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Government Affairs Albany Update

January 26, 2001

PSC Ratifies SBC Extension and Expansion

On January 24th the Public Service Commission (PSC) approved, with some amendments, the System Benefits Charge (SBC) expansion and extension that was proposed last fall. Specifically,

Peak load reduction is designed to lower the overall amount of electricity consumed by the state as a whole. The goal of this new phase is to reduce the statewide consumption of electricity by over 1,400 Megawatts per year by year five. Under the PSC staff proposal 15 objectives were outlined to lower the state's overall wholesale megawatt consumption. Further details on these comprehensive plans are due in mid-February when NYSERDA is scheduled to reveal its master plan for the second phase of the SBC.

The System Benefits Charge (SBC)

The System Benefits Charge (SBC) is a surcharge on electricity that funds programs including energy efficiency, research and development, low-income services, and environmental protection. Together these programs form the core of the "New York State Energy $mart Program". The SBC was instituted by the PSC in order to help market transformation by encouraging these programs, many of which had previously been administered by the local investor owned utilities. The PSC feared that many of these programs would be discontinued without the encouragement of the state.The New York State Energy Research Development Authority (NYSERDA) is the entity charged by the PSC with administering the programs comprehensively entitled "Energy $mart". Under the first round of the SBC, it was assessed at $78 million per year. The SBC was originally scheduled to expire on June 30, 2001. As mentioned above, the new program will continue to fund the New York Energy $mart programs administered by NYSERDA between 1998-2000 but will also add peak load reduction programs beginning in 2001 and running through 2005.The Business Council expressed strong reservations about the five-year extension of the program and advocated for the exemption of commercial and industrials from the charge. Under the extension ratified by the PSC on Wednesday, rate payers that were previously exempt from the SBC are now subject to the SBC when their flex rate contracts are renewed.