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A07275 Summary:

COSPNSRHunter, Blankenbush, Crespo, Ortiz, Rosenthal L, Blake, Woerner, Colton, Miller B, Galef, Jones, McDonald, Englebright, Steck, Carroll, Pellegrino, Weprin, Solages, Abinanti, Arroyo, Santabarbara, Paulin, Lupardo, Skoufis, Gottfried, Lavine
MLTSPNSRBronson, Buchwald, Magee, Thiele
Relates to maintaining the continued viability of the state's existing large-scale, renewable energy resources.
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A07275 Actions:

04/17/2017referred to energy
04/28/2017amend (t) and recommit to energy
04/28/2017print number 7275a
01/03/2018referred to energy
02/26/2018amend and recommit to energy
02/26/2018print number 7275b
06/01/2018amend and recommit to energy
06/01/2018print number 7275c
06/07/2018reported referred to ways and means
06/19/2018reported referred to rules
06/20/2018rules report cal.482
06/20/2018substituted by s5549c
 05/01/2017PRINT NUMBER 5549A
 05/24/20171ST REPORT CAL.1352
 06/05/20172ND REPORT CAL.
 06/21/2017PASSED SENATE
 06/21/2017referred to energy
 01/03/2018died in assembly
 01/03/2018returned to senate
 01/29/2018PRINT NUMBER 5549B
 05/16/20181ST REPORT CAL.1289
 05/22/20182ND REPORT CAL.
 06/19/2018PASSED SENATE
 06/19/2018referred to ways and means
 06/20/2018substituted for a7275c
 06/20/2018ordered to third reading rules cal.482
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A07275 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  TITLE OF BILL: An act in relation to maintaining the continued viability of the state's existing large-scale, renewable energy resources   PURPOSE: New York State has been a leader in renewable energy, beginning with the hydroelectric power plant at Niagara Falls in 1895. The Clean Energy Standard mandates that by 2030, 50% of electricity consumed in the state will come from renewables and establishes programs to develop new capac- ity. However, economic factors threaten NY's existing large-scale renew- able generators, in many cases the most cost-effective sources of clean power. This bill establishes utility support for these facilities to protect critical infrastructure and ensure that the 50 by 30 goal is achieved as economically as possible. New York recognizes the social cost of greenhouse gas (GHG) emissions and the value of clean power sources. This is reflected in the compen- sation provided to nuclear generators through the Zero Emission Credit program. Legacy large-scale renewables (LSRs), however, are compensated at the same rates as natural gas or coal generators despite their carbon benefits. Low fuel prices have brought these rates below the long-term viability threshold of many legacy renewable resources. Approximately 10% of New York's electricity currently comes from inde- pendently owned hydroelectric facilities, which also provide flood control and water levels management to support communities and the envi- ronment. Biomass plants are a critical economic component of the fores- try industry in Northern NY and power the US Army installation at Fort Drum. These facilities face an uncertain future and may ultimately be compelled to retire or export from the state. This would not only endanger their community and economic benefits, it would also undermine the cost-effective achievement of the state's GHG targets. The current Maintenance Tier program does not adequately address these issues. Through the Renewable Portfolio Standard, New York ratepayers have invested heavily in the development of wind, solar, and biomass facili- ties. Without fair compensation going forward, at the expiration of the RPS contracts these generators will likely export into neighboring ener- gy markets or terminate operations. This will mean that despite being located in NY, these resources will not contribute to the 50 by 30 goal, depriving NY ratepayers of continuing benefit from their investment. New capacity will need to be built at a higher cost to achieve the same target. This bill provides compensation for the clean energy attributes of lega- cy large-scale renewable generators at a variable per-kWh rate equal to 75% of the cost of new renewables. This ensures that it will save rate- payers money in the achievement of the CES goal by preserving existing renewable producers at 25% less than the cost of new. This does not place any additional burden on ratepayers to purchase renewable energy; rather, it ensures that NY will first look to purchase electricity from existing, cheaper resources before paying a high price for new renewa- bles to achieve the mandate already established by the CES.   