Legislative Memos

Gavin Donohue Testimony on Climate and Community Protection Act

Climate and Community Protection Act
S.2992 (Kaminsky) / A.3876 (Englebright)

The Independent Power Producers of New York (IPPNY) is New York’s oldest trade association dedicated to representing the independent generators of electric power in New York State. Our members account for more than 60 percent of New York's electricity, utilizing almost every generation technology available today such as wind, solar, natural gas, oil, hydro, coal, biomass, and nuclear. New York’s fleet of independent power producers has invested more than $10 billion in constructing and upgrading their facilities, pay annual taxes of over $600 million, and employ more than 10,000 individuals.

Addressing climate change and transitioning New York to a new energy future are important issues, and we appreciate the fostering of conversations on how the Climate and Community Protection Act (CCPA) can address those topics. Senator Kaminsky, holding hearings, welcoming comments on such a complex topic, and recognizing this is an energy matter just as much as an environmental matter are reasoned and appropriate steps towards a practical solution.

The effects of climate change are well understood, especially in your home area of Long Island. Rising sea levels, higher temperatures, increased storms, and vulnerable beaches are all very real issues with which you must contend.

That is why it is critical to get this right.

IPPNY actively supports a move to a more efficient electric system in a way that maintains the reliability of our grid and makes sure consumer costs do not balloon unnecessarily. As it is constructed today, the CCPA will have many unintended consequences, and we hope you will assess ways to improve this legislation.

Your legislation, which would set a benchmark for a 100 percent reduction in greenhouse gas emissions by 2050 and codify the Clean Energy Standard’s (CES) current goal that 50 percent of all electricity used in the State be generated from renewable energy resources by 2030, has sweeping, economy-wide impacts.

Before committing to these goals in statute, the New York State Legislature must collect as much information as possible. Reducing New York’s greenhouse gas emissions is not like putting on a blindfold and hitting a piñata. We need to know exactly where we’re going and what it takes to get there. To that end, improvements to this bill are needed to ensure that the implementation of the proposed emissions reduction goals would be completed in a way that maintains electric system reliability and protects consumers from unnecessary cost increases.

When considering New York’s move to a new energy future, three central points must be considered:

• Reliability;
• Affordability; and
• Environmental impact.

To understand how the CCPA will address those points, we must answer three accompanying questions.

• Where does our electricity come from?
• What progress has been made in integrating renewable resources into the grid?
• What will be the financial and technical impact of further integration?

The answers to these questions will better allow us to understand the reliability, affordability and environmental impact of the CCPA to Long Islanders and New York State as a whole.

State of the Grid

It has been nearly 20 years since the inception of New York’s wholesale electricity markets. In that time, these markets have driven independent power producers to take tremendous strides to reduce emissions and provide significant environmental benefits. Sulfur dioxide emissions have decreased by 99 percent, nitrogen oxides by 88 percent, and carbon dioxide emissions have decreased by 52 percent.

In fact, the State’s electric generation sector has seen the sharpest decrease of emissions from 1990 levels of any sector. According to data from the New York State Energy Research and Development Authority (NYSERDA), from 1990 through 2015, the power sector reduced greenhouse gas emissions by 53.8 percent. This is largely as a result of the forces of the competitive wholesale electricity market and without the availability of direct emission control technologies. In that same span of time, emissions from the transportation sector increased by 22.2 percent, and emissions from the residential sector increased by 3.8 percent. In the ongoing debate on reducing New York’s carbon footprint, fingers are constantly pointed at power plants, but it is other sectors that must make the same strides generators have.

The reason New York moved to a market-based electric system was to avoid situations where cost overruns or changed circumstance result in massive costs to consumers, such as was the case with the Shoreham Nuclear Power Plant. Under today’s market structure, the risk of investment is entirely on the developer, meaning private investors would bear the brunt of cost overruns or a failed project.

According to data from the New York Independent System Operator (NYISO) – which is the federally regulated body in charge of managing the electric grid – there is 5,306 megawatts (MW) of generation capability on Long Island, more than 5,100 MW of which is fossil fueled generation. IPPNY Members, like Calpine Corporation, Caithness Long Island, the Haugland Group, and J-Power USA, are operating highly efficient fossil fuel facilities and providing reliable, affordable power, as well as an essential tax base and jobs. On the renewables front, IPPNY Members NextEra Energy Resources and Invenergy are making large investments in energy storage and solar power on Long Island.

