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A07275 Summary:

BILL NOA07275B
 
SAME ASSAME AS S05549-B
 
SPONSORJenne
 
COSPNSRHunter, Blankenbush, Crespo, Ortiz, Rosenthal L, Blake
 
MLTSPNSRMagee, Thiele
 
 
Relates to maintaining the continued viability of the state's existing large-scale, renewable energy resources.
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A07275 Actions:

BILL NOA07275B
 
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
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A07275 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7275B
 
SPONSOR: Jenne
  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
        ________________________________________________________________________
 
                                         7275--B
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                     April 17, 2017
                                       ___________
 
        Introduced  by  M.  of  A.  JENNE,  HUNTER, BLANKENBUSH, CRESPO, HARRIS,
          ORTIZ, L. ROSENTHAL, BLAKE -- Multi-Sponsored by -- M.  of  A.  MAGEE,
          THIELE -- read once and referred to the Committee on Energy -- commit-
          tee  discharged, bill amended, ordered reprinted as amended and recom-
          mitted to said committee -- 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  commit-
          tee
 
        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).
    17    3.  A  recent  study  shows  that  New  York's clean energy sector now
    18  employs more than 85,000 workers at more than 7,500 business  establish-
    19  ments  spread  out  across  the  state, in both the renewable energy and

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10514-03-8

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

        A. 7275--B                          3
 
     1    3. "Load serving entity" or "load serving entities" means and includes
     2  all  investor-owned distribution utilities (in their capacity as commod-
     3  ity suppliers), energy service companies, community  choice  aggregation
     4  programs  not  served  by  energy service companies, municipal utilities
     5  under  the  jurisdiction  of  the  public service commission, and retail
     6  customers that self-supply with electricity through the New  York  inde-
     7  pendent system operator.
     8    4.  "Renewable  energy  credit"  means a tradable, non-tangible energy
     9  commodity that represents proof that 1 megawatt-hour (MWh) of  electric-
    10  ity  was  generated from a renewable energy resource. To be eligible for
    11  sale in New York state and to meet the procurement obligations  of  load
    12  serving  entities,  each renewable energy credit must be registered with
    13  the New York generation attribute tracking systems.
    14    5. "Tier 1" means the program designated as tier  1  pursuant  to  the
    15  clean energy standard order.
    16    6. "Tier 2 renewable energy credit" refers to a renewable energy cred-
    17  it generated by an eligible large-scale, renewable energy resource.
    18    7.  "Order  adopting a clean energy standard" means the public service
    19  commission order dated August 1, 2016, and entered in case number  15-E-
    20  0302 et seq.
    21    §  3.  Deliverability.  Energy from an eligible large-scale, renewable
    22  energy resource shall be deemed to comply with the New York deliverabil-
    23  ity requirement if either it is: (a) delivered into  a  market  adminis-
    24  tered  by  the  New  York independent system operator for end-use in New
    25  York state; (b) delivered through a wholesale meter under the control of
    26  a utility, public authority or municipal electric company such  that  it
    27  can  be measured, and such that consumption within New York state can be
    28  tracked and verified by such entity  or  by  the  New  York  independent
    29  system  operator;  or  (c) delivered through a renewable energy resource
    30  dedicated generation meter,  approved  by  and  subject  to  independent
    31  verification  by  the  New  York  state  energy research and development
    32  authority, to a customer in New York state.
    33    § 4. Program for eligible  large-scale,  renewable  energy  resources.
    34  Notwithstanding  any  other provision of law to the contrary, including,
    35  but not limited to, any order, rule or regulation  promulgated  pursuant
    36  to  the public service law, the public authorities law, and/or the state
    37  administrative procedure act, the public service commission, in  consul-
    38  tation  with the New York state energy research and development authori-
    39  ty, shall adopt a program within 120 days of the effective date of  this
    40  act, to provide support to and for eligible large-scale, renewable ener-
    41  gy  resources  through  a  market for tier 2 renewable energy credits as
    42  defined herein to ensure the continued viability of eligible  large-sca-
    43  le, renewable energy resources for the purpose of meeting the state's 50
    44  by  30 target. In developing such program, the public service commission
    45  shall create an obligation on load serving entities to purchase  tier  2
    46  renewable  energy  credits  from  eligible large-scale, renewable energy
    47  resources through a process and requirements as fully described below:
    48    1. Annual targets for tier 2  renewable  energy  credits.  The  public
    49  service  commission  shall  provide  annual targets and mandates for the
    50  acquisition of tier 2 renewable energy credits by load serving  entities
    51  for the years 2018 to 2030 that ensures market demand for tier 2 renewa-
    52  ble  energy  credits for all resources that become eligible large-scale,
    53  renewable energy resources during such timeframe for purposes of achiev-
    54  ing the 50 by 30 target. The targets to be  established  by  the  public
    55  service  commission  should  reflect  the  quantity  of renewable energy
    56  generation that is serving  total  electric  load  in  New  York  state,

