Energy Committee Update
June 27, 2012
Staff Contact: Darren Suarez
- End of Legislative Session Report
- Passed Both Houses
- Not Approved
- State Energy Plan
- Energy Highway
- Task Force Members
- EIA Released Annual Energy Outlook
- Discussion of Energy Policy
Last week marks the scheduled close of the legislative session. Last year, the first year of a two year session, resulted in numerous longstanding items being resolved. The second year of this two year session was not dominated by the pressing need to address economic development power programs, or power plant siting.
The 2012 Energy Session discussion was dominated by a desire by some to address perceived energy market failures with numerous adjustments.
Passed Both Houses
- Generation Attribute Certification and Tracking System.
S.3872-C (Maziarz) / A.6114-C (Hevesi). Requires the development of a generation attribute certification and tracking system by the New York State energy research and development authority; defines generation attribute certificate.
- Remote Net Metering.
S.6670 (Little) / A.9560 (Brindisi). Authorizes remote net metering by farm and non-residential customer-generators using micro-hydroelectric generating equipment.
- Solar Leasing Tax Credit.
S.149-B (Maziarz) / A.34-B (Cahill). This legislation will allow homeowners to who lease solar equipment or purchase power under a written agreement with a third party to benefit from a solar equipment tax credit.
New York enacted legislation in July 2005 exempting the sale and installation of residential solar-energy systems from the state's sales and compensating use taxes. The exemption applies to solar-energy systems that utilize solar radiation to produce energy designed to provide heating, cooling, hot water and/or electricity. The exemption does not apply leased solar equipment
- NYC Solar Tax Abatement.
S.7711 (Lanza) / A.10620 (Farrell). Provides for the tax abatement for solar generating systems in cities of one million or more. If the solar electric generating system is placed in service on or after January 1, 2013 and before January 1, 2015, the amount of the tax abatement would be 2.5% of eligible solar electric generating system expenditures in each year of the four-year compliance period. However, the benefit in each tax year would be limited to the lesser of the amount of taxes payable or $62,500.
The current law allows building owners to deduct from their total real property taxes a portion of the expenditures associated with installing a PV system on an eligible building. Systems placed in service between August 5, 2008 (the effective date) and December 31, 2010 were eligible for an abatement of 8.75% of eligible expenditures annually for four years. Systems placed in service between January 1, 2011 and December 31, 2012 are eligible for an abatement of 5.0% of eligible expenditures annually for 4 years. Thus the total property tax benefit can amount to either 35% or 20% of the installed system cost depending on when it is built.
- Commercial Solar Tax.
S.3203-B (Maziarz) / A.5522-B (Englebright). Exempts the sale and installation of commercial solar energy systems equipment from sales and compensating use taxes; grants municipalities the option to grant such exemption from local sales and use taxes. Currently, only residential solar customers are exempt from sales tax.
- Solar Mandate.
A9149-A (Englebright). Creates the New York solar industry development and jobs act of 2012; relates to establishment of solar incentive programs by the public service commission, the power authority of the state of New York and the Long Island power authority.
- Independently Owned Utilities to Pay Prevailing Wage.
S.7434 (Savino) / A.9375 (Camara). Relates to prevailing wages for service workers; amends certain definitions, payroll filing requirements and penalties for violations thereof.
- Street Cutter Prevailing Wage.
S.3827 (Maziarz) / A.6970 (Wright). Enacts the "roadway excavation quality assurance act;" relates to workers on excavations; provides that utility companies or their contractors shall use competent workers and shall pay the prevailing wage on projects where a permit to use or open a street is required to be issued.
In September 2009, a law was passed that statutorily establishes the State Energy Planning Board and calls on that Board to launch an energy planning process and complete a State Energy Plan on or before March 15, 2013. The goal of the planning process is to map the State’s energy future by showing how the State can ensure adequate supplies of power, reduce demand through new technologies and energy efficiency, preserve the environment, reduce dependence on imported gas and oil, stimulate economic growth, and preserve the individual welfare of New York citizens and energy users.
The State Energy Planning Board will be meeting over the summer to complete the draft state energy plan. The Business Council is engaged in the development of Energy Plan, and will be preparing formal comments on the Draft State Energy Plan when it is released.
Energy Planning Board Meeting
July 9, 2012
Release of Draft Energy Planning Board Meeting
August 6, 2012
Draft State Energy Plan
August 23, 2012
Final State Energy Plan
March 15, 2013
Governor Cuomo, in his 2012 State of the State Address, put forward a proposal for an “Energy Highway,” promising to help provide reliable, economical power to New York’s homes and businesses for the next half century while creating jobs, energizing private-sector investment and protecting the State’s environment and the well-being of its citizens.
Energy Highway Update
In the next few months a number of items will be considered by the Energy Highway Task Force. Some information has been shared by organizations and individuals whom have submitted materials to Request for Information (RFI). At time of publication the June 15 RFI summaries have not been issued.
By July 15, 2012 comments are due from the public on guidelines and specific action items the Task Force should consider in formulating its Action Plan. The Task Force is scheduled to complete the Action Plan this summer.
Energy Highway Task Force Members:
- Gil C. Quiniones, President and Chief Executive Officer, New York Power Authority (Co-Chair).
- Joseph Martens, Commissioner, New York State Department of Environmental Conservation (Co-Chair).
- Kenneth Adams, President & CEO and Commissioner, Empire State Development.
- Garry A. Brown, Chairman, New York State Public Service Commission.
- Francis J. Murray, Jr., President and Chief Executive Officer, New York State Energy Research and Development Authority.
The U.S. Energy Information Administration (EIA) on June 25, released the complete version of Annual Energy Outlook 2012 (AEO2012) which, in addition to the Reference case projections, includes 29 alternative cases which show how different assumptions regarding market, policy, and technology drivers affect projections of energy production, consumption, technology, and market trends and the direction they may take in the future.
