Grid operator warns Cuomo energy plan could raise consumer costs 

ALBANY – The state’s independent grid operator is concerned the Cuomo administration’s primary method of achieving its goal of doubling New York’s renewable energy could prove costly for consumers.

The state is developing a Clean Energy Standard that would require that New York power at least half its electric grid with renewable energy by 2030. That would lead to an unprecedented expansion of solar, wind, hydropower and other renewable sources that would be partially funded by about $5 billion collected from monthly utility bills.

But the New York Independent System Operator is concerned that a primary method of connecting more customers with renewable energy sources could be risky for consumers.

So called purchase-power agreements allow a large number of customers to buy into a renewable energy project, according to NYISO. But using PPAs as a primary way to comply with the Clean Energy Standard is a risky strategy that could lead to higher costs for consumers and other problems on the grid, NYISO officials wrote in comments to the state Public Service Commission.

“Such PPAs unnecessarily transfer the risk that certain resources may not be economically viable from private investors and developers to those that are unable to manage and mitigate such risk – consumers,” NYISO officials wrote. “Significantly, the [Department of Public Service] Staff White Paper does not address the reliability concerns that arise when resources are insulated from the financial consequences of their operation.”

The PSC recently determined that the Clean Energy Standard would increase consumer bills by less than 1 percent, and cost the average residential customer about $1 per month. However, those estimates are only calculated through 2023 and not until 2030, when the costs would likely be higher.

Dozens of renewable energy and green groups have also submitted comments about the Clean Energy Standard. Most support the plan call it transformative and an important method of combating climate change. However, NYISO’s critique carries more weight as it is an objective look at the plan from a neutral party, rather than a group that supports renewables, utilities or traditional power generation plants.

Taken together, the comments will be used to shape the plan before it is finalized by the PSC.

In its comments, the grid operator was supportive of the Cuomo administration’s plan to include nuclear plants in the Clean Energy Standard. That, NYISO says, will be essential for grid reliability as more renewable energy is brought online. Of particular concern, according to NYISO, is that renewables are “intermittent technologies.”

“Nuclear generators are also generally available around the clock and only require refueling on 18- or 24-month cycles, providing reliable operation when intermittent renewable generators may be unavailable and when natural gas prices spike or consumption may be restricted,” NYISO officials wrote.

Residential and business ratepayers will subsidize nuclear facilities, according to the PSC. According to state calculations, the cost for ratepayers to subsidize struggling nuclear facilities will as much as $658 million in the next six years, according to the PSC, or as low as $59 million.

The state will need 25,000 megawatts of solar capacity to meet the administration’s target or 15,000 megawatts of wind capacity or approximately 4,000 megawatts of hydropower, according to the NYISO. The state will also likely need more transmission lines to connect the new renewable energy sources to the grid, the grid operator said in its comments to the PSC.

NYISO officials recommend that the state rely on competitive markets to drive renewable energy growth rather than create incentives that interfere with the open market. Improperly interfering with the markets to give subsidies to some plants at the expense of others could lead to reliability problems for the electrical grid if some power generators are artificially forced out of the market, NYISO officials wrote.

“If reduced market prices cause or accelerate the retirement or mothballing of other generation facilities, or stall the development of new generation, the lack of diverse generation resources could adversely affect reliability,” they said.