      you today, and when it's time, I appreciate any

      11      questions you might have.

      12             SENATOR GRIFFO:  We were going to have

      13      everybody speak, and ask questions, but, I think we

      14      may just ask some questions while you're speaking,

      15      if anybody has one.

      16             I think Senator DeFrancisco does.

      17             SENATOR DEFRANCISCO:  So, what do you

      18      specifically think should be done?

      19             I understood all the goals, and we heard that

      20      from the past group.

      21             What ought to be done in order to protect the

      22      energy supply in the state?

      23             And what --

      24             RICHARD DEWEY:  Well, very specifically, we

      25      feel that reliability, and the needs to ensure and







                                                                   143
       1      enhance reliability, has to be the highest priority.

       2             The transmission infrastructure is aging.

       3      Some of it is nearing end of life.

       4             You heard from Gil and the earlier panel

       5      about some of the improvements that have been made

       6      by NYPA.  That investment needs to continue.

       7             Some of the existing challenges with building

       8      transmission centers around right-of-ways, and

       9      access to land, to build transmission lines, a lot

      10      of the proposed upgrades that we're talking about

      11      are to replace in -- replace in place --

      12             SENATOR GRIFFO:  Time out --

      13             RICHARD DEWEY:  Yes, sir.

      14             SENATOR DEFRANCISCO:  -- time out.

      15             Everybody here wants reliability.

      16             Okay, now we got that out of the way.

      17             Is -- are the people that spoke at -- the

      18      last group of people, is what they're saying, is

      19      there a specific-enough plan to know that your goal

      20      of reliability is actually going happen, based upon

      21      a what they just presented?

      22             Or, is there a list -- is there a time frame,

      23      what should be doing next in order to make it a

      24      smooth transition?

      25             RICHARD DEWEY:  I can tell you that the







                                                                   144
       1      reliability studies that have been performed by the

       2      New York ISO lay out that time frame for when the

       3      need is most urgent and when the upgrades are

       4      required.

       5             And, we can look at that from a

       6      reliability -- from a resource-adequacy standpoint,

       7      when there's enough generation, and we can look at

       8      it from a transmission-security standpoint of when

       9      those bottlenecks need to be replaced.

      10             SENATOR DEFRANCISCO:  But is that ready now?

      11      Have you done --

      12             RICHARD DEWEY:  Those plans, we do that on an

      13      annual basis.  Those plans are ready and public.

      14             The next step is that, in response to that,

      15      market solutions are solicited, so private investors

      16      or public investors that want to propose solutions

      17      to solve those problems would then bring them

      18      forward.

      19             The Energy Highway is an example of that, of

      20      a vehicle or a process by which those solutions are

      21      being prioritized and assessed.

      22             Chair Zibelman talked about how the -- those

      23      solutions are being looked at.

      24             I don't know the schedule of when these

      25      projects are set to kick off.







                                                                   145
       1             I can only tell you when -- from the analysis

       2      of the system, when it's needed.

       3             SENATOR DEFRANCISCO:  Okay.  I think we're

       4      getting a timeline, if I understood them correctly.

       5             Thank you.

       6             SENATOR GRIFFO:  Phil.

       7             PHIL WILCOX:  Thank you, Senators, for this

       8      critically important meeting.

       9             I'll forgo my written testimony in the

      10      interest of time.

      11             Attached to our testimony is just a

      12      broad-based list of support from all over

      13      New York State to expedite the transmission

      14      investments.

      15             We have an epidemic of struggling generators

      16      upstate that represent thousands of jobs, tens of

      17      millions in tax revenue to the communities that they

      18      reside in, and hundreds of millions in economic

      19      impact that stand threatened as we sit today.

      20             One of the architects of the Energy Highway

      21      blueprint was a fellow by the name of John Dyson,

      22      and, he's a former NYPA chairman, vice chairman, and

      23      he was a member of the Governor's Energy Highway

      24      Task Force.

      25             And his quote was, "Every struggling upstate







                                                                   146
       1      power generator that is environmentally compliant

       2      deserves a lifeline until the Energy Highway

       3      transmission work is completed.