SUMMARY OF PROVISIONS: Section one of the bill provides the Legislative findings and intent of the bill. Section two defines various terms. Sections three and four provide a framework for the program including deliverability, annual targets, load serving entities' obligations, the establishment of a Tier 2 Renewable Energy Credit (REC) priced at a level of 75% the cost of new renewables, the enabling of a process to show financial hardship in specific cases of need, and provision of an outline of procedures to implement the Tier 2 REC program at the PSC and NYSERDA. Section five provides the effective date.   JUSTIFICATION: It is often noted that ratepayers in NY face some of the highest elec- tricity costs in the nation. This is largely due to utility costs, fees, and taxes, and conceals wholesale prices at historic lows. The low price of natural gas, above-market support for new renewables, proliferation of residential solar, and low demand growth have all contributed to a decline in compensation for baseload electricity generators. Recognizing this, in its draft CES, Department of Public Service Staff recommended a "Tier 2" REC program to provide support for legacy renewables. This program was eliminated without warning when the CES was released. The North Country alone contains over 500 MW of independent hydro. These facilities are long-lived and low impact, and are core infrastruc- ture, often located at the center of towns and managing water levels for lakes and reservoirs. Direct competition with natural gas, which has lower costs and no such responsibilities, is proving unsustainable. The RPS established a Maintenance Tier program for a subset of renewable generators that predated the RPS. The program does not apply to all vintage renewable resources and, even where it does has had mixed results, allowing biomass and hydro plants to close. This bill takes lessons from recent closure and provides improvements to the program to streamline the application process and fix support at a level sufficient to maintain viability. Wind facilities developed under the RPS between 2003 and 2016 were given ten-year support contracts. With electricity rates low, at the expira- tion of those contracts they must seek additional revenue. Though the NY CES does not allow existing generators to participate in procure- ments, RPS programs in neighboring states do. The location of a genera- tor does not determine where its energy is consumed or which state gets to count its production toward clean energy goals. This export threat is imminent, with many states already seeking to procure this generation and transmission lines already being sited across Lake Champlain specif- ically to deliver wind power into the ISO-NE. This bill follows the model for Tier 2 established by DPS Staff in the original CES draft, and will be available to all legacy large scale renewable generators. The compensation for Tier 2 RECs will be 75% of Tier 1. The Tier 1 price for new renewables is established by compet- itive bidding through NYSERDA-managed procurements, and reflects the additional compensation needed above available wholesale rates to make a renewable project viable. As wholesale rates rise, REC prices fall. This ensures that ratepayers will not overpay for LSRs, and will never pay to develop new generators while existing ones can be kept online for less.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: None to the state.   EFFECTIVE DATE: Immediately.
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A07275 Text:

                STATE OF NEW YORK
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                     April 17, 2017
        Introduced  by  M.  of  A.  JENNE,  HUNTER,  BLANKENBUSH, CRESPO, ORTIZ,
          NALD  -- Multi-Sponsored by -- M. of A. MAGEE, THIELE -- read once and
          referred to the Committee on  Energy  --  committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee -- recommitted to the  Committee  on  Energy  in  accordance  with
          Assembly Rule 3, sec. 2 -- committee discharged, bill amended, ordered
          reprinted  as  amended  and  recommitted  to  said  committee -- again
          reported from said committee with  amendments,  ordered  reprinted  as
          amended and recommitted to said committee
        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.  In  2016,  more  than  twenty percent of the state's electric load
    10  (representing 2,354 gigawatt hours) was supplied by renewable  resources
    11  - solar, wind, hydroelectric, biomass, fuel cells and similar resources.
    12  To  further promote and incentivize the development of renewable energy,
    13  the New York state public  service  commission  recently  established  a
    14  clean  energy standard requiring, among other things, that fifty percent
    15  of the electric load in  the  state  be  served  entirely  by  renewable
    16  resources by the year 2030 (i.e., 50 by 30 target).