Reliability and Generation

Your legislation would require essentially a 100 percent renewable power sector by 2050 to satisfy the requirement that greenhouse gas emissions be reduced to zero by that point. Such a requirement causes the elimination of the gas-fired baseload electric generating facilities that can operate continuously to provide reliable and low-cost electricity. Each fuel and technology play an important role in maintaining electric system reliability. Currently, 34 percent of the State’s electricity consumed, including 70 percent of the electricity downstate, is produced by dual-fuel (natural gas and oil) resources.

This legislation would also cause the elimination of the dual-fuel peaking facilities that the NYISO relies on to produce electricity quickly to maintain reliability on hot summer evenings when intermittent solar and wind energy facilities are producing minimal or no electricity at all.

One important technical aspect of electric generation is called a capacity factor – which is a measurement of a facility’s actual generation as a percentage of its potential maximum generation. For example, if a plant has a maximum capacity of 100 MW, but only generates an average of 20 MW of power per day over a year, it has an annual capacity factor of 20 percent. Nuclear, hydro, and gas resources all have capacity factors of 70 percent or greater. According to the most recently available data from the NYISO, annual average capacity factors for wind and solar resources are 26 percent and 14 percent, respectively.

Of course, low capacity factor resources can benefit tremendously from investment in energy storage, which would balance out the mismatch between high demand days and times when it is not sunny or windy. However, understanding how the system physically operates is critically important if we are going to prescribe specific technology solutions, which is why the NYISO conducted a study in 2017 that examined the effect of 50 percent renewable generation on the electric grid. The study concluded that the future grid will be less predictable and will require more flexibility than it has today. Intermittent renewables will increase uncertainty on the electric system, and flexible units – like natural gas plants – will be needed to maintain reliability. That’s why the best public policy solutions to achieve New York’s energy goals aren’t ones that mandates specific technology targets but are ones that require all electric generation technologies to provide for system reliability while emitting the least emissions possible - which we will elaborate on further down.

New York’s Progress on Renewable Generation

The CES was announced in 2016, so IPPNY looked at NYISO data from five and ten years prior to see where New York was under the Renewable Portfolio Standard (the precursor program to the CES) and how the State has progressed in renewables proliferation over the years.

• In 2006, 21 percent of electricity generated in New York State came from renewable resources. The vast majority of this was from the giant hydro facilities constructed by New York Power Authority over 50 years ago.
• In 2011, renewable production rose to just a shade under 24 percent.
• The most recently available data is 2017’s generation statistics, and the percentage has risen to 28 percent.

These numbers show growth, but not at the rate needed to meet a goal of 50 percent renewable generation by 2030. Clearly, more private sector investment is needed, and steps are being taken in that direction. The State has made progress by awarding 46 projects contracts for renewable energy credits through NYSERDA’s solicitations, accounting for more than 3,000 MW of new renewable capacity. But getting these projects sited and built will be a challenge. It is a story all around New York State: opposition from local communities to new renewable resources is strong. People want renewable generation, but it seems like nobody wants to see it or hear it.

Infrastructure

There is also the issue of transmission. In 2016 when the CES was developed, the NYISO stated that significant transmission investment would be needed to move upstate renewables to downstate load centers. The investments needed will cost billions of dollars, and the timeline for developing improved transmission is unclear.

The Berlin Wall came down more recently than the last time New York saw critical transmission infrastructure come online. The Marcy South line came online in 1988, and the Berlin Wall fell in 1989.

Governor Cuomo announced an Energy Highway in 2012, and, thereafter, the State did identify an upstate to downstate need for AC Transmission under the Order 1000 process of the Federal Energy Regulatory Commission. The NYISO is currently deciding the projects to meet the AC Public Policy Transmission Need. Assuming the most generous timetable for completion of Article VII transmission line siting review and the construction of power lines, the projects would not be built before 2023, meaning that it will take no less than 11 years from the announcement of the Energy Highway to its completion. If New York does not make progress on transmission, a fully-renewable future is a non-starter.