       4             "They struggle, in part, due to transmission

       5      congestion that is no fault of their own; and, thus,

       6      have been denied the competitive promises of

       7      deregulation and fair market access."

       8             So, from our perspectives, step one, get the

       9      transmission work done, efficiently move power from

      10      one end of the state to the other, and then assess

      11      your needs for additional distributed generation.

      12             Those are my comments.

      13             SENATOR GRIFFO:  Thanks, Phil.

      14             SENATOR DEFRANCISCO:  Perfect.

      15             SENATOR GRIFFO:  Ted.

      16             SENATOR DEFRANCISCO:  Perfect.  I even

      17      understood it.

      18             Thank you.

      19                  [Laughter.]

      20             SENATOR GRIFFO:  Ted.

      21             TED SKERPON:  I was going say ditto, but --

      22                  [Laughter.]

      23             TED SKERPON:  My name is Ted Skerpon.  I'm

      24      the president and business manager of International

      25      Brotherhood of Electrical Workers for Local 97, and







                                                                   147
       1      I sit as the utility chair, representing over

       2      15,000 utility workers.

       3             And I do thank you, Senators Griffo and

       4      DeFrancisco for taking the time.

       5             I will be very brief.

       6             We do have submitted comments.

       7             And, Senator Parker, for hanging in there

       8      with us too.

       9             Phil touched on most of issues that we're

      10      here for.  And, to me, it's not rocket science.

      11      It's pretty simple:  We have supply, we have demand.

      12             We know where the supply is.

      13             How do we get the supply to the demand?

      14             That's our main problem.

      15             Our issue here today is, REV can work.

      16      I think it's going to take time to really figure out

      17      what it's going of cost, and how we're going to work

      18      it.

      19             However, if we do not upgrade our

      20      transmission, we'll get nothing to market.  We'll

      21      have nothing more of a stranded cost again that our

      22      ratepayers, our consumers, are going to be stuck

      23      paying.

      24             Long story short, without the upgrade of the

      25      transmission, REV will not work.







                                                                   148
       1             And I get very frustrated as a labor leader

       2      in New York State, when I see power being imported

       3      from Canada, from New Jersey, when we're all

       4      supposed to be taking care of New York State.

       5             So, as I said, long story short, take care of

       6      the transmission upgrades, REV will follow, and

       7      we'll be able to do what we need to do for the

       8      future.

       9             SENATOR GRIFFO:  Go ahead.

      10             SENATOR PARKER:  Ted, have you -- I have a

      11      bill that would actually improve Article 7, that

      12      would actually fast-track the Article 7 transmission

      13      process.

      14             TED SKERPON:  Yep.

      15             SENATOR PARKER:  Have you seen it?  Have you

      16      guys thought about an updated Article 7?

      17             TED SKERPON:  We have.

      18             And as I heard today, that this technical

      19      conference and everything may be delayed even longer

      20      than we thought, that raises concern.

      21             If we can fast-track this, we would gladly

      22      take a look and see what we can do.

      23             SENATOR PARKER:  Okay.

      24             SENATOR GRIFFO:  One of the --

      25             SENATOR PARKER:  A support memo for my bill







                                                                   149
       1      would be great.

       2             But, go ahead, Mr. Chairman.

       3                  [Laughter.]

       4             SENATOR GRIFFO:  One of the things that

       5      I would be concerned with is, I think there's an

       6      agreement that we need to invest in our transmission

       7      system, but we also are looking at looking at

       8      existing lines, as opposed to new lines that could

       9      cause concern to communities, both, environmentally,

      10      from a public-health perspective.

      11             I mean, we've seen some proposals in the

      12      past.

      13             We had with one in Upstate New York that we

      14      fought, the New York Regional Interconnect.

      15             We don't want to see projects like that

      16      again.

      17             So I don't think that's what you're

      18      (inaudible).

      19             TED SKERPON:  No, we have -- under the

      20      existing rights-of-way is what we're looking at.

      21             I mean, that's already been out there.  It's

      22      been proven, it can be done.

