Bill Text: NY A08096 | 2021-2022 | General Assembly | Introduced

Bill Title: Relates to maintaining the continued viability of the state's existing large-scale, renewable energy resources; directs the public service commission, in consultation with NYSERDA to modify the Competitive Tier 2 Program adopted by the order modifying the clean energy standard.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2021-06-11 - referred to energy [A08096 Detail]

Download: New_York-2021-A08096-Introduced.html

                STATE OF NEW YORK


                               2021-2022 Regular Sessions

                   IN ASSEMBLY

                                      June 11, 2021

        Introduced by M. of A. CUSICK -- read once and referred to the Committee
          on Energy

        AN ACT in relation to maintaining the continued viability of the state's
          existing large-scale, renewable energy resources

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Legislative findings and  intent.  The  legislature  hereby
     2  finds and determines:
     3    1. New York is a national leader in developing and implementing policy
     4  to  promote the development of renewable energy resources, the growth of
     5  which has significantly benefited the state in numerous ways,  including
     6  through  reductions  in  pollutants  that  contribute to climate change,
     7  associated reductions in adverse impacts on public health, and  substan-
     8  tial job growth in the clean energy sector.
     9    2.  To  further  promote  and incentivize the development of renewable
    10  energy, New York state  recently  adopted  the  Climate  Leadership  and
    11  Community  Protection  Act  (CLCPA), which, among other things, mandates
    12  that by 2030, 70% of electricity consumed in the state  will  come  from
    13  renewable  resources,  and 100% of such electricity be renewable by 2040
    14  (CLCPA targets). In 2019, approximately 27 percent of the state's  elec-
    15  tric load (representing 41,340 gigawatt hours) was supplied by renewable
    16  resources  - solar, wind, hydroelectric, biomass, fuel cells and similar
    17  resources.
    18    3. However, a recently published triennial review of the clean  energy
    19  standard  (CES)  found  that  falling  commodity  market revenues in the
    20  wholesale energy markets create a risk that legacy renewable  generators
    21  may  not  be able to cover their costs. These facilities have options to
    22  export to neighboring  renewable  portfolio  standard  (RPS)  compliance
    23  markets and will do so if the renewable energy certificate (REC) revenue
    24  opportunity is greater than New York's voluntary market.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 8096                             2