        A. 7275--B                          4
 
     1  excluding generation from facilities owned by the power authority of the
     2  state of New York and excluding hydropower from generators with a capac-
     3  ity greater than 50 megawatts.
     4    2.  Load  serving entities' tier 2 renewable energy credit obligation.
     5  Each load serving entity shall be responsible for  acquiring  a  defined
     6  quantity  of tier 2 renewable energy credits based upon the total tier 2
     7  load serving entity obligation target  allocated  to  all  load  serving
     8  entities  proportional  to  the  load  each  serves; i.e., determined by
     9  multiplying each load serving entity's actual load for the prior year by
    10  the percentage GWh target for that  year.  The  New  York  state  energy
    11  research and development authority shall publish each load serving enti-
    12  ty's  annual obligation for each annual compliance period on its website
    13  or by other appropriate means by December 1 of the  year  prior  to  the
    14  year such published annual obligation shall apply.
    15    3.  Tier  2 renewable energy credit price. By each December 1 prior to
    16  the annual compliance period, the public service commission shall estab-
    17  lish a tier 2 renewable energy credit price to be set at 75  percent  of
    18  the  weighted average cost per renewable energy credit that the New York
    19  state energy research and development authority paid to acquire  renewa-
    20  ble energy credits from resources under the clean energy standard tier 1
    21  program in the prior calendar year.
    22    4.  Financial  hardship.  Those eligible large-scale, renewable energy
    23  resources for which the tier 2 renewable energy credit price is insuffi-
    24  cient may seek additional financial assistance from the New  York  state
    25  energy  research  and  development  authority through contracts having a
    26  minimum duration of ten years for the purpose of ensuring the  continued
    27  viability and availability of such resources toward meeting the 50 by 30
    28  target.    The  New York state energy research and development authority
    29  shall apply the following criteria in  determining  the  eligibility  of
    30  such  eligible  large-scale,  renewable energy resources to receive such
    31  financial assistance, which shall be paid as an increment above the tier
    32  2 renewable energy credit price determined pursuant to subdivision three
    33  of this section:
    34    (a) A showing of financial hardship;
    35    (b) The basis for and reasonableness of expected operating and capital
    36  costs. This evaluation may include, among other things, a comparison  to
    37  prior years' costs and a comparison to costs of like generation;
    38    (c)  The  existence  of any other cash sources available to the large-
    39  scale, renewable energy resource, such as: (i) tax benefits; (ii) subsi-
    40  dies; (iii) contracts; and (iv) other sources,  including  restructuring
    41  financing;
    42    (d)  Whether market rules are increasing the costs of the large-scale,
    43  renewable energy resource and, if so, whether any steps can be taken  to
    44  reduce such costs;
    45    (e) Whether the large-scale, renewable energy resource's real property
    46  tax  assessment  is consistent with the assessments imposed in similarly
    47  situated facilities elsewhere, and if not, what action has been taken to
    48  address such assessment;
    49    (f) Whether the large-scale, renewable energy resource is required  to
    50  operate  as  part of a package of assets that is financially viable as a
    51  whole;
    52    (g) Whether  the  large-scale,  renewable  energy  resource  generates
    53  enough  revenue,  based on expected output, to cover its operating costs
    54  and enjoy a reasonable return;
    55    (h) Whether the generation facility generates enough revenue  to  make
    56  necessary capital improvements;

