Transition costs hit utility bills

Transition costs hit utility bills

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.

TRANSITION COSTS HIT UTILITY BILLS — POLITICO’s Marie J. French: New York is eager to move away from fossil fuels. Customers, though, will feel the switch in their wallets. The state has largely funded the recent investments in clean energy, electric vehicle chargers, heat pumps and new transmission lines incrementally through piecemeal decisions by the quasi-independent Public Service Commission, which regulates utilities. But larger bills for the aggressive transition are increasingly coming due, and it has the potential for sticker shock for ratepayers — a byproduct of the tremendous complexity of shifting from from fossil fuels to heat and power homes and businesses.

Some of the costs are already impacting utility bills, but more are set to hit in the coming years as projects come online. “Financing them exclusively through rates, particularly on residential, is the least progressive mechanism for financing anything. We make no judgment whether you have the money to pay or you don’t have the money to pay,” John Howard, a commissioner on the Public Service Commission, said at last month’s meeting. While lawmakers’ concerns are growing over the impact on consumers, they have few levers to shift course on the already-approved costs.

A wholesale transition of the state’s energy system is not optional: It is mandated under a sweeping 2019 law requiring 70 percent renewable electricity by 2030 and an emissions-free grid by 2040, alongside overall reductions in planet-warming gasses. So it requires a wholesale electrification of the state’s economy if New York is to meet the statutory targets. The nation-leading initiative won’t come cheap, even though the changeover represents just a small fraction of the state’s economy. Total costs are a small percentage — less than 1 percent in 2030 and 1.3 percent in 2050 — of the state’s total economic output, according to the state’s analysis. Incorporating the value of avoided emissions along with health benefits shows an overall benefit from the shift, the analysis shows.

BEACON GAS BAN: The popular tourist destination of Beacon, a city of about 14,000, is poised to become the third city in New York to phase out natural gas and other fossil fuels in new buildings. The Beacon City Council is scheduled to vote during their Monday night meeting on a measure to require almost all new buildings starting in 2024 to utilize electric heat and appliances. There are exemptions for restaurants, hospitals, laundromats, crematoriums and laboratories.

New York City has already passed a similar local law, albeit with a longer timeline for larger buildings, and Ithaca has adopted building codes requiring all new buildings to meet net-zero requirements by 2026. State lawmakers are also mulling a ban on fossil fuel combustion in new construction, with some pushing a faster timeline than Hochul’s budget includes and others raising concern about the plan. — Marie J. French

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Here’s what we’re watching this week:


— New Jersey Transit’s board meets, 6 p.m. Before the meeting, environmental advocates will rally in front of the agency’s Newark headquarters at 5 p.m. and talk about the agency’s plans to build a gas-fired power plant and present a study that “shows a clean energy option would be cleaner, more economical and technically feasible.”

— Keep an eye out for one-house budget measures from the New York Assembly and Senate, which will provide a roadmap for some of the negotiations on issues including a push to electrify new buildings.


— The New York Public Service Commission meets, 10:30 a.m.

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— The New York Times highlights the challenges for apartments to comply with Local Law 97, which requires steep reductions in emissions to avoid penalties.

— The Verge interviews Revel’s CEO and co-founder about the company’s move into EV charging in New York City.

— Gannett crunches some data on chemical pollution, both permitted and violations, in New York.

— Amtrak is restarting an Adirondack rail route to Montreal.

— Some residents in a village that swapped its streetlights for LEDs are complaining of health problems from the switch.

— Solar installations continued apace on Long Island in 2022.

— EV fires pose a challenge for firefighters, Newsday reports.

— A lawmaker yanked a building electrification bill from a scheduled vote after opposition from the fossil fuel industry.

— The spotted lanternfly remains a big concern in New Jersey.

MORE EV CHARGER SUBSIDIES FLOATED: The New York Department of Public Service staff wants to boost a ratepayer-funded program to support electric vehicle charging infrastructure from $701 million to $1.1 billion. A mid-point review of the “make ready” program, which the Public Service Commission approved in July 2020, found uneven progress in different utility territories to achieve the public charger goals of the program. Overall, only 630 fast charger plugs of a targeted 1,500 and only 12,475 of a targeted more than 53,000 Level 2 chargers by 2025 have been completed or committed.