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

        A. 7275--C                          2
     1    3.  A  recent  study  shows  that  New  York's clean energy sector now
     2  employs more than 85,000 workers at more than 7,500 business  establish-
     3  ments  spread  out  across  the  state, in both the renewable energy and
     4  energy efficiency sectors. With implementation of the clean energy stan-
     5  dard, clean energy jobs are anticipated to grow by more than six percent
     6  per  year  or double the growth rate of the entire United States economy
     7  in 2016. Proper implementation of the clean energy standard will  ensure
     8  that the state meets these job growth projections.
     9    4.  To promote achievement of the clean energy standard, and to ensure
    10  the continued job growth and other benefits attendant to a clean  energy
    11  economy, New York needs to assure that its existing large-scale, renewa-
    12  ble  energy sector is provided with adequate price signals and financial
    13  incentives to remain in operation and to  sell  their  renewable  energy
    14  attributes in New York, allowing the state to count the resources toward
    15  the  50  by  30 target and retain the jobs and tax payments supported by
    16  these generators. Absent these assurances, it would be difficult if  not
    17  impossible for the state to meet the recently established target.
    18    5.  New  York's  ability  to  meet  the  clean energy standard will be
    19  hampered if such  existing  resources  provide  their  wholesale  energy
    20  products  for  delivery  to  adjacent states, some of which have enacted
    21  laws that provide for a robust market that provides a stronger  opportu-
    22  nity  to sell renewable energy attributes than is currently available in
    23  New York. There is a real and present danger that a significant  portion
    24  of  New York's existing fleet of large-scale, renewable energy resources
    25  will participate in the programs offered by these other states and  thus
    26  will not be available for consideration in terms of meeting the 50 by 30
    27  target,  and  compete  effectively  with  other renewable classes in the
    28  clean energy standard.
    29    6. It also is of paramount importance to ensure the fuel diversity  of
    30  the state's energy sector for the purposes of providing energy security,
    31  system  reliability  and  protection  of  consumers from potential price
    32  spikes or shortages. For this same reason, it is important for the state
    33  to take measures to ensure the continued viability and competitive posi-
    34  tion of a wide variety of large-scale, renewable energy resources in the
    35  state.
    36    7. Accordingly, the overlying intent of this act is to provide  exist-
    37  ing  large-scale,  renewable  energy  resources  in  New York state with
    38  appropriate financial incentives to continue operations for the foresee-
    39  able future.
    40    § 2. Definitions.  1. "Large-scale, renewable energy  resource"  means
    41  an  electric  generating facility that:  (a) sells its energy within the
    42  New York control area with a generating  capacity  of  25  kilowatts  or
    43  more;  (b)  is deemed an eligible technology type pursuant to Appendix A
    44  of the "Order Adopting a Clean Energy Standard"  and,  in  the  case  of
    45  hydropower,  has  a  generating  capacity less than 50 megawatts; (c) is
    46  physically located within the jurisdiction of the New  York  independent
    47  system  operator;  and (d) the associated energy is delivered in accord-
    48  ance with a New York delivery requirement as described in section  three
    49  of this act.
    50    2. "Eligible large-scale, renewable energy resource" means an existing
    51  large-scale, renewable energy resource that: (a) at the time in question
    52  is  not  under  a contract for the sale of renewable energy credits with
    53  the New York state energy research and development authority pursuant to
    54  the renewable portfolio standard main tier, maintenance tier or  custom-
    55  sited  tier  program or clean energy standard tier 1 program implemented
    56  by such authority; (b) is not under an existing  contract  for  sale  of

        A. 7275--C                          3
     1  renewable  energy  credits with a load serving entity; and (c) is other-
     2  wise found by the New York state energy research and development author-
     3  ity to meet deliverability requirements specified in  section  three  of
     4  this  act,  and  other eligibility requirements specified in subdivision
     5  one of this section.