      23             So, I understand the projects you're talking

      24      about in the past, where, you know, it wasn't what

      25      everybody was looking to do.







                                                                   150
       1             This is an existing rights-of-way.

       2             It's there now.  It's there today.

       3             SENATOR GRIFFO:  So would it be safe to say,

       4      so far, for those who have spoken, and those who

       5      haven't spoken are free to join in, and we'll come

       6      to Kevin next, that we say we're on parallel paths

       7      with the REV, and the transmission improvements on

       8      the Energy Highway, but I think what you're saying

       9      is, there may be a deficiency there, and that --

      10      really, that should be priority one: that the

      11      investment and the improvement on the transmission

      12      lines should be taking place, and then the REV could

      13      be following?

      14             TED SKERPON:  I guess I go back to

      15      high school.

      16             If I build a whole bunch of widgets and

      17      I can't get them to market, what good are the

      18      widgets?

      19             So if we move forward with REV, not even

      20      knowing the costs, and we have a bunch of stranded

      21      costs sitting out there that we can't get to market,

      22      what are we really doing?

      23             I think as time goes on and we find out

      24      costs, and these new initiatives come about, we will

      25      be able to efficiently get them to market once, as







                                                                   151
       1      I said, that transmission is upgraded and we're able

       2      to move it.

       3             PHIL WILCOX:  And just briefly, Senator,

       4      I think, again, going back to John Dyson, when the

       5      blueprint was completed in 2012, he would be stunned

       6      to realize that, 3 years later, we are don't have

       7      any steel in the ground or conductors in the air.

       8             It's really appalling, and we need to

       9      expedite that.

      10             SENATOR GRIFFO:  Kevin.

      11             SENATOR DEFRANCISCO:  Excuse me, last

      12      question:  Does -- do you have any estimates as to

      13      what the transmission lines, to get them back

      14      online, or operating more efficiently, would run?

      15             Or has the government in any way provided

      16      some estimates?

      17             TED SKERPON:  The pricing?

      18             SENATOR DEFRANCISCO:  Yeah.

      19             TED SKERPON:  Yeah, I believe that it's

      20      1.2 billion for the transmission upgrades that are

      21      defined in the proposal -- one of the four

      22      proposals, anyways, that would address a congestion

      23      from Utica, east, and, Albany, south.

      24             And the cost-benefit analysis is included in

      25      that.  We can provide that for you.







                                                                   152
       1             SENATOR DEFRANCISCO:  I think we just settled

       2      another lawsuit for a billion and a half, if I'm not

       3      mistaken.

       4             DARREN SUAREZ:  That is correct.

       5             SENATOR DEFRANCISCO:  That is correct.

       6             What do you think?

       7             Billion and a half, billion and a half?

       8             DARREN SUAREZ:  There's that great potential,

       9      but I think, too, as you look at it, one of the

      10      great things actually about transmission, and one of

      11      the things we care about significantly, is cost.

      12             And one of the great things that upgrades in

      13      transmission do, is they actually reduce the cost

      14      for customers.

      15             And so these projects that have been

      16      proposed, and this is why we actually agree very

      17      much with everything that Phil said, that priority

      18      should be the AC transmission upgrades; get that

      19      process going forward.

      20             It was good to hear today that, you know, the

      21      Public Service Commission is moving forward.

      22             It was unfortunate to hear it's not on the

      23      time frame that we had earlier understood.

      24             So, I think that those costs can actually be

      25      taken care of as a result of the savings that







                                                                   153
       1      customers will receive.

       2             And that's one of the great things that, sort

       3      of, is contained in the AC proceeding, is to make

       4      sure that the customers that are benefiting will

       5      actually receive a benefit.

       6             And, they'll pay a little bit more, but

       7      they'll actually see a reduction in their overall

       8      cost.

       9             SENATOR GRIFFO:  Kevin.

      10             KEVIN SCHULTE:  So, I'm Kevin Schulte.  I am

      11      the owner of Sustainable Energy Developments.  We're

      12      a wind and solar developer in Western New York.