        A. 7275--B                          5
 
     1    (i)  Whether  the  large-scale,  renewable  energy  resource generates
     2  enough revenue to cover its fixed costs, including:  (i)  debt  service;
     3  (ii) property taxes; (iii) security costs; and (iv) other costs;
     4    (j)  Whether  the large-scale, renewable energy resource has attempted
     5  to make use of other renewables programs available to it, such as volun-
     6  tary green markets; and
     7    (k) The regional economic importance of the resource. This  evaluation
     8  may  include  job creation and retention, regional spending for fuel and
     9  other goods and services, contribution to local tax base, fuel  diversi-
    10  ty,  greenhouse  gas  reduction,  enhanced forest health, flood control,
    11  municipal water supply, ecological stewardship  and  other  non-economic
    12  factors  on  a region-specific basis.  Any contract entered into with an
    13  eligible large-scale, renewable energy resource pursuant to this  subdi-
    14  vision  shall  include a reasonable return, and take the form of a fixed
    15  price increment to the tier 2 renewable energy  credit  price  that  the
    16  generator  is  receiving  from  a  load  serving  entity  or a financial
    17  contract for differences to adjust based on fluctuations in the  tier  2
    18  renewable  energy  credit price. The totality of all increments provided
    19  to resources pursuant to this subdivision shall be recovered from deliv-
    20  ery customers in the same manner as in the renewable portfolio  standard
    21  program maintenance tier.
    22    5.  Procedures.  To  implement  the  tier  2  renewable  energy credit
    23  program, the public service commission shall also adopt within 120  days
    24  of  the  effective date of this act the following procedures and related
    25  requirements:
    26    (a) The public service commission shall establish procedures  consist-
    27  ent with the procedures developed under the clean energy standard tier 1
    28  program  to  determine  the eligibility of large-scale, renewable energy
    29  resources to participate in the program adopted pursuant to this act and
    30  to certify such eligible large-scale, renewable  energy  resources.  All
    31  resources  that  have previously been found by the New York state energy
    32  research and development authority to meet the eligibility and delivera-
    33  bility requirements in force under the renewable portfolio  standard  or
    34  clean  energy  standard programs shall be deemed to meet eligibility and
    35  deliverability requirements of this act.
    36    (b) The public service commission, with the assistance of the New York
    37  state energy research and development authority, shall develop an  equi-
    38  table  process  by  which load serving entities acquire tier 2 renewable
    39  energy credits from eligible large-scale,  renewable  energy  resources,
    40  which  may include the designation of the New York state energy research
    41  and development authority as the central procurement entity for  tier  2
    42  renewable energy credits, whereby the New York state energy research and
    43  development authority would ensure the registration of all tier 2 renew-
    44  able  energy  resources from generators in New York generation attribute
    45  tracking systems, purchase the required targeted amount of tier 2 renew-
    46  able energy credits, and re-sell the tier 2 renewable energy credits  to
    47  load  serving  entities  on an annual basis in order to facilitate their
    48  collective efficient compliance. The public service commission, with the
    49  assistance of the New York state energy research and development author-
    50  ity, shall also develop and implement protocols in the event that  there
    51  is  an  oversupply  or  undersupply  of  tier 2 renewable energy credits
    52  offered for sale, relative to the tier 2 renewable energy  credit  obli-
    53  gation applied to the load serving entities, provided that the protocols
    54  should  recognize and prioritize the realization of economic benefits in
    55  New York from generators located in New York.

        A. 7275--B                          6
 
     1    (c) The public service commission shall develop  procedures  by  which
     2  eligible  large-scale,  renewable  energy resources may obtain contracts
     3  from the New York state energy research and development authority  under
     4  subdivision  four of this section in accordance with the requirements of
     5  the  state  administrative  procedure  act.  Such procedures shall, on a
     6  case-by-case basis, authorize  eligible  large-scale,  renewable  energy
     7  resources  to  petition  the  public service commission for a finding of
     8  financial hardship, which finding shall be based  upon  a  determination
     9  that  the  established  tier  2  renewable  energy credits determined in
    10  accordance with subdivision three of this section  are  insufficient  to
    11  ensure  the  viability  of  the  resource. The public service commission
    12  shall make a final decision with respect to  such  contract  within  120
    13  days after a hardship petition is received.
    14    (d)  Each  load  serving  entity shall demonstrate compliance with the
    15  requirements of this section through an annual compliance filing  pursu-
    16  ant  to  a  process established by the public service commission that is
    17  consistent with the compliance filing requirements established  pursuant
    18  to the tier 1 program.
    19    § 5. This act shall take effect immediately.
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