Energy Committee Update
March 19, 2010
Staff Contact: Ken Pokalsky
If you have not already done so, we urge you to weigh in on an Executive Budget proposal to allow cities and villages to increase their local gross receipts taxes on energy and telecommunications utilities from one to three percent, a potential increase of up to $140 million per year. This proposal is included in S.6606/A.9706, Part HH; our memo in opposition is available here.
Two legislative proposals to create a long term replacement for Power for Jobs and Economic Development Power have been introduced. In addition, we are anticipating both the Administration and Senate Energy Chair George Maziarz to submit proposals in the very near future. Proposals to date include:
- Assembly Energy Chair Kevin Cahill has introduced A.10053, the first legislative proposal that would redeploy NYPA “rural and domestic” power for economic development programs. This legislation also would provide long term contracts for program participants, with provisions for mid-contract extensions (so-called “evergreen” contracts.) The Business Council has raised concerns about the energy audit mandate included in the proposal, as well as the feasibility of the residential rate mitigation program proposed in this bill.
- Senator Darryl Aubertine has introduced S.7138. This bill shares key components with A.10053. Both redeploy R&D power for economic development; both create a permanent replacement program; both provide for long-term power contracts that can include allocation-based benefits; and both allow for mid-contract extensions. We believe the Aubetine bill has more appropriate provisions for consideration of energy efficiency investments by program applicants. However, we are concerned that the five year redeployment schedule in S.7138, and its residential rate mitigation provisions, would result in a limited economic development program during its initial years of implementation.
Bill text is available here. A more detailed review of these proposals is available here. We will provide updates to committee members as additional proposals are introduced.
The New York Independent System Operator (ISO) has release data showing that average wholesale electric prices in 2009 were $48.63 per megawatt-hour (MWh) a ten year low. The 2009 average was below the previous low of $49.90 per MWh set in 2002 and 49 percent below the 2008 average of $95.31 per MWh. The attributed the 2009 wholesale price drops to reduced power consumption and reductions in the cost of natural gas, adding that by their estimates, fuel-adjusted wholesale power prices (both energy and capacity) in New York has declined by 18 percent since 2000.
The Council’s Public Policy Institute has issued a study showing that state and local government taxes make up more than a quarter of New York electric bills. Our summary, and the complete report, are available here. New York’s power industry paid an estimated $6.367 billion in state and local taxes, assessments and fees in 2009. The figure is $853 million higher than the total the industry paid in 2008, an increase of more than 15%.