     6    3. "Qualified independent party" shall have the meaning given  to  the
     7  term in the New York Generation Attribute Tracking System (NYGATS) oper-
     8  ating rules promulgated by the New York state energy research and devel-
     9  opment authority.
    10    4. "Load serving entity" or "load serving entities" means and includes
    11  all  investor-owned distribution utilities (in their capacity as commod-
    12  ity suppliers), energy service companies, community  choice  aggregation
    13  programs  not  served  by  energy service companies, municipal utilities
    14  under the jurisdiction of the  public  service  commission,  and  retail
    15  customers  that  self-supply with electricity through the New York inde-
    16  pendent system operator.
    17    5. "Renewable energy credit" means  a  tradable,  non-tangible  energy
    18  commodity  that represents proof that 1 megawatt-hour (MWh) of electric-
    19  ity was generated from a renewable energy resource. To be  eligible  for
    20  sale  in  New York state and to meet the procurement obligations of load
    21  serving entities, each renewable energy credit must be  registered  with
    22  the New York generation attribute tracking systems.
    23    6.  "Tier  1"  means  the program designated as tier 1 pursuant to the
    24  clean energy standard order.
    25    7. "Tier 2 renewable energy credit" refers to a renewable energy cred-
    26  it generated by an eligible large-scale, renewable energy resource.
    27    8. "Order adopting a clean energy standard" means the  public  service
    28  commission  order dated August 1, 2016, and entered in case number 15-E-
    29  0302 et seq.
    30    § 3. Deliverability. Energy from an  eligible  large-scale,  renewable
    31  energy resource shall be deemed to comply with the New York deliverabil-
    32  ity  requirement  if  either it is: (a) delivered into a market adminis-
    33  tered by the New York independent system operator  for  end-use  in  New
    34  York state; (b) delivered through a wholesale meter under the control of
    35  a  utility,  public authority or municipal electric company such that it
    36  can be measured, and such that consumption within New York state can  be
    37  tracked  and  verified  by  such  entity  or by the New York independent
    38  system operator; or (c) delivered to a customer in New York state, where
    39  such delivery shall be subject to independent verification  by  the  New
    40  York  state  energy  research  and  development authority or a qualified
    41  independent party.
    42    § 4. Program for eligible  large-scale,  renewable  energy  resources.
    43  Notwithstanding  any  other provision of law to the contrary, including,
    44  but not limited to, any order, rule or regulation  promulgated  pursuant
    45  to  the public service law, the public authorities law, and/or the state
    46  administrative procedure act, the public service commission, in  consul-
    47  tation  with the New York state energy research and development authori-
    48  ty, shall adopt a program within 120 days of the effective date of  this
    49  act, to provide support to and for eligible large-scale, renewable ener-
    50  gy  resources  through  a  market for tier 2 renewable energy credits as
    51  defined herein to ensure the continued viability of eligible  large-sca-
    52  le, renewable energy resources for the purpose of meeting the state's 50
    53  by  30 target. In developing such program, the public service commission
    54  shall create an obligation on load serving entities to purchase  tier  2
    55  renewable  energy  credits  from  eligible large-scale, renewable energy
    56  resources through a process and requirements as fully described below:

        A. 7275--C                          4
     1    1. Annual targets for tier 2  renewable  energy  credits.  The  public
     2  service  commission  shall  provide  annual targets and mandates for the
     3  acquisition of tier 2 renewable energy credits by load serving  entities
     4  for the years 2018 to 2030 that ensures market demand for tier 2 renewa-
     5  ble  energy  credits for all resources that become eligible large-scale,
     6  renewable energy resources during such timeframe for purposes of achiev-
     7  ing the 50 by 30 target. The targets to be  established  by  the  public
     8  service  commission  should  reflect  the  quantity  of renewable energy
     9  generation that is serving  total  electric  load  in  New  York  state,
    10  excluding generation from facilities owned by the power authority of the
    11  state of New York and excluding hydropower from generators with a capac-
    12  ity greater than 50 megawatts.
