fitz-150x150-4940144Governor Andrew Cuomo’s massive ratepayer subsidy of aging upstate nuclear power plants would be significantly modified under a bill just introduced by Senate Republican Leader John Flanagan.

Under a standard enacted by the Public Service Commission (PSC) last August at Cuomo’s behest, utilities across the state are required to purchase  “zero-emission credits” (ZECs), the proceeds of which will be given to Exelon Corp. to support the continued operation of three nuclear plants outside Rochester and Syracuse. The plants reportedly were considering closing prior to the enactment of the subsidy.

ZEC purchases became mandatory on April 1 and will cost up to $2.6 billion over the next five years, according to an Empire Center calculation—making the associated Clean Energy Standard one of the biggest tax hikes in state history.

Flanagan’s proposal (S6651)* would immediately end the ZEC mandate and refund about $80 million that utilities and large industrial customers have already paid. The state would instead subsidize the plants using proceeds from the Regional Greenhouse Gas Initiative (RGGI), a market-based program that requires conventional power plants to purchase credits as a mechanism for reducing greenhouse gas emissions, “in recognition of their zero carbon emitting attributes,” according to the bill memo.

The state currently steers RGGI proceeds into the Cuomo-controlled New York State Energy Research & Development Authority (NYSERDA), which spends the proceeds chiefly on energy efficiency and renewable energy programs. In fiscal 2016, NYSERDA collected $170.5 million from RGGI—which serves, in effect, as a major source of discretionary funding for a range of projects promoted as part of the governor’s “clean energy” political agenda.

That’s a far cry from the $591 million that Exelon, the plants’ owner, expects to pocket by 2021, but it’s worth noting the ZEC system was developed based on what the PSC could get away with without asking for legislative permission, not what best served the public interest. The PSC could not create a subsidy that simply made each plant whole: instead it devised a credit scheme reflective of the “social cost of carbon” independent of the plants’ supposed financial need.

That “need” has never been substantiated by an open, public review of financial documents, which lawmakers would have likely demanded before signing off on any bailout. Lawmakers also would have been positioned to demand cost restructuring or contract concessions from the plants’ vendors and unions—neither of which were sought, thanks to the PSC’s largesse.

Although Flanagan’s bill does not yet have an Assembly companion measure, members of the lower house have not been shy about criticizing the nuclear subsidies or proposing legislative modifications to the Clean Energy Standard as a whole. A8191, introduced by Assemblywoman Amy Paulin (D-Westchester), would require the PSC to adjust the ZEC price in each region “to reflect the benefits attributable to the continued operation” of the plants, in recognition of the limited connection between upstate energy supplies and downstate demand. A8246, filed by Assemblyman Jeffrey Dinowitz (D-Bronx), would cap at 25 cents per month the amount of ZEC compliance cost that utilities could pass along to residential consumers.

The Cuomo administration estimates the Clean Energy Standard, chiefly its nuclear subsidies, will add an average of $2 to residential electric bills, although the Empire Center calculated the standard would hike the average residential bill by more than $2.09 in 2018 and by $3.40 in 2021 from added supply costs alone; compliance with the standard will necessitate major changes to the electrical grid, which will separately drive up customer delivery charges as utilities are forced to accommodate intermittent generation from solar panels and wind turbines.

The PSC has subsequently taken steps to conceal the impact of the Clean Energy Standard on consumer bills, forbidding utilities from showing their compliance costs as a separate line on monthly statements.

Unlike the existing ZEC program, which drew an arbitrary distinction among the state’s nuclear plants, Flanagan’s proposed “Zero Carbon Emission Investment Program” would make Westchester County’s Indian Point nuclear plant eligible for subsidies.

The Empire Center has noted that the Clean Energy Standard is riddled with internal contradictions, including an outright prohibition on new hydroelectric dams that would also provide zero-emission electricity (but would compete with the solar panels and wind turbines envisioned by Governor Cuomo).

The Legislature is free to modify the Clean Energy Standard however it chooses, and more importantly, to place restrictions on the Public Service Commission to limit its ability to levy taxes and spend the proceeds–a power that’s supposed to be reserved for the people’s elected representatives, and that Flanagan’s bill seeks to partially take back.

NOTE: Flanagan’s bill was this morning amended to expand the funds available for nuclear subsidies to all of those funds now handled by NYSERDA under section 1854 of the Public Authorities Law. The original version tied the size of the subsidies to RGGI revenues, but they have since been delinked.


About the Author

Ken Girardin

Ken Girardin is the Empire Center’s Director of Strategic Initiatives.

Read more by Ken Girardin

You may also like

Wind costs could blow up

The long-term cost of subsidies for New York’s new offshore wind turbine projects could exceed $6 billion—or three times the amount acknowledged by Governor Andrew Cuomo’s energy agency. Read More

Offshore wind to soak upstate

Upstate electricity customers could shell out more than $1 billion to cover the state’s initial round of subsidies for offshore wind turbines, the Cuomo administration’s energy agency has now revealed. Read More

Trucking NY’s natural gas gap

Yesterday’s fatal truck accident outside Binghamton is a reminder that state government’s opposition to natural gas pipelines is having negative consequences⁠—including putting more gas trucks on the road. Read More

Cuomo tilts with windmills

Governor Andrew Cuomo is continuing full steam ahead with policies that will make the state’s already lofty renewable energy targets more expensive and less realistic. Read More

How NY fuels higher emissions

In the name of reducing greenhouse gas emissions, the Cuomo administration has been doing everything it can to block construction of natural-gas pipelines in New York. But that policy is probably accomplishing just the reverse—increasing greenhouse gas emissions by boosting reliance on fuel oil, which results in even higher emissions. Read More

Albany unleashes a green monster

The Climate Leadership and Community Protection Act on its way to enactment in Albany would vastly expand the state government’s power to regulate every corner of New York’s economy in pursuit of reducing greenhouse gas emissions. Yet even as it addresses what proponents describe as a “climate emergency,” the bill’s most controversial elements have been postponed until after the 2022 elections. Read More

NY’s green new dud

New York got less electricity from renewable sources in 2018 than it did the year before despite significant state intervention. Read More

Wind costs will blow north

Upstate New York ratepayers will pick up more than half the multi-billion-dollar tab for a massive offshore wind turbine project that will provide very costly power for Long Island and New York City. Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130


The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.