While Con Edison is about halfway to its fast charger and Level 2 charger targets, National Grid is only 16 percent of the way to its Level 2 goal and 44 percent of the way to its fast charger target. Central Hudson is 1 fast charger shy of its program goal but has only hit 16 percent for its Level 2 target. NYSEG/RG&E are far behind.

DPS staff concludes that the incentives in the make ready program are insufficient and proposes boosting the available subsidies. New targets for the number of plugs are also proposed, including a new sub-category for chargers at apartment buildings. The new targets increase the number of public fast chargers to about 6,300 and reduce the number of level 2 chargers to about 43,000. A new $25 million micro-mobility program for disadvantaged communities is also proposed and the staff supports increasing a medium- and heavy-duty vehicle electrification pilot by $30 million to $54 million. — Marie J. French

PSEG TOPS LOBBYING LIST — POLITICO’s Ry Rivard: Public Service Enterprise Group, which owns the state’s largest utility and three nuclear power plants that receive massive state subsidies, was the largest spender on lobbying in New Jersey, though its outlay fell by nearly 70 percent from 2021 to $849,112. For the first time in more than a decade, no New Jersey special interest spent more than $1 million in lobbying last year. The preliminary findings of lobbying filings, from the latest annual analysis of spending by New Jersey Election Law Enforcement Commission, found overall spending of $95 million in 2022 was still the fourth highest in history, though it was down by nearly 1 percent. Jeff Brindle, ELEC’s executive director, said lobbying may be reverting to “more normal patterns” following the worst years of the pandemic. “The last five years have been a relatively tumultuous time for the state and lobbyists. Things seem to be settling down somewhat,” Brindle said in a statement accompanying the release of the analysis.

MONEY FOR GATEWAY, MTA — POLITICO’s Ry Rivard: President Joe Biden’s proposed budget includes a $700 million boost to build the two new rail tunnels beneath the Hudson River. The plan, released Thursday, includes a huge chunk of money to create the new rail link between New Jersey and New York to supplement century-old tubes that are in shambles. The budget line is the largest in Biden’s proposal for the Federal Transit Administration’s “new starts” projects. The budget also includes $496 million for the New York Metropolitan Transit Agency to extend the Second Avenue Subway into East Harlem.

Senate Majority Leader Chuck Schumer said the budget proposal was great news for New York City’s transit system and came after he told Biden and Transportation Secretary Pete Buttigieg the region needed to have the money fast. Even though the line items are in a proposed budget subject to approval with lawmakers, the money comes from a pot of funds in the infrastructure law — put there specifically for these projects and others like them. “It sure locks things in, you bet, now we’ve had over $1 billion allocated for Gateway,” Schumer said.

GE MANUFACTURING BACKED BY OFFSHORE WIND BIDDERS — POLITICO’s Marie J. French: Most of the developers in New York’s latest offshore wind solicitation recently submitted supply chain proposals that include the manufacturing of blades and nacelles by General Electric at a port near Albany. The new details of the bids were included in heavily redacted public documents released by NYSERDA earlier this month. The documents also indicate that Vestas, a competitor of GE in the offshore wind turbine supplier space, is considering manufacturing blades at a site in East Greenbush in Rensselaer County. “It is amazing that there’s a chance that the Capital Region … could be Grand Central for this industry,” said Assemblymember John McDonald (D-Cohoes). “It’s a great opportunity.”

Whether New York will secure one of these major projects — the only other offshore wind turbine blade manufacturer currently planned in the U.S. is in Virginia — depends on the outcome of the NYSERDA solicitation and subsequent commitments being kept by developers and their partners. GE had previously announced a proposal for manufacturing offshore wind turbine components at the Port of Coeymans south of Albany. All six of the developers included an option to support that project if they are awarded contracts by NYSERDA. Siemens Gamesa also proposed making nacelles, which house the generators turning the energy from the spinning turbine blades into electricity, at the Port of Coeymans.