Key results highlighted in AEO2012 include:
The rate of growth in energy use slows over the projection period, reflecting moderate population growth, an extended economic recovery, and increasing energy efficiency in end-use applications.
Overall U.S. energy consumption grows at an average annual rate of 0.3 percent from 2010 through 2035 in the AEO2012 Reference case. The U.S. does not return to the levels of energy demand growth experienced in the 20 years prior to the 2008-2009 recession, because of more moderate projected economic growth and population growth, coupled with increasing levels of energy efficiency and rising energy prices.
Existing Federal and State energy requirements and incentives play a continuing role in requiring more efficient technologies. New Federal and State policies could lead to further reductions in energy consumption. The potential impact of technology change and the proposed vehicle fuel efficiency standards on energy consumption are examined in several cases in the AEO2012.
Domestic crude oil production increases.
Domestic crude oil production has increased over the past few years, reversing a decline that began in 1986. U.S. crude oil production increased from 5.0 million barrels per day in 2008 to 5.5 million barrels per day in 2010. Over the next 10 years, continued development of tight oil, in combination with the ongoing development of offshore resources in the Gulf of Mexico, pushes domestic crude oil production higher.
Because the technology advances that have provided for recent increases in supply are still in the early stages of development, future U.S. crude oil production could vary significantly, depending on the outcomes of key uncertainties related to well placement and recovery rates. Those uncertainties are highlighted in several cases completed as part of AEO2012 and discussed in an article examining impacts of uncertainty about current estimates of the crude oil and natural gas resources.
With modest economic growth, increased efficiency, growing domestic production, and continued adoption of nonpetroleum liquids, net imports of petroleum and other liquids make up a smaller share of total U.S. energy consumption.
U.S. dependence on imported petroleum and other liquids declines in the AEO2012 Reference case, primarily as a result of rising energy prices; growth in domestic crude oil production to more than 1 million barrels per day above 2010 levels in 2020; an increase of 1.2 million barrels per day crude oil equivalent from 2010 to 2035 in the use of biofuels, much of which is produced domestically; and slower growth of energy consumption in the transportation sector as a result of existing corporate average fuel economy standards.
Proposed light-duty vehicle fuel economy standards covering vehicle model years 2017 through 2025, which are not included in the Reference case, could further reduce demand for petroleum and other liquids and the need for imports, and increased supplies from U.S. tight oil deposits could also significantly decrease the need for imports as examined in several cases in AEO2012.
Natural gas production increases throughout the projection period, allowing the United States to transition from a net importer to a net exporter of natural gas.
Much of the growth in natural gas production in the AEO2012 Reference case results from the application of recent technological advances and continued drilling in shale plays with high concentrations of natural gas liquids and crude oil, which have a higher value than dry natural gas. Shale gas production increases in the Reference case from 5.0 trillion cubic feet per year in 2010 (23 percent of total U.S. dry gas production) to 13.6 trillion cubic feet per year in 2035 (49 percent of total U.S. dry gas production). As a result of the projected growth in production, U.S. natural gas production exceeds consumption early in the next decade in the Reference case. The outlook reflects increased use of LNG in markets outside North America, strong growth in domestic natural gas production, reduced pipeline imports and increased pipeline exports, and relatively low natural gas prices in the United States.
When looking forward to 2035, there are unresolved uncertainties surrounding the technological advances that have made shale gas production a reality. The potential impact of those uncertainties results in a range of outcomes for U.S. shale gas production from 9.7 to 20.5 trillion cubic feet per year when looking forward to 2035. Those uncertainties and their impact are examined in several cases that are summarized in an article in AEO2012.
Power generation from renewables and natural gas continues to increase.
In the Reference case, the natural gas share of electric power generation increases from 24 percent in 2010 to 28 percent in 2035, while the renewables share grows from 10 percent to 15 percent. In contrast, the share of generation from coal-fired power plants declines. The historical reliance on coal-fired power plants in the U.S. electric power sector has begun to wane in recent years. Over the next 25 years, the share of electricity generation from coal falls to 38 percent, well below the 48-percent share seen as recently as 2008, due to slow growth in electricity demand, increased competition from natural gas and renewable generation, and the need to reduce emissions.
Although the current trend toward increased use of natural gas and renewables appears fairly robust, there is uncertainty about the factors influencing the fuel mix for electricity generation. AEO2012 includes several cases examining the impacts on coal-fired plant generation and retirements resulting from different paths for electricity demand growth, coal and natural gas prices, and compliance with environmental rules.
Total energy-related emissions of carbon dioxide in the United States remain below their 2005 level through 2035.
Energy-related carbon dioxide (CO 2) emissions grow slowly in the AEO2012 Reference case, due to a combination of modest economic growth, growing use of renewable technologies and fuels, efficiency improvements, slow growth in electricity demand, and increased use of natural gas, which is less carbon-intensive than other fossil fuels.
Projections for CO 2 emissions are sensitive to economic and regulatory factors. These linkages result in a range of potential GHG emissions scenarios. In the AEO2012 Low and High Economic Growth cases, projections for total primary energy consumption in 2035 are, respectively, 100.0 quadrillion Btu (6.4 percent below the Reference case) and 114.4 quadrillion Btu (7.0 percent above the Reference case), and projections for energy-related CO 2 emissions in 2035 are 5,356 million metric tons (7.0 percent below the Reference case) and 6,117 million metric tons (6.2 percent above the Reference case).
The projections from the complete AEO2012, including the Reference case, all of the alternative cases, and supplemental tables showing the regional projections, can be found at: www.eia.gov/forecasts/aeo.