MACNY Submits Comments to Public Service Commission on the Large Scale Renewable Program
Pursuant to the Notice Institution Proceeding, Soliciting Comments and Providing for Technical Conference issued on June 1, 2015 by the Commission, MACNY – The Manufacturers Association (MACNY) hereby offers its initial comments on the “Large-Scale Renewable Energy Development in New York: Options and Assessment” (“Report”) that was issued jointly by New York State Department of Public Service Staff and the New York State
Energy Research and Development Authority on June 1, 2015 in Case 15-E-0302, In the Matter of the Implementation of a Large-Scale Renewable Program.
MACNY is a trade association representing over 330 member companies with over 55,000 employees within a 21-county region, and we advocate for the growth and development of the manufacturing sector of New York State. Founded in 1913, we advocate for causes that will enable New York State manufacturers to thrive in today’s competitive global market
It is well known that a strong manufacturing base is absolutely critical to any successful economy. During New York State’s difficult financial times, a solid manufacturing base is needed more than ever, to be able to do what our sector does best: retain and create family supporting and high paying jobs, maintain a significant amount of economic and tax revenues, and provide communities with the jobs and economic sustainability that is so necessary.
MACNY is concerned that the Reforming the Energy Vision (REV) process and this Report in particular, gives insufficient weight to the potential impact on ratepayer bills, and our sector as a whole.
The paper takes as a given the emission and renewable goals from the State Energy Plan – a 40% emission reduction and 50% of power from renewable generation. The overall question addressed is, “what is the least expensive approach to buying the large-scale renewable generation needed to achieve those goals.” The Report does not address, “what rate and level of expenditure should be pursued to best reduce the impact of emission levels.”
The report also assumed that ultimately, rate payers will shoulder the burden of these investments regardless of the approach. We believe that using rates to recover these costs risks losing manufacturing jobs in the State, and reducing overall gross state product.
Near grid parity or even below grid costs for LSR generation is assumed throughout the Report. We believe that the cost of renewable energy will be higher and that ratepayers will pay higher rates as a result. The impact of large-scale renewable energy on customer bills is not given sufficient attention in the Report. In so far as one goal for the REV process is to keep energy affordable, the risk of increased rates should be reduced by the plan.
The risk of above-market rates is tacitly acknowledged in the Report in comments such as “…capturing net savings for customers in the latter years of the contracts..” and “…the above market premium for LSR would shrink when the rest of the customer bill increases..”
Providing revenue certainty to developers is noted as one goal of the Report. The reason stated is that this will obtain the lowest cost of capital. While that may be true, the goal of the State should not be to take on all the risk of developing a project, or it would not need the market to compete for these opportunities. The true cost of the risk taken on by New York State should be addressed in this report.
One recommended strategy of the Report is to enter into bundled PPA’s to hedge against price volatility. However, having price certainty at above-market prices is not a significant advantage even if volatility is reduced. Long term PPA’s will likely become a new “6 cent” rule, where ratepayers had to pay millions of dollars to retire out-of-market contracts.
The current approach of NY Sun, to offer significant but limited incentives to developers of large-scale solar, may be a sufficient strategy to obtain additional LSR, without the assumption of additional risk by ratepayers.
The Report suggests that New York obtain greater voluntary participation in the purchase of energy from ratepayers. It suggests mechanisms for New York State to incentivize this participation. This recommendation is consistent with others in the Report, where the State is taking on costs to lower the costs of projects for developers.
In general, MACNY is concerned that if New York incurs costs that raise electricity rates above other States, New York could lose manufacturing and other jobs to States with lower emission standards, and thus simply move the emission sources elsewhere. Carbon goals should not put New York at a competitive disadvantage relative to other states for retaining and attracting energy intensive industry.