NYC grid shortfall as fossil fuel peakers plan to retire

NYC grid shortfall as fossil fuel peakers plan to retire

Good morning and welcome to the Monday edition of the New York & New Jersey Energy newsletter. We’ll take a look at the week ahead and look back on what you may have missed last week.

NYC GRID SHORTFALL — POLITICO’s Marie J. French: The state’s independent grid operator has officially identified a shortfall of electric generating capacity for New York City in 2025, which will likely prevent some highly polluting power plants from retiring.

The New York Independent System Operator, which is tasked with ensuring there’s enough electricity available even during heatwaves when people crank up their air conditioners, has been warning about the potential issue for years. The forecasted shortfall is driven by rising demand and the planned retirement of the fleet of older peaker power plants in response to state environmental rules aimed at reducing harmful co-pollutants in the downstate region.

The NYISO process will seek solutions from the market to address the identified reliability need. Given permitting and other hurdles in New York City, it’s likely that some of the peaker plants will remain online in 2025.

The NYISO’s 169-page report released Friday identifies a need for 446 megawatts of electricity for nine hours during a peak demand day in 2025 when two generators or transmission lines are unexpectedly offline and the temperature hits 95 degrees. The shortfall would be even greater if the city experiences a more intense heatwave.

“To be clear: The reliability of our grid is not in question,” Hochul spokesperson Katy Zielinski said in a statement. “We are committed to ensuring New Yorkers have a reliable and affordable power supply — and we can do this while accomplishing our nation-leading climate goals. Governor Hochul remains fully committed to rapidly decreasing emissions and setting an example for how clean energy and reliability can go hand-in-hand.”

Zielinski cited the planned Canadian hydropower line, the Clean Path line and offshore wind projects as ways to bring more renewables into New York City. The offshore wind projects aren’t far enough advanced for NYISO to include in its forecasts, and the Clean Path line is not expected to be complete until 2027.

“We’ve identified the reliability need, so we’re confident that’s present for summer 2025,” said NYISO spokesman Kevin Lanahan. “We’re also confident that we can solve the reliability [need]. That’s the nature of our planning process, to identify those issues with enough time to solve the problems so we’re confident we can find the solution and keep the system reliable.”

More reactions: “We encourage all stakeholders involved in the energy planning process to take concrete action to prevent delaying the closure of fossil fuel peaker plants in 2025 and beyond,” the PEAK Coalition, which is pushing to close these plants said in a statement. “These plants harm the communities that surround them every hour that they operate. PEAK refuses to accept a scenario in which environmental justice communities must suffer further harm to guarantee further profligate summertime energy consumption in commercial buildings and wealthy communities.”

“The pace of play is not keeping up with pace of promises, and this report makes that clear,” said Independent Power Producers of New York president and CEO Gavin Donohue, who represents the state’s existing nuclear, renewable and predominantly fossil fuel power plants. “This report should draw attention from state officials in shaping realistic public policies. I encourage the NYISO to identify solutions that are market-based so we can set ourselves on the pathway to a cleaner energy future, while maintaining the reliability of our grid at affordable rates.”

What’s next? The NYISO plans to solicit solutions to the reliability issue in August, with 60 days for a response. If there are no solutions that can be in place by 2025, the grid operator can unilaterally — without sign off from the state — decide to keep some peakers online for two years until May 2027 and potentially an additional two years if a solution still is not in place.

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Here’s what we’re watching this week:


— The Long Island Power Authority CEO and officials with NextEra and National Grid Ventures hold an event highlighting a year of operation for the Calverton Solar Energy Center, 10 a.m., Calverton Solar Energy Center.


— Another environmental bond act listening session is held, 1 p.m., University at Albany, Campus Center Auditorium.

— The Public Service Commission meets, 10:30 a.m. Items on the preliminary agenda include the Con Edison rate hike and information about the costs of implementing the state’s climate law.

— The New York Times looks at efforts to prepare for more flooding in the state.

— A plastics plant proposed in Lockport is getting pushback, with environmental advocates opposing tax breaks for the project.

— More wet days are ahead in New York as the effects of climate change continue to be felt.

— The Times Union says recent flooding could spur a new push for buyout programs, with a focus on the benefits of such a program in Hoosick Falls.