    13    2.  Load  serving entities' tier 2 renewable energy credit obligation.
    14  Each load serving entity shall be responsible for  acquiring  a  defined
    15  quantity  of tier 2 renewable energy credits based upon the total tier 2
    16  load serving entity obligation target  allocated  to  all  load  serving
    17  entities  proportional  to  the  load  each  serves; i.e., determined by
    18  multiplying each load serving entity's actual load for the prior year by
    19  the percentage GWh target for that  year.  The  New  York  state  energy
    20  research and development authority shall publish each load serving enti-
    21  ty's  annual obligation for each annual compliance period on its website
    22  or by other appropriate means by December 1 of the  year  prior  to  the
    23  year such published annual obligation shall apply.
    24    3.  Tier  2 renewable energy credit price. By each December 1 prior to
    25  the annual compliance period, the public service commission shall estab-
    26  lish a tier 2 renewable energy credit price to be set at 75  percent  of
    27  the  weighted average cost per renewable energy credit that the New York
    28  state energy research and development authority paid to acquire  renewa-
    29  ble energy credits from resources under the clean energy standard tier 1
    30  program in the prior calendar year.
    31    4.  Financial  hardship.  Those eligible large-scale, renewable energy
    32  resources for which the tier 2 renewable energy credit price is insuffi-
    33  cient may seek additional financial assistance from the New  York  state
    34  energy  research  and  development  authority through contracts having a
    35  minimum duration of ten years for the purpose of ensuring the  continued
    36  viability and availability of such resources toward meeting the 50 by 30
    37  target.    The  New York state energy research and development authority
    38  shall apply the following criteria in  determining  the  eligibility  of
    39  such  eligible  large-scale,  renewable energy resources to receive such
    40  financial assistance, which shall be paid as an increment above the tier
    41  2 renewable energy credit price determined pursuant to subdivision three
    42  of this section:
    43    (a) A showing of financial hardship;
    44    (b) The basis for and reasonableness of expected operating and capital
    45  costs. This evaluation may include, among other things, a comparison  to
    46  prior years' costs and a comparison to costs of like generation;
    47    (c)  The  existence  of any other cash sources available to the large-
    48  scale, renewable energy resource, such as: (i) tax benefits; (ii) subsi-
    49  dies; (iii) contracts; and (iv) other sources,  including  restructuring
    50  financing;
    51    (d)  Whether market rules are increasing the costs of the large-scale,
    52  renewable energy resource and, if so, whether any steps can be taken  to
    53  reduce such costs;
    54    (e) Whether the large-scale, renewable energy resource's real property
    55  tax  assessment  is consistent with the assessments imposed in similarly

        A. 7275--C                          5
     1  situated facilities elsewhere, and if not, what action has been taken to
     2  address such assessment;
     3    (f)  Whether the large-scale, renewable energy resource is required to
     4  operate as part of a package of assets that is financially viable  as  a
     5  whole;
     6    (g)  Whether  the  large-scale,  renewable  energy  resource generates
     7  enough revenue, based on expected output, to cover its  operating  costs
     8  and enjoy a reasonable return;
     9    (h)  Whether  the generation facility generates enough revenue to make
    10  necessary capital improvements;
    11    (i) Whether  the  large-scale,  renewable  energy  resource  generates
    12  enough  revenue  to  cover its fixed costs, including: (i) debt service;
    13  (ii) property taxes; (iii) security costs; and (iv) other costs;
    14    (j) Whether the large-scale, renewable energy resource  has  attempted
    15  to make use of other renewables programs available to it, such as volun-
    16  tary green markets; and
    17    (k)  The regional economic importance of the resource. This evaluation
    18  may include job creation and retention, regional spending for  fuel  and
    19  other  goods and services, contribution to local tax base, fuel diversi-
    20  ty, greenhouse gas reduction, enhanced  forest  health,  flood  control,
    21  municipal  water  supply,  ecological stewardship and other non-economic
    22  factors on a region-specific basis.  Any contract entered into  with  an
    23  eligible  large-scale, renewable energy resource pursuant to this subdi-
    24  vision shall include a reasonable return, and take the form of  a  fixed
    25  price  increment  to  the  tier 2 renewable energy credit price that the
    26  generator is receiving  from  a  load  serving  entity  or  a  financial
    27  contract  for  differences to adjust based on fluctuations in the tier 2
    28  renewable energy credit price. The totality of all  increments  provided
    29  to resources pursuant to this subdivision shall be recovered from deliv-
    30  ery  customers in the same manner as in the renewable portfolio standard
    31  program maintenance tier.