      13             I'm here today on behalf of the Alliance for

      14      Clean Energy New York, as a board member.

      15             The Alliance represents a diverse group of

      16      renewable-energy and energy-efficiency companies,

      17      clean-energy consultants, and the environmental

      18      community.

      19             We are the voice of clean energy for the

      20      state of New York.

      21             I think the first and most important thing,

      22      other than to thank you for the opportunity to speak

      23      here today, is to tell you that we are supportive of

      24      the REV proceeding and the long-term possibilities

      25      it creates for renewable energy and energy







                                                                   154
       1      efficiency in the state.

       2             I think the clean-energy goals are good.

       3             It's an ambitious, innovative, and,

       4      potentially, extremely positive clean-energy

       5      business opportunity for the state.

       6             At the same time, our members approach it

       7      with some level of trepidation and uncertainty as

       8      policy changes for our respective companies.

       9             Again, at a general level, we're very

      10      supportive and appreciative of the policy goals.

      11             We do not advocate for them to slowed down --

      12      we do not advocate for them to slow down or step

      13      away from the initiative, but, we are actively

      14      pushing for assurances that the transition will be

      15      smooth for our businesses, making sure the process

      16      is open, transparent, and profitable for our member

      17      companies, and to ensure we have no backsliding in

      18      the markets that are all on a growth path.

      19             I think I can break my comments down into

      20      two basic pieces:  One is for large-scale

      21      renewables, and the other is for distributed.

      22             The large-scale renewable side of things, we

      23      were very happy in February that that process was

      24      engaged in.

      25             We believe that this will be the next







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       1      generation of our RPS.

       2             We think four main components of the

       3      large-scale renewable programs should be considered.

       4             The first is, that the statewide

       5      renewable-energy target should ensure at least

       6      50 percent of New York's electric energy is coming

       7      from renewables by 2025.

       8             The second should be a utility procurement

       9      model, with flexible contracting mechanisms, such as

      10      bundled contracts and long-term PPAs, in order to

      11      send a clear long-term signal to renewable-energy

      12      companies and investors to attract them in New York.

      13             The third, is that the program should be

      14      consistent statewide and include Long Island.

      15             And that -- the fourth is, that the LSR

      16      should track -- should track -- should maintain the

      17      current eligibility for the RPS, and foster diverse

      18      technologies; and, particularly, off-shore wind.

      19             From a distributed-renewables and

      20      energy-efficiency perspective, again, I think our

      21      comments are somewhat similar.

      22             We are approaching, with some trepidation at

      23      the end of the RPS, that programs like those that

      24      support distributed wind and energy efficiency are

      25      ending at the end of this year, and we want to







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       1      ensure that there are smooth transitions to new

       2      programs as we go into 2016.

       3             Overall, I think our comments are consistent,

       4      that we're supportive of the process, we're excited

       5      about the future of renewable energy in the state,

       6      and we're here to be engaged.

       7             SENATOR GRIFFO:  Go ahead.

       8             SENATOR DEFRANCISCO:  Are any of the last

       9      panelists still here?  Or anybody from their

      10      offices?

      11             You know, I would hope that we would be able

      12      to get a taping of this, and copies of all the

      13      testimony, because it would seem that what these

      14      people say, who are the experts in their area, on

      15      the ground, doing the energy work, rather than

      16      philosophizing, that they should listen, to see what

      17      the suggestions are.  They may even agree.

      18             So I would ask the Chair to get copies of all

      19      the testimony, and if we could get tapes of this,

      20      hand-delivered to each of the four speakers, and

      21      maybe they can take a look it, 'cause what is being

      22      said here, it seems to me, to make a lot of sense.

      23             Secondly, Darren, this is a little off-board,

      24      and I will ask for a real, real short answer.

      25             DARREN SUAREZ:  Yes.







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       1             SENATOR DEFRANCISCO:  Comprehensive and

       2      short.

       3             DARREN SUAREZ:  Okay.

       4             SENATOR DEFRANCISCO:  What does the

       5      Green Bank do that a commercial bank could not do in

       6      providing loans for energy-type energy -- solar-type

       7      energy?