Offshore wind developers were required to propose “supply chain investment plans” as part of their bids to NYSERDA, which is making up to $300 million in state funding available for proposals that include manufacturing blades or nacelles. New York is racing to capture a portion of the supply chain for the key wind components and the associated jobs.

All the developers included GE’s proposal in their bids. Only one project — Ørsted and Eversource’s Sunrise Wind 2 — included both GE’s and Vestas’ proposal as options. The bid documents did not identify the location of the Vestas project, but the details match a site in East Greenbush that previously qualified for port funding in a 2019 NYSERDA process. East Greenbush town supervisor Jack Conway said he met with officials from Vestas about the project and that the site was a good fit for the proposal. “It’s in the right place; it supports the right project,” Conway said.

NYPA STORAGE RFP UPDATE: The New York Power Authority has made contingent awards to six storage projects at some of its small gas power plants and the Richard M. Flynn plant. NYPA has a preference for projects that get selected by NYSERDA in its offshore wind request for proposals “to help harness energy from offshore wind, the results of which are expected this Spring,” spokesperson Sue Craig said in a statement. The contingent winners were notified by NYPA in January. There were 22 proposals that NYPA selected from. It issued the RFP in April 2022 in conjunction with a study about shuttering and repurposing its fossil fuel peakers. — Marie J. French

A NEW BPU — POLITICO’s Ry Rivard: New Jersey Gov. Phil Murphy is looking to remake the Board of Public Utilities by replacing three of its five commissioners as his administration enters its final years and his environmental legacy remains up in the air. On Monday, Murphy nominated two new commissioners to replace former state Sen. Bob Gordon, who has been on the board since 2018, and Dianne Solomon, who former Gov. Chris Christie nominated to the board a decade ago. The Democratic governor has been trying since last year to replace Solomon, who is the only member Murphy didn’t nominate or reappoint.

But his latest push went public Monday just hours after Solomon has raised questions during a BPU meeting about the Murphy administration’s energy policy on several fronts, including rising costs of offshore wind energy and the governor’s recent push for the BPU to examine the future of the state’s natural gas utilities in a post-gas world. “We need only look to California to see what the future could hold if we do not move in a measured way in this transition,” she said, referring to reliability issues in that state. If Murphy has his way, Solomon’s spot would go to Marian Abdou, an attorney for the energy company NRG. She is little known in Trenton and people were scrambling to find out more about her. Murphy had to withdraw his previous pick to replace Solomon, former Republican state lawmaker Maria Rodriguez-Gregg. Abdou’s low profile could help her — or hurt her when she’s vying to replace Solomon, the wife of a state Supreme Court justice nominated by Christie, a Republican. In a brief interview, Solomon said “it’s been my honor” to have been on the commission for as long as she has been.

Murphy’s replacement for Gordon, Christine Guhl Sadovy, is much better known. She is a former BPU chief of staff who is now the liaison between the governor and his cabinet. It’s clear why Murphy would want Sadovy on the board, because she is one of the top staffers who worked on the state’s clean energy master plan and someone who knows her way around the BPU. Because of that history, critics of the governor’s energy policies are likely to press lawmakers to use her confirmation hearing in the Senate Judiciary Committee to challenge the governor.

BUILDING ELECTRIFICATION AD: A coalition backing a mandate to electrify new homes and phase out fossil fuel combustion in existing buildings has launched a Facebook ad campaign highlighting the volatile price of natural gas. The Better Buildings NY coalition, which includes environmental groups such as NRDC, Alliance for a Green Economy and WE ACT for Environmental Justice, announced it spent in the “high five figures” on the ads to support all-electric buildings requirements. “Tell Governor Hochul it’s time to get off gas and transition to a clean and affordable heating future,” the 47-second ad concludes.

Hochul’s budget proposal included a ban on fossil fuel burning equipment, including furnaces and stoves, in new buildings with exceptions for restaurants, hospitals and manufacturers among others. The start date is later than some environmental advocates and Senate Democrats prefer, targeting alignment with new statewide building codes. The proposal faces opposition from the fossil fuel industry, particularly fuel suppliers and natural gas utilities facing an existential threat to their business. Smarter NY Energy, which is backed by the propane industry, has been running Facebook ads opposing the state’s climate plan that included the proposals in Hochul’s budget. In her 30-day amendments, the governor included a new exemption for agricultural buildings to be defined by the state’s building codes council.