— The Port of Albany is continuing work on what could be the nation’s first offshore wind manufacturing project, despite a significant funding gap to complete it that’s not yet resolved.

— The village of Solvay mismanaged its electric fund, a state audit found.

— Drones will be used to monitor sharks off New York beaches.

— Long Island water providers are urging conservation measures.

— Stronger lead paint rules could be coming to New York City.

— ENERGY MOVES: Schuyler Matteson, who has been a key player at NYSERDA working on energy storage policy, heads to the Department of Public Service as Clean Energy Planning Lead, he announced on LinkedIn.

— The state and Wildwood are still in dispute over unauthorized beach repairs.

— With more warehouses in New Jersey come more concerns for the health of nearby residents.

NJ TO FOLLOW CALIF. ON CLEAN CARS — Gov. Phil Murphy’s office plans to formally propose a ban on the sale of new gasoline-powered cars by 2035. The move, which the governor had telegraphed in a major environmental speech back in February, could come as soon as Friday and would put New Jersey firmly on a path pioneered by California and already adopted by several other states, including New York.

While the move was expected, environmental advocates have lately expressed public and private concerns that the governor’s promise had yet to become a formal rulemaking process. A series of procedural waiting periods between a rule’s proposal and adoption means the rule — known as Advanced Clean Cars II — needs to be published soon in the state register or else it might not be adopted by the end of the year, which would delay the rule’s effect by a whole vehicle model year.

Fans of the move were reluctant to comment on the governor’s expected announcement before the governor made his intentions public. The governor is also expected to announce the signing of an international declaration to speed up the move to zero-emission cars and vans. A spokesperson for the governor did not respond to a request for comment.

California’s plan, upon which New Jersey’s will be modeled, was announced several years ago by Murphy’s fellow Democrat, Gov. Gavin Newsom. Nonetheless, when California moved to formally adopt the rule last year, it was a vivid show of the changing times. The rule is a firm signal that the era of the internal combustion engine is coming to a close.

In New Jersey, electric vehicles are about 5 percent of new vehicle registrations, according to a December 2022 DEP presentation. —Ry Rivard

PIPELINE ENHANCEMENT PROJECT POSES CLIMATE TEST — POLITICO’s Marie J. French: Gov. Kathy Hochul’s administration is facing another test of New York’s climate law as a pipeline company seeks to increase the amount of natural gas shipped to the New York City area. The developer of the project is pushing the Department of Environmental Conservation to issue required air permits imminently or risk the project not being completed in time for the 2025-26 winter heating season, according to a letter obtained by POLITICO.

“The Air Permits have been pending with DEC for more than three years,” the June 15 letter from Jeff Bruner, president of the Iroquois Pipeline Operating Company, to DEC Commissioner Basil Seggos says. “Now, however, the time for DEC’s final decision on the Applications has become critical.” The proposed Iroquois Enhancement by Compression, or ExC, project involves adding compressor stations onto an existing pipeline, not a new pipeline to serve New York or neighboring regions. The additional gas would be sold to National Grid and Con Edison, enabling the utilities to meet any increased demand for gas from their customers.

The air permit decision for the ExC projects is another test of DEC’s interpretation of the climate law, with significant implications for the downstate gas system.

WIND IN COURT — The Associated Press’ Wayne Parry: A tangle of litigation could delay the start of New Jersey’s first offshore wind energy project, as developer Orsted is suing governments to stop delaying necessary permits, and citizens groups try to halt the project altogether.

OFFSHORE WIND AWARDS ON TRACK: An announcement of winners of the state’s third offshore wind is still expected this summer, said NYSERDA president and CEO Doreen Harris on Wednesday. The authority received updated prices from developers based on new federal tax guidance on June 16 and staff “are concluding our evaluation now,” Harris said. “I don’t have a date for an announcement but I’d say we’re wrapping up our work shortly.” Summer officially ends September 23. Coincidentally, NYC Climate week kicks off on Sept. 17. — Marie J. French

BPU PUNTS ON BUILDING ELECTRIFICATION: The New Jersey Board of Public Utilities delayed action Wednesday on a plan that would encourage building electrification amid opposition from Republicans, traditional industry groups and the state’s ratepayer watchdog. A BPU straw proposal aimed to use a new three-year energy efficiency program that utilities will have to start next year to decarbonize buildings. Utilities would help customers switch from gas to electric appliances by targeting space and water heating in the residential and multifamily sectors and making buildings electrification-ready. While the proposal has been out for several weeks, political backlash ensued as the board meeting approached. The BPU decided to punt.