Similarly, transitioning to a future with lower emissions must account for highly efficient natural gas electric generating facilities to maintain reliability and replace higher emitting technologies. Carbon capture and sequestration will be essential to that end; however, this technology is not commercially available today because there is neither market nor political support for it. To further support a flexible and resilient system, more must be done in the way of critical pipeline development. New York has not seen a major pipeline built since the 1990s. With Con Edison’s recently announced gas moratorium in Westchester County, and National Grid considering its own moratorium on large projects such as the Belmont Park Arena project, the time is more important than ever to invest in the backbone of our energy system.

Improving the CCPA

Considering the full picture of New York’s electricity sector, there are some essential changes necessary to improve the CCPA.

Your legislation calls for the creation of the Climate Action Council, the job of which is to spearhead the efforts of the State to meet its emissions reduction goals. Understanding how, or if, New York can reach those goals is essential; as stated earlier, we must have as much information as possible.

An effective way to gather information would be to require the State Energy Planning Board, building on the work of the Climate Action Council, to conduct a study on the technical and economic feasibility of the emissions reduction goals. In 2017, the Governor directed the Department of Environmental Conservation (DEC) and NYSERDA to conduct a study on the pathway to 100 percent renewable energy. We all are still waiting on those results. Moving forward on pursuing goals, without fully understanding the ramifications and possibilities that would be gleaned from these studies, is simply irresponsible.

Furthermore, enforcement of the emissions reduction benchmarks will be extremely difficult. The CCPA should include safety valves so that the emission reductions provisions would not be enforced if:

• The study finds that it is economically or technically infeasible to meet the goals;
• Electric system reliability would be impaired;
• Transmission is found to be inadequate;
• Permitting, interconnection or other circumstances cause a delay in availability of resources; and
• There is a lack of commercially available, cost-effective technology to capture and sequester greenhouse gas emissions.

Those triggers to waive enforcement present a realistic, responsible approach to make sure all bases are covered. This approach also ensures that New York can move ahead on this path without incurring overly burdensome costs – which would fall to consumers – and without negatively impacting our ability to keep the lights on. California’s landmark renewable energy legislation passed in 2018 included similar safety valves.

A waiver, however, does not mean a full stop on addressing climate change. In this case, the waiver takes under consideration the legislation’s expanded authority for the DEC. When one of the triggers is hit, the emissions reduction provisions would be paused, and the DEC would work to correct the issue that is holding up the process. Once that happens, the enforcement process would resume.

We also feel very strongly that you must require the NYISO and the New York State Reliability Council to be a part of the Council. The purpose of these two organizations is to maintain reliable electric system operations. Legislating changes to New York’s grid, without their input, would be irresponsible, and, at the very least, the Legislature should be engaging them in discussions on this legislation.

Finally, the Legislature should enact a social cost of carbon to aid the adoption of carbon pricing at the NYISO. The NYISO and New York State have spent the better part of a year and a half developing a proposal to price the social cost of carbon in the wholesale market. Adoption of carbon pricing would be the single best public policy solution to achieve New York’s energy goals because it would redesign the markets to send clear price signals to all technology types to provide for system reliability while emitting the least emissions possible.

Carbon pricing would result in cleaner resources being paid more and higher emitting resources being paid less, which could very well result in technologies such as carbon capture and sequestration becoming viable. IPPNY is strongly supportive of the NYISO’s efforts as they would harness private investment to reach the State’s emissions reductions goals while preserving the market structure that has brought numerous benefits to consumers.

Most importantly, carbon pricing would greatly encourage renewables, energy storage and carbon neutral development in the places where these resources are the most economic and efficient while incenting existing generators to invest in next generation emissions reduction technologies, helping greatly to balance out the investments New York State is making. Markets have already focused upon reliability, kept costs low for consumers, and reduced emissions, but they have not placed a greater value on low and zero-emitting resources. It only makes sense to improve upon an already successful model.

Conclusion

New York is a national leader on clean energy and emissions reductions. The CCPA, with the right corrections and with practical, sound judgement, can further solidify that rank. These comments have offered a generator perspective on this legislation, but there are many nuances to reshaping New York’s power system.

It would be enormously beneficial for the Legislature to engage the NYISO in further discussions on the CCPA. The grid implications of legislating emissions cannot be fully comprehended without analysis from, and the partnership of, the single independent entity that oversees the operations of the New York power grid.

We at IPPNY look forward to working with you, and please contact our offices with any questions.