    32    5. Procedures.  To  implement  the  tier  2  renewable  energy  credit
    33  program,  the public service commission shall also adopt within 120 days
    34  of the effective date of this act the following procedures  and  related
    35  requirements:
    36    (a)  The public service commission shall establish procedures consist-
    37  ent with the procedures developed under the clean energy standard tier 1
    38  program to determine the eligibility of  large-scale,  renewable  energy
    39  resources to participate in the program adopted pursuant to this act and
    40  to  certify  such  eligible large-scale, renewable energy resources. All
    41  resources that have previously been found by the New York  state  energy
    42  research and development authority to meet the eligibility and delivera-
    43  bility  requirements  in force under the renewable portfolio standard or
    44  clean energy standard programs shall be deemed to meet  eligibility  and
    45  deliverability requirements of this act.
    46    (b) The public service commission, with the assistance of the New York
    47  state  energy research and development authority, shall develop an equi-
    48  table process by which load serving entities acquire  tier  2  renewable
    49  energy  credits  from  eligible large-scale, renewable energy resources,
    50  which may include the designation of the New York state energy  research
    51  and  development  authority as the central procurement entity for tier 2
    52  renewable energy credits, whereby the New York state energy research and
    53  development authority would ensure the registration of all tier 2 renew-
    54  able energy resources from generators in New York  generation  attribute
    55  tracking systems, purchase the required targeted amount of tier 2 renew-
    56  able  energy credits, and re-sell the tier 2 renewable energy credits to

        A. 7275--C                          6
     1  load serving entities on an annual basis in order  to  facilitate  their
     2  collective efficient compliance. The public service commission, with the
     3  assistance of the New York state energy research and development author-
     4  ity,  shall also develop and implement protocols in the event that there
     5  is an oversupply or undersupply  of  tier  2  renewable  energy  credits
     6  offered  for  sale, relative to the tier 2 renewable energy credit obli-
     7  gation applied to the load serving entities, provided that the protocols
     8  should recognize and prioritize the realization of economic benefits  in
     9  New York from generators located in New York.
    10    (c)  The  public  service commission shall develop procedures by which
    11  eligible large-scale, renewable energy resources  may  obtain  contracts
    12  from  the New York state energy research and development authority under
    13  subdivision four of this section in accordance with the requirements  of
    14  the  state  administrative  procedure  act.  Such procedures shall, on a
    15  case-by-case basis, authorize  eligible  large-scale,  renewable  energy
    16  resources  to  petition  the  public service commission for a finding of
    17  financial hardship, which finding shall be based  upon  a  determination
    18  that  the  established  tier  2  renewable  energy credits determined in
    19  accordance with subdivision three of this section  are  insufficient  to
    20  ensure  the  viability  of  the  resource. The public service commission
    21  shall make a final decision with respect to  such  contract  within  120
    22  days after a hardship petition is received.
    23    (d)  Each  load  serving  entity shall demonstrate compliance with the
    24  requirements of this section through an annual compliance filing  pursu-
    25  ant  to  a  process established by the public service commission that is
    26  consistent with the compliance filing requirements established  pursuant
    27  to the tier 1 program.
    28    § 5. This act shall take effect immediately.
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