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New York


STATES HAVE BIG HOPES FOR RENEWABLE ENERGY. GET READY TO PAY FOR IT.

$48 billion in projects is set to be funded by consumers over the next two
decades.



New York and other states are facing a difficult balancing act as they try to
move more toward renewable energy, but are having to force consumers to pay for
the projects. It might be a tough issue for Democrats heading into the 2024
elections. | John Minchillo/AP Photo

By Marie J. French

08/22/2023 05:00 AM EDT

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ALBANY, N.Y. — A generational push to tackle climate change in New York is
quickly becoming a pocketbook issue headed into 2024.

Some upstate New York electric customers are already paying 10 percent of their
utility bill to support the state’s effort to move off fossil fuels and into
renewable energy. In the coming years, people across the state can expect to
give up even bigger chunks of their income to the programs — $48 billion in
projects is set to be funded by consumers over the next two decades.



The scenario is creating a headache for New York Democrats grappling with the
practical and political risk of the transition.



It’s an early sign of the dangers Democrats across the country will face as they
press forward with similar policies at the state and federal level. New Jersey,
Maryland and California are also wrestling with the issue and, in some cases,
are reconsidering their ambitious plans.

“This is bad politics. This is politics that are going to hurt all New Yorkers,”
said state Sen. Mario Mattera, a Long Island Republican who has repeatedly
questioned the costs of the state’s climate law and who will pay for it.

Democrats, Mattera said, have been unable to explain effectively the costs for
the state’s goals. “We need to transition into renewable energy at a certain
rate, a certain pace,” he said.

Proponents say the switch will ultimately lower energy bills by harnessing the
sun and wind, result in significant health benefits and — critically — help
stave off the most devastating climate change scenarios. And they hope federal
money from the Inflation Reduction Act, celebrating its one-year anniversary,
can limit costs to consumers.

New York has statutory mandates calling for 70 percent renewable electricity by
2030 and a fully “zero emissions” grid by 2040, among the most aggressive
targets in the country. The grid needs to be greened, while demand for
electricity is expected to more than double by 2050 — the same year when state
law requires emissions to be cut by 85 percent from 1990 levels.

But some lawmakers in New York, particularly upstate Democrats, and similar
moderates across the nation are worried about moving too quickly and sparking a
backlash against higher costs. The issue is another threat to Democrats heading
into the critical 2024 battleground House races in New York, which will be
instrumental in determining control of Congress.

Even Gov. Kathy Hochul, a Democrat who is fond of saying that “we’re the last
generation to be able to do anything” about climate change, last spring balked
at the potential price tag of a policy to achieve New York’s climate targets.
And she’s not the only top member of her party to say so.

“If it’s all just going to be passed along to the ratepayers — at some point,
there’s a breaking point, and we don’t want to lose public support for this
agenda,” state Comptroller Tom DiNapoli, a Democrat, warned in an interview.


RAMPING UP RENEWABLES

New York is moving toward fewer fossil fuels and more renewable energy sources,
but the high price tag is set to be a big hit on utility customers. | Hans
Pennink/AP Photo

Part of the problem is New York has been unable to meet its previous renewable
targets, which DiNapoli’s office in a recent report attributed in part to
permitting challenges and inconsistent contracting efforts.

New York got about 29 percent of its electricity from renewables in 2022,
three-quarters of which came from large hydropower dams in upstate New York.




The costs of the state’s renewable energy mandates are being paid for almost
solely by New York residents and businesses through their electric bills. With
renewable developers asking for higher subsidies to deal with inflation, those
costs are expected to increase while expected savings from the transition takes
longer to materialize.

Democrats who control New York’s government are increasingly worried about the
fallout.

“I’m very concerned about the cost and the impact on our ratepayers, our
constituents,” said Assemblymember Didi Barrett, a Hudson Valley Democrat who
chairs the chamber’s Energy Committee. “People right now are already complaining
about where their utility costs are, so it has to be part of the conversation.”

Utility rates are a particularly regressive way to fund the clean energy
transition. Wealthy residents pay the same amount for electricity as people
struggling to make ends meet.

While some programs exist to assist low-income individuals, those aren’t
available to middle-income people and can be difficult to access. The state also
has a policy goal of capping utility costs at 6 percent of income, which some
lawmakers want to enshrine in law to ensure it is achieved.

But the mounting costs for the transition continues to draw warnings from a wide
array of regulators, advocates and legislators.

New York City “supports efforts to transform our electric system away from
fossil fuels to sustainable, carbon-free technologies,” a lawyer for Mayor Eric
Adams’ administration wrote in recent comments on a potential new clean energy
subsidy. “However, the City is very concerned that the cost of utility service
is becoming unaffordable for many New Yorkers.”

Democratic lawmakers are planning a hearing in the fall on the costs of the
climate law to ratepayers.


TRANSITION BENEFITS AWAITED

New York Assembly Energy Committee chairperson Didi Barrett, a Democrat, is
warning that the state's move to renewable energy shouldn't overburden
consumers. | Hans Pennink/AP Photo

Bringing new renewables online will, in the long run, lower costs for
electricity and insulate New York residents from the volatility of oil and gas
prices, proponents said.