       8             DARREN SUAREZ:  Well, it...

       9             SENATOR DEFRANCISCO:  Come on.

      10             DARREN SUAREZ:  All right.

      11             UNIDENTIFIED SPEAKER:  Nothing.

      12             DARREN SUAREZ:  It actually does a pretty

      13      good amount, in terms of what it, it would -- it,

      14      potentially, has the ability to fill in a market

      15      space that isn't being addressed, in terms of being

      16      able to aggregate resources that -- or, loans that

      17      may not otherwise, sort of, be marketable.

      18             And, it has the potential to, basically, fund

      19      additional projects.

      20             There is -- there's real potential for it.

      21             How -- sort of how it plays out I think it's

      22      unclear.

      23             It certainly, in Connecticut, has worked

      24      well, to allow for the residential solar market to

      25      expand.







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       1             SENATOR DEFRANCISCO:  You don't know how it

       2      plays out yet?

       3             DARREN SUAREZ:  No, and I don't think we do.

       4             I think -- but -- so we support it, really,

       5      actually, because, right now, the current system

       6      doesn't work.

       7             The current system basically have

       8      assessments, and charge, basically, customers, oh,

       9      nearly a billion dollars annually.

      10             We haven't met our renewable goals, and, so,

      11      you know, it's sort of like:  There's another

      12      alternative.  We'll certainly take that path,

      13      because the one that we're on doesn't work.

      14             SENATOR DEFRANCISCO:  Have you got a

      15      suggestion, Business Council, for another

      16      alternative?

      17             DARREN SUAREZ:  Yeah, leave customers their

      18      money.

      19             So that was actually --

      20             SENATOR DEFRANCISCO:  That sounds pretty

      21      good.

      22             DARREN SUAREZ:  -- it was contained,

      23      actually, in the REV proceeding, which one of the

      24      pieces allowed for large -- larger (unintelligible)

      25      customers to make energy-efficiency upgrades on







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       1      their own and with their own money.

       2             SENATOR DEFRANCISCO:  And, lastly, now,

       3      I hope I didn't forget what I was thinking here:

       4             The -- let the customers pay their money.

       5             This is one of the main benefits, if I'm not

       6      mistaken, that the Green Bank can actually guarantee

       7      loans from private banks?

       8             DARREN SUAREZ:  Yeah.

       9             SENATOR DEFRANCISCO:  Well, wouldn't a

      10      guarantee of a loan, alone, reduce some of the risks

      11      of private banks, and not require a -- a relatively

      12      extensive staff to do what banks do anyway?

      13             DARREN SUAREZ:  Yes, that's true.

      14             SENATOR DEFRANCISCO:  Okay.

      15             SENATOR GRIFFO:  Darren, are you familiar --

      16      you mentioned Connecticut.

      17             Are you familiar with the Connecticut

      18      Green Bank.

      19             DARREN SUAREZ:  A bit, Senator.

      20             SENATOR GRIFFO:  Were they established by

      21      statute or administratively?  Do you know?

      22             DARREN SUAREZ:  They were established by

      23      statute.

      24             SENATOR GRIFFO:  So I think that's something

      25      that we may want to have staff look into, too, is to







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       1      determine how many of the Green Banks that do exist

       2      were established by statute, or how they were

       3      established.

       4             DARREN SUAREZ:  Yeah, New York has,

       5      certainly, unfortunately, a long history of

       6      establishing things without statute, like the RGGI

       7      program.

       8             SENATOR DEFRANCISCO:  Really?

       9             I hadn't noticed.

      10                  [Laughter.]

      11             DARREN SUAREZ:  Yeah, well.

      12             SENATOR PARKER:  Can I jump in?

      13             And, Chairman DeFrancisco, I think, you

      14      know, just so there's clarity about this, the

      15      Green Bank does not use taxpayer dollars.

      16             It actually uses a systems-of-benefit charge,

      17      which is actually being -- which is collected

      18      through the utilities and is there already, and,

      19      frankly, sitting, unused, in NYSERDA.

      20             So to say that they should -- they would --

      21      to give the money back, you would have to get rid of

      22      the systems-benefit charge.