     1    4.  Exports  of  legacy  supply have increased since 2014 by about 0.5
     2  TWh, and unless reversed would need  to  be  made  up  from  incremental
     3  sources of supply in order to achieve CLCPA targets. There is a real and
     4  present  danger  that a significant portion of New York's resources will
     5  either  cease  operations  or  sell  increasing volumes of their RECs to
     6  neighboring markets. In either case, New York will not be able to  count
     7  them towards the CLCPA targets.
     8    5.  A recent study shows that, in the wake of COVID-19, after reaching
     9  nearly 164,000 clean energy jobs statewide in 2019, the pandemic  tempo-
    10  rarily  reversed multi-year growth trends. The clean energy industry can
    11  serve as a cornerstone for economic recovery, but that must  begin  with
    12  the retention of New York's existing valuable renewable assets.
    13    6.  The CES was established in a 2016 public service commission order,
    14  predating the CLCPA. In its original form, the CES  was  composed  of  a
    15  tier  1 for the development of new large-scale renewables, a maintenance
    16  tier 2 to provide short-term relief to economically distressed renewable
    17  resources, and a tier 3 to support the state's nuclear resources through
    18  ZECs. In 2018, the public service commission added a program related  to
    19  offshore  wind  development. Despite numerous appeals from the renewable
    20  energy and environmental advocates, none of the public  service  commis-
    21  sion's  actions  modified  the  program  such  that the state's existing
    22  renewable energy resources would be preserved as a baseline  onto  which
    23  to  add  in pursuit of the state's laudable and aggressive environmental
    24  goals.
    25    7. In 2019, the CLCPA was passed and signed into law. In the meantime,
    26  during the period between the implementation of the  CES  to  the  CLCPA
    27  becoming  law  (2016-2019),  exports  of  baseline  renewable generation
    28  increased by approximately 50 percent - a direct contrast to the  objec-
    29  tives  of  both  initiatives.  Given that numerous RPS contracts will be
    30  expiring in the near term, the public service commission has stated that
    31  it expects this trend to continue, potentially putting New York at  risk
    32  of not reaching the 70 by 30 target.
    33    8. Also, in 2019, a separate energy-related bill passed both houses of
    34  the  legislature. That bill would have created a truly supportive tier 2
    35  requiring the New York state energy research and  development  authority
    36  (NYSERDA) to procure RECs from all eligible existing renewable resources
    37  at  a  discounted  rate  (75%)  of  the  current  tier 1 REC price. That
    38  proposed legislation rightfully recognized that to  promote  achievement
    39  of  the  CLCPA targets, and to ensure the continued job growth and other
    40  benefits attendant to a clean energy economy, New York needs  to  assure
    41  that  its  existing renewable resources are provided with adequate price
    42  signals and financial incentives to remain  in  operation  and  to  sell
    43  their  renewable energy attributes in New York. Absent these assurances,
    44  it would be difficult if not  impossible  for  the  state  to  meet  the
    45  recently established targets.
    46    9.  The  governor  vetoed the tier 2 legislation, citing in large part
    47  that payments would be made to renewable resources on a  non-competitive
    48  basis.  However, he ordered NYSERDA and the department of public service
    49  to  develop  a  program  "to  provide  qualified legacy renewable energy
    50  resources in New York State with  appropriate  support  to  continue  to
    51  competitively operate and contribute to the State's clean energy goals."
    52    10.  In  response to the veto message, NYSERDA filed a petition with a
    53  proposed framework for a competitive tier 2, which  the  public  service
    54  commission  adopted  in an October 2020 order modifying the clean energy
    55  standard. The program would issue annual solicitations over three years,
    56  with the winning bidders receiving three-year contracts  to  sell  their

        A. 8096                             3

     1  RECs  to  NYSERDA  at  the  accepted price. NYSERDA's stated goal was to
     2  procure approximately one-third of the renewable baseline RECs  in  each
     3  auction.
     4    11. However, the first ever competitive tier 2 solicitation, completed
     5  in May 2021, netted awards to just three renewable facilities that total
     6  less than 14 MW, while the eligible baseline capacity well exceeds 1,000
     7  MW.  The  low  volume of awards is directly attributable to offers being
     8  rejected due to a confidential price cap utilized by NYSERDA, which does
     9  not accurately reflect the price needed to  keep  New  York's  renewable
    10  resources in New York.
    11    12.  Even  had  NYSERDA  accurately  valued  existing  renewables, the
    12  competitive tier 2 program is set to have the contracts from  its  third
    13  and  final  solicitation  expire  at the conclusion of 2025, a full four
    14  years before the first CLCPA renewable target date of 2030.  This  chasm
    15  provides no assurances to renewable resources that they should invest in
    16  their assets or keep their RECs in the state in the critical years lead-
    17  ing up to the 70 by 30 target.
    18    13.  New  York's ability to meet the CLCPA targets will be hampered if
    19  such existing resources provide  their  wholesale  energy  products  for
    20  delivery  to  adjacent  states,  some  of  which  have enacted laws that
    21  provide for a robust market that provides a stronger opportunity to sell
    22  renewable energy attributes than is currently available in New York.
    23    14. It also is of paramount importance to ensure the fuel diversity of
    24  the state's energy sector for the purposes of providing energy security,
    25  system reliability and protection  of  consumers  from  potential  price
    26  spikes or shortages. For this same reason, it is important for the state
    27  to take measures to ensure the continued viability and competitive posi-
    28  tion of a wide variety of large-scale, renewable energy resources in the
    29  state.
    30    15.  Accordingly,  the  overlying  intent of this act is to modify the
    31  competitive tier 2 program such that it appropriately values maintaining
    32  the state's renewable baseline and provides existing large-scale, renew-
    33  able energy resources in  New  York  state  with  appropriate  financial
    34  incentives to continue operations for the foreseeable future.
    35    § 2. Definitions. As used in this act:
    36    1.  "Competitive  tier  2  program"  refers  to the renewable baseline
    37  retention program created within the order modifying  the  clean  energy
    38  standard and being administered by NYSERDA.
    39    2.  "Eligible competitive tier 2 resource" shall have the same meaning
    40  as contained in the order adopting modifications  to  the  clean  energy
    41  standard:  (a)  existing  non-state-owned  run-of-river  hydropower  and
    42  existing wind generators located within the State; (b) that have entered
    43  commercial operation prior to January 1, 2015, and (c) are  not  already
    44  under contract with NYSERDA.
    45    3.  "Renewable  energy  credit"  means a tradable, non-tangible energy
    46  commodity that represents proof that 1 megawatt-hour (MWh) of  electric-
    47  ity was generated from a renewable energy resource.
    48    4.  "Tier  1" means   the program designated as tier 1 pursuant to the
    49  order adopting a clean energy standard and subsequently  refined  within
    50  the order modifying the clean energy standard.
    51    5. "Tier 2 renewable energy credit" refers to a renewable energy cred-
    52  it generated by an eligible competitive tier 2 resource.
    53    6.  "Maximum bid price" shall mean the price employed by NYSERDA above
    54  which offers submitted in  the  competitive  tier  2  program  would  be
    55  rejected.