Hochul has also backed a phaseout of the sale of replacement gas furnaces starting in 2030 for single-family homes and residential buildings less than three stories and 2035 for larger and commercial buildings. That means a homeowner would likely need to invest in a heat pump if their gas, propane or other fuel furnace breaks down after that date. Hochul’s 30-day amendments also added an exemption from this equipment phaseout proposal and the new building requirements for “emergency replacement of existing equipment.” NYSERDA has estimated that the current up-front cost of a heat pump conversion is higher than a gas replacement and that a conversion from gas does not offer an economic return. — Marie J. French

NYLCV 2023 AGENDA — The New York League of Conservation Voters is pushing for more funding to tackle the state’s growing waste problem, according to its newly-released 2023 policy agenda. The League plans to advocate Long Island municipalities and county legislatures for more funding to expand regional recycling facilities, anaerobic digesters, compost sites and curbside collection of residential food waste. “There’s a pending garbage crisis on Long Island,” NYLCV President Julie Tighe said in an interview, pointing to the impending closure of the Brookhaven landfill, which will likely increase exports of trash by rail or long-haul trucks. The League is also calling on New York City to pass legislation that codifies the city’s Zero Waste by 2030 goal.

The NYLCV is unique among environmental advocacy groups in that it campaigns and raises money for candidates. It also grades local lawmakers on their environmental record, a process that is guided by its annual agenda. The organization is also calling for increased city parks funding and greater investments in renewable energy and energy efficiency programs — Danielle Muoio Dunn

ØRSTED LOOKS TO KEEP TAX CREDIT DOLLARS — POLITICO’s Ry Rivard: For months, the Murphy administration has been locked in negotiations with Danish energy giant Ørsted about how to keep the state’s first offshore wind farm afloat financially. Details of those fraught negotiations spilled into public Monday, during a Board of Public Utilities meeting where the five-member board began accepting proposals for more wind farms off the New Jersey coast. But first it’s clear there are questions about how to pay for the first one. In 2019, the state Board of Public Utilities approved Ørsted’s plans to put 100 turbines 15 miles off the South Jersey coast. The project, known as Ocean Wind 1, is supposed to be finished in 2025 but has yet to begin construction as Ørsted worries it can’t make money from the deal. The project and two other wind farms approved by BPU depend on backing from New Jersey ratepayers. For Ocean Wind 1, the typical residential power bill is expected to increase by about $1.50 per month.

Now, though, Ørsted is looking to redo part of the 2019 deal it struck with BPU, citing inflation, interest rates and supply chain issues. The stakes couldn’t be higher for either side as they try to reach a deal. The outcome of the negotiations may determine whether Murphy can achieve his ambitious clean energy goals and whether Ørsted remains a credible partner to New Jersey. Ørsted has been loath to talk about what it’s asking for from the state. But, according to two BPU commissioners, the company is looking to keep federal tax incentives from the Inflation Reduction Act, tax credits that would cover up to 40 percent of construction costs.

GE AT NJ WIND PORT — During Monday’s BPU meeting, Commissioner Dianne Solomon also mentioned the possibility that GE was “pulling” its planned facility from the state-backed “wind port” in Salem. The port, which has received some $465 million in state subsidies, is one of the centerpieces of the economic development plans Murphy’s administration has for offshore wind because it’s expected to be a place for manufacturing and marshaling offshore wind infrastructure. Tim Sullivan, the head of the state Economic Development Authority, said GE is still talking with New Jersey even as it’s also talking with New York. “We are in active negotiations with GE and other manufacturers to build facilities at the wind port,” he said in an interview. Right now, Ørsted and Atlantic Shores, the companies responsible for building the state’s three approved offshore wind farms, have announced they will use the port as staging area for construction but no company has yet committed to using the site for manufacturing. — Ry Rivard

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