“Czar” exiles energy facts

by Ken Girardin |  | NY Torch

3630982_origGovernor Andrew Cuomo’s energy czar isn’t letting facts get in the way of attacking the growing number of dissenters who challenge Cuomo’s new Clean Energy Standard.

On Wednesday, a coalition of liberal and environmental groups condemned the standard’s subsidies for three money-losing upstate nuclear power plants. Blair Horner, executive director of New York Public Interest Group (NYPIRG), described the standard (correctly) as “a tax to keep aging nuclear power plants on line.”

The coalition has labelled the standard “the Cuomo tax” because the subsidies, created at Cuomo’s behest, will come out of electricity ratepayer bills, with residential, commercial and industrial users paying higher rates. Horner called it “one of the biggest transfers of wealth in New York state history.”

Richard Kauffman, whose official Cuomo administration title is Chairman of Energy and Finance, fired back with a letter to Horner condemning the groups for their “cheap stunt” and saying they were “wrong on substance, wrong on costs, and wrong on history.”

But Kauffman himself made a number of dubious assertions:

  • He claimed the subsidies will provide the “bare minimum” of support needed to keep the plants running. That’s not correct, however. The plants will receive subsidizes reflecting the perceived societal benefits of avoided carbon emissions, not the plants’ actual financial needs—even though state regulators examined confidential financial documents for at least two of the nuclear plants and know exactly how much money the operator was losing.  
  • Cuomo’s “aggressive” pursuit of renewables, as Kauffman describes it, hasn’t necessarily generated results. For example, the state added effectively zero new wind turbines during 2015, despite the availability of considerable state and federal subsidies. And a proposed offshore wind project that was poised for approval by the Cuomo-controlled Long Island Power Authority (LIPA) in July was inexplicably delayed—and hasn’t been taken up since.
  • Kauffman writes that the closure of the nuclear plants would increase reliance on “more expensive” electricity from other sources—which flies in the face of the economic reality. For close to two decades, electricity in New York has been sold on a competitive wholesale basis, and electricity sells in different parts of the state at the market rate. The nuclear plants begged the state for a bailout because their operating costs exceeded what money they could make selling power at the going rate. While the loss of all three upstate nuclear plants (an unlikely scenario) would have reduced electricity supply, the same less expensive generators that have driven down wholesale prices would have been the ones who stepped in to meet demand.
  • While the energy czar asserts that “New York must use all of its existing carbon free power sources … to continue our progress on climate change,” the Cuomo administration has been pushing to shut down one of those sources, the Indian Point nuclear plant in Westchester County. Kauffman rationalizes the nuclear subsidies by saying they prevent 31 million metric tons of carbon dioxide emissions in a two-year period—which is only about three-quarters of the estimated 44 million metric tons that Indian Point’s owner calculated are prevented by that plant.

The nuclear subsidies are the most costly part of the standard, at least in the near term: in August, the Empire Center estimated that the entire standard will cost New Yorkers $3.4 billion over the first five years, with the nuclear bailout costing $2.6 billion.

But environmental groups have other reasons to take issue with the standard as a whole, which is supposed to lead to the state getting 50 percent of its power from renewables by 2030.

Ostensibly enacted to reduce the state’s carbon dioxide emissions from electricity generation, the standard doesn’t actually regulate carbon dioxide—the way California did years ago. That type of regulatory scheme would have the advantage of encouraging generators to move from oil to cleaner-burning natural gas, and to encourage conservation across the board. It would not, however, specifically force the construction of new renewables—on which Kauffman appears to be more focused than he is on any environmental objectives.

As we explained in our recent analysis of the standard, the overall likelihood of reaching the 50 percent goal by 2030 is scant, given that the state Public Service Commission, which developed the standard, didn’t address fundamental issues such as capacity, siting, energy storage or transmission.

The program’s ambiguity, which has complicated Kauffman’s efforts to defend it, resulted from Cuomo’s decision to end-run the Legislature and distort the PSC’s statutory authority beyond the Legislature’s intent.

State lawmakers, with few exceptions, remain oddly silent about what amounts to a major (and costly) power grab by the governor that will allow him to tax, and spend, billions of dollars without permission from the people’s representatives.

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- Ken Girardin is the Policy Analyst at the Empire Center for Public Policy.