      23             DARREN SUAREZ:  Right, which would be great,

      24      Senator.  Honestly, that would be a real step

      25      forward.







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       1             And I think that's the intent, is to

       2      eventually get rid of SBC and RPS.

       3             You're looking at $950 million worth of money

       4      that's going to --

       5             SENATOR PARKER:  You get rid of the renewable

       6      portfolio standard?

       7             DARREN SUAREZ:  Yeah, potentially, those fees

       8      that are associated with that.  Yes.

       9             SENATOR PARKER:  Okay.

      10             DARREN SUAREZ:  And look to a new model, and

      11      sort of market innovation and a market approach that

      12      sort of assesses and evaluates those in a sort of

      13      more real manner.

      14             Right now, the money is not going out the

      15      door, so that's why the money was available.  And

      16      NYSERDA hadn't been spending it, and that's why it

      17      was available.

      18             SENATOR PARKER:  Right, and, you know,

      19      I agree with that.  I just made that point in front

      20      of NYSERDA.  I mean --

      21             DARREN SUAREZ:  No, I'm agreeing with you.

      22             I'm just sort of saying -- you're saying that

      23      we should spend it.  I'm just saying, just give it

      24      back.

      25             SENATOR GRIFFO:  Ted, you wanted to add







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       1      something to that, I think?

       2             TED SKERPON:  No, I'm set.  I'm good.

       3             SENATOR GRIFFO:  Okay.  Aren't we all?

       4             They were getting excited there,

       5      Senator Parker.

       6                  [Laughter.]

       7             SENATOR PARKER:  I saw.

       8             SENATOR DEFRANCISCO:  So let me clarify this.

       9             Business and labor agree.  Is that correct?

      10             Is that correct?

      11             And, it seems pretty --

      12             UNIDENTIFIED SPEAKER:  Fundamental.

      13             SENATOR DEFRANCISCO:  Almost, almost.

      14             Well, I didn't expect miracles, you know.

      15             No, but, seriously, these are excellent

      16      suggestions.

      17             And it just seems to me, if we can't get it,

      18      a change administratively, we really ought to try to

      19      do something legislatively, because it's got to get

      20      done, and the sooner it gets done, the less problem

      21      we've going to have down the road.

      22             SENATOR GRIFFO:  Darren, did you want to add

      23      anything officially?  Or are you --

      24             DARREN SUAREZ:  No, I'm okay.

      25             You know, I think, in terms of -- yeah, you







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       1      didn't hear my full testimony, but I think

       2      Senator DeFrancisco probably appreciates that.

       3             SENATOR GRIFFO:  And you have provided

       4      testimony; correct?

       5             DARREN SUAREZ:  I have provided testimony.

       6             And the main things to hear, just from our

       7      members, are about our concern regarding costs so

       8      that we can stay competitive with other locations,

       9      and transmission upgrades are part of that.

      10             SENATOR GRIFFO:  Senator Parker, do you have

      11      anything to add?

      12             Senator DeFrancisco?

      13             Now, any members of the panel have anything

      14      they want to add?

      15             I would just conclude with saying that, you

      16      know, we understand the importance of the

      17      Energy Highway, and the Reforming the Energy Vision.

      18             I think these are initiatives that need to

      19      work in tandem to provide New York with a strong

      20      centralized grid; a modernized, upgraded backbone of

      21      transmission, flexibility, and resilience, so that

      22      we can do what we need to do to provide distributed

      23      resources.

      24             I think that would be, hopefully, an

      25      objective and goal that we can concur on.







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       1             And I want to thank you all for being here

       2      today.

       3             And I'm am going to adjourn this meeting of

       4      the Energy Committee, and the Finance Committee,

       5      with Senator DeFrancisco's concurrence.

       6             The joint Committee is adjourned.

       7

       8                  (Whereupon, at approximately 2:58 p.m.,

       9        the public hearing held before the New York State

      10        Senate Standing Committee on Energy and

      11        Telecommunications, and the Senate Standing

      12        Committee on Finance, concluded, and adjourned.)

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