The delay in deciding how to handle building decarbonization threatens Gov. Phil Murphy’s ambitious climate change and clean energy plans. Earlier this year, amid criticism that he had lost some of his environmental street cred, the governor set a target to electrify 400,000 residential buildings and 20,000 commercial buildings by 2030, which generally means retrofitting them to switch from natural gas to electric heat.

To explain the delay, BPU President Joseph Fiordaliso said, “We’ve gotten an awful lot of stakeholder input and we want to make sure that we include every aspect of input we’ve received before we have the final order issued.”

UTILITY RATES SCRUTINIZED: The Assembly held the first of two planned hearings on utility rates on Tuesday, with a handful of lawmakers getting the chance to question Rory Christian, the chair of the Public Service Commission. The second hearing will dive more into the impact of the state’s climate law on utility rates, said Assemblymember Didi Barrett (D-Columbia County), who chairs the Energy Committee.

Lawmakers got an overview of the commission’s rate case process, where utilities seek higher returns on their investments and approval of their plans to spend on capital projects, maintenance and other priorities. Questions touched on the energy affordability target of limiting bills to 6 percent of income, the usability of the commission’s website, the risk of stranded assets as the state transitions buildings away from fossil fuels for heating and the nitty gritty of rate cases including how return on equity for capital investments works. “I think some of the frustration of constituents is that they see the same movie play out over and over,” said Assemblymember Ken Zebrowski (D-Rockland County), the chair of the corporations committee, pointing to the rate case process where utilities ask for big increases and the commission signs off on some lower number.

Christian highlighted the PSC’s role in scrutinizing investments proposed by utilities and the earnings adjustment mechanisms the commission has included in rate hike approvals. “We must make sure that whatever we are putting in is actually going to meet a need, and this can be a challenge when you’re going through a transformation of the system,” he said. — Marie J. French

COMMUNITY AIR MONITORING CONCLUDES — POLITICO’s Marie J. French: Intensive air quality data collection in 10 disadvantaged communities across the state is beginning to conclude, and the state is now gearing up to analyze the information collected to identify pollution sources. Department of Environmental Conservation officials on Monday discussed the community air monitoring effort in Manhattan after data collection for one year was completed last month.

Why it matters: The intensive local air monitoring, including mobile units driving key streets dozens of times and detectors near locations like schools and hospitals, is required under the state’s 2019 climate law. The work is expected to provide more information about health-harming local pollutants and their sources in disadvantaged communities. The DEC will then work with local communities to identify strategies to address poor air quality. Addressing pollution in communities that have historically suffered higher levels of it due to the siting of infrastructure in low-income and minority areas is a key part of New York’s climate efforts. Environmental justice groups are concerned these areas will be left behind or negatively impacted as policymakers consider an economy-wide cap-and-trade program to reduce total greenhouse gas emissions as also required by the climate law.

BOEM EX-HEAD JOINS RWE: Amanda Lefton, who led the Biden administration’s offshore wind efforts as director of the Bureau of Ocean Energy Management until mid-January, joined RWE on Monday to lead the company’s East Coast offshore projects. RWE and National Grid are jointly developing the largest lease area off New York’s shores for the 3-gigawatt Community Offshore Wind project. As BOEM chief, Lefton oversaw the approval of the nation’s first two offshore wind developments, Vineyard Wind and South Fork Wind. She joined Foley Hoag as senior policy director in February. — James Bikales

MSG DEAL IN SIGHT — POLITICO’s Janaki Chadha: Madison Square Garden should be granted a new permit to continue operating atop Penn Station, but only if it cooperates with plans to revamp the transit hub, the Department of City Planning said Monday.

The agency’s recommendations would allow MSG to continue operating at its current location for another 10 years, with a requirement that the Garden return to City Planning when plans to redesign Penn Station are 30 percent complete and show that it is compatible with the rebuild.

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