“Our optimistic view — our view of the future — is that as we include additional
renewable energy resources; the instability that we experienced recently and
have experienced historically with fluctuating energy prices can be mitigated;
and we can have a far more stable energy system and a far more affordable energy
system,” Rory Christian, the chair of the state’s Public Service Commission that
regulates utilities, said in an interview.


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Academic research supports his view, with studies of the transition ultimately
showing benefits, especially when factoring in the value of eliminating
greenhouse gas emissions. Lowering co-pollutants also has significant health
benefits.

But there is still the question of customers’ tolerance for higher bills,
especially during the current inflationary period, and whether their anger will
translate to trouble at the polls for Democrats.

A recent report by the state Public Service Commission’s staff found the
transition is already increasing utility bills. National Grid electric customers
in upstate New York saw 9.8 percent of their bills go toward climate investments
in 2022; for Con Edison customers in New York City, it was 4.4 percent. That
amounts to an average of about $9.40 out of a $96 monthly bill for upstate Grid
customers and $7.90 out of a $182 monthly bill for Con Ed customers.

Christian said that benefits from the Inflation Reduction Act, which in part
subsidizes clean energy projects, will help lower the cost to ratepayers for
some programs. But details of how some of those programs will work is still
sparse.


COST CONCERNS RAMPANT

New Jersey Gov. Phil Murphy is pushing off-shore wind development to get the
state off fossil fuels, but delays and growing costs has been used by
Republicans as a campaign issue this year in statehouse races. | Wayne Parry/AP
Photo

Other states are also dealing with similar concerns.

In New Jersey, all of the state’s legislative seats are on the ballot this fall,
and the expense of moving away from natural gas and building new state-backed
offshore wind projects are major campaign issues in some races.

Republicans have been hammering Democrats, including Gov. Phil Murphy, on the
costs of his clean energy plan.

A study released by the state’s utility regulators last summer found Murphy’s
clean energy policies could increase rates by 10 percent to 20 percent unless
people use less energy, buy an electric car and rip out their natural gas
appliances to install new electric appliances.

And that was before he set even more ambitious clean energy targets this year.

Meanwhile, the outgoing chair of Maryland’s utility regulator, appointed by
moderate Republican Gov. Larry Hogan, recently cautioned policymakers to make
sure ratepayers don’t foot the bill for aggressive climate policies.

In California, Democratic Gov. Gavin Newsom proposed substantial cuts to climate
programs at the beginning of the year and ultimately cut a deal with lawmakers
to trim spending.




Still, California has a longstanding cap-and-trade program and a low carbon fuel
standard that incentivizes electrification and alternative fuels, with proceeds
aimed at reducing costs of the transition.

And while those programs increase gas costs between 22 and 44 cents per gallon,
Newsom is now in the midst of implementing an anti-price gouging law targeting
oil and gas companies.

Washington state’s first auctions under a new cap-and-trade program have raised
significant revenue. But the program has been linked to rising fuel prices in
the state, with farmers saying they’re getting hit despite an exemption in the
law.


ALTERNATIVE FUNDING MECHANISM

New York Gov. Kathy Hochul earlier this year had to pull back some plans that
would lower costs to utility customers amid concerns from environmentalists that
it would weaken the state's ambitious climate policies. | Evan Vucci/AP Photo

Democratic lawmakers approved New York’s landmark climate law in 2019, but
haven’t had to grapple with the policies — and the costs —that will allow the
state to achieve its goals until recently.

“My job at this point is: How are we going to achieve the goals, which I support
and I voted for, and how are we going to pay for them,” Barrett said.

The main mechanism to raise funds, backed by a Hochul-administration dominated
panel, looks likely to be an economy-wide cap-and-trade system to ratchet down
emissions over time and auction off the right to pollute. Such a program will
likely raise fossil-based energy costs, including at the pump and on utility
bills.

Citing the high prices in Washington, Hochul officials earlier this year said
the state’s climate law needed to be rewritten because the potential cost
impacts under cap-and-trade would be too burdensome. But Hochul backed down
after backlash from environmentalists and groups that pushed for passage of the
climate law.

Assemblymember Ken Zebrowski (D-Rockland County) said at the time the increases
in gas prices estimated by the Hochul administration under cap-and-trade were
not reasonable.

“Assuming those are real numbers, they are absolutely unaffordable for New
Yorkers — and we will need to amend the law,” Zebrowski said.

Some key Democratic lawmakers are instead pushing for a Superfund-style program
to charge large fossil fuel companies for damages caused by historical
pollution, pitching it as a way to raise billions without costs being passed to
consumers. The Hochul administration, though, has been wary of the potential
litigation that could come from it.

Lawmakers earlier this year instead approved a rebate program for a third of any
revenue raised by the cap-and-trade program, which is still in development.

“We’re waiting to have some information to react to,” Barrett said. “The world
has changed since 2019 in lots of ways, so we have to work in the reality of
where we are now.”

Ry Rivard contributed to this report.


 * Filed under:
 * New Jersey,
 * New York,
 * Kathy Hochul,
 * Funding,
 * Electricity,
 * Renewable Energy


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CALIFORNIA CLIMATE

How the politics of climate change are shaping the future of California


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How the politics of climate change are shaping the future of California

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