Lack of Common Sense on Energy in the Budget

Anyone hoping the governor would make even modest, common-sense changes to New York’s disastrous energy policies will be disappointed. The energy portion of the budget is out, and the nonsense still outweighs the few sensible changes.

Let’s start with the reasonable changes.

First, there are modest changes to how New York calculates greenhouse gas emissions, especially when those emissions occur outside the state. Electricity produced in Pennsylvania but consumed in New York would count toward New York’s emissions. Earlier rules, by contrast, would have counted emissions from drilling and transporting every gallon of fuel to New York. This change should make it easier to meet the state’s self-imposed targets.

Second, the budget says the state will produce a plan by 2028 to meet its climate goals—and that the plan will be reasonable and not strangle New York’s economy. That sounds fine, but what seems “reasonable” to climate activists may be impossible for energy consumers and producers.

The budget also requires utilities to return excess earnings to ratepayers if they make more than regulators allow. The provision reflects the flaws of price regulation and leaves unanswered what happens when utilities earn less, but at least it has some internal logic.

That’s it for common sense.

Now for the dangerous—and petty—parts.

First, the state wants to cap rate increases below inflation unless utilities provide a detailed justification. But New York’s electricity prices have outpaced inflation for years, so every future rate increase will become an even bigger political fight—with even more paperwork.

Second, the government will install “Affordability Monitors” to scrutinize utilities and report on whether they are spending wisely and whether rates should rise. If that sounds like a ridiculous, corruption-prone position, that’s because it is.

And if we’re creating “affordability monitors,” how about one for New York’s government? The state spends roughly twice as much as Florida, which has more people—but I digress.

Third, the state will examine whether utility investments—i.e., power lines—advance New York’s climate goals. I welcome scrutiny, but this looks like another way for politicians to steer more money to politically favored green projects.

For example, if a utility spends millions connecting wind power to the grid, that investment will likely be approved, and those millions will show up in your bill. But if a utility invests in connecting a gas-fired plant, that investment could be excluded from the rate base. Albany wants to force companies to pour money into green energy—which suggests Albany is perfectly comfortable with high energy prices, so long as the spending is “green.”

Fourth, the proposed “Affordability Index” is not a bad idea. But comparing energy prices with household incomes is guaranteed to show that lower-income households can afford less energy—no expensive study needed. Apply the same index to groceries, rent, or parking, and you would get the same result.

The real concern is that the state may use this index to force utilities to offer discounted rates to low-income households, with the cost shifted to everyone else. Average- and above-average-income households would end up paying even more for energy.

Fifth, as in the original February proposal, the budget spends a surprising amount of time on the ratio of worker pay to CEO pay. It remains unclear what the government would do with that information—or whether it would affect energy prices at all. More likely, it will become another talking point for legislators whenever rates rise.

Sixth, energy companies’ expenses for advertising, communication, and public outreach will be excluded from regulated rates. These costs are trivial compared with fuel or new power lines. But the provision is a blatant attempt to silence energy companies and their critics, while government agencies remain free to spend taxpayer money promoting the climate agenda—like when NYSERDA hired a PR firm to spin “positive narratives” about the Climate Act.

Finally, the budget includes an entire clause barring energy companies from owning, leasing, or chartering airplanes and passing those costs on to ratepayers. Every penny counts, I suppose.

Which raises a question: will the New York Power Authority—an entity controlled by the governor—also have to give up its plane, or does this rule not apply to institutions friendly with Albany’s establishment?

This budget could have marked a real step toward rolling back New York’s failed energy policies and refocusing the state on abundant, affordable power. Instead, it fixates on punishing energy companies. How cliche.