        A. 8096                             4

     1    7.  "Order  adopting a clean energy standard" means the public service
     2  commission order dated  August  1,  2016  and  entered  in  case  number
     3  15-E-2203 et seq.
     4    8.  "Order  modifying  the  clean  energy  standard"  means the public
     5  service commission order dated October 15, 2020,  and  entered  in  case
     6  number 15-E-2203 et seq.
     7    §  3.  Modifications  to the competitive tier 2 program. 1. The public
     8  service commission, in consultation  with  the  New  York  state  energy
     9  research   and   development   authority,  shall  modify  the  following
    10  provisions of the competitive tier 2  program  within  30  days  of  the
    11  effective  date  of  this  act,  to  provide support to and for eligible
    12  competitive tier 2 resources.
    13    2. Maximum bid price. The maximum bid price utilized  by  NYSERDA  for
    14  each  solicitation conducted within the competitive tier 2 program shall
    15  be set equal to 75% of NYSERDA's tier 1 REC sale price  established  for
    16  the  most  recently completed Renewable Energy Standard (RES) compliance
    17  year for tier 1 RECs.
    18    3. Program cost cap. The  $200  million  cost  cap  on  total  program
    19  expenditures imposed by the order modifying the clean energy standard is
    20  eliminated.  Program  costs will be determined by the volume of accepted
    21  offers, as determined by NYSERDA's annual  targets,  multiplied  by  the
    22  price of accepted offers no greater than the maximum bid price.
    23    4.  Program  duration.  The competitive tier 2 program shall remain in
    24  place and NYSERDA shall conduct annual solicitations  for  tier  2  RECs
    25  such that the final solicitation will result in NYSERDA procuring tier 2
    26  RECs under awarded contracts through the year 2030.
    27    5.  Annual  targets  for  tier  2 renewable energy credits. The target
    28  volume of tier 2 RECs in each of NYSERDA's annual  tier  2  solicitation
    29  shall  be  one-half  the quantity of renewable energy generation that is
    30  serving total electric load in New York state, excluding generation from
    31  facilities owned by the power authority of the  state  of  New  York  or
    32  otherwise under contract with NYSERDA.
    33    § 4. This act shall take effect immediately.