SBC
Expansion Proposal
Comments filed with the PSC by the Business Council
November 20,
2000
Ms. Janet H.
Diexler, Secretary
Public Service Commission
Agency Building 3
Empire State Plaza
Albany, New York 12223-1350
Dear Secretary
Diexler:
RE: PSC-30-00-0005; Comments on Staff Proposal to extend and
expand the System Benefits Charge (SBC)
The Business
Council of New York State, Inc., a statewide association of more than 4,000
companies, chambers of commerce, and regional associations, has reviewed the
above-captioned proposal in detail and in consultation with its members. We
recommend that this proposal be significantly restructured or reduced for
commercial and industrial customers—and that the program extension be
limited to two years.
We support many
of the goals of the current System Benefits Charge —especially low-income
assistance programs, and energy conservation. New York has a good record of
energy conservation. This state ranks 49th among the 50 states, for example,
in overall energy consumption—about 35 percent below average. New York
is 48th in average residential electric usage, with consumption that is almost
40 percent below the national average. Conservation efforts are good for the
environment, are good for the economy, and can work to reduce electric rates.
We have concluded,
however, that this proposal to increase significantly the cost and the application
of the SBC—and to extend these higher costs for five full years—is
risky and unwarranted. It would further raise the energy costs faced by industrial
and commercial users, at a time when high energy costs are already acknowledged
to be a significant drag on New York State's economy. The five-year time frame
would weaken accountability in the SBC program, at a time when we need to
ensure that the program's benefits outweigh its costs. We are concerned, also,
that this lengthy extension is being considered in a vacuum, without New York
moving with comparable speed to meet the universally acknowledged need for
siting additional electric generating capacity.
The Business
Council has received and studied extensive comments from our member companies
on this issue. We have heard from those opposed to the rate increases that
would finance the expanded program, as well as from those who have made use
of the program. The majority of the input we received was in opposition to
the rate increases proposed under this proceeding.
Many of our industrial
members, for whom the cost of energy in New York is a top concern, are especially
alarmed that the non-bypassable provisions of this proposal would force them
to pay this added cost for the first time. Some of them will see SBC rates
equivalent to a rate increase of 0.14 cents per kWh.
An additional,
major concern of The Council regarding the expansion of the program under
this proposal is the state's ability to actually achieve the energy savings
this program targets.
We agree with
the advocates of this program that if its load reduction goals are
achieved, there would, in all likelihood, be net energy dollar savings for
electricity rate payers overall. But the reverse is also true—if the
goals are not achieved, this program will increase, rather than reduce, energy
costs overall.
The intended
goal of this program is to reduce electricity demand in New York State by
an estimated 1,019 to 1,269 megawatts by the end of the program period (2005).
Under this proposal, SBC funds will be targeted not only to overall conservation,
but specifically to "peak load reduction."
These goals,
if achieved, would represent a very large increase over the 125 megawatts
of energy savings reported as having been achieved by this program to date.
(And indeed, it should be noted that there is not unanimous agreement that
such savings have been caused by the existing SBC program; the proposal before
the Commission includes significant new research funding for the specific
purpose of investigating the issue of causality.) This uncertainty is a key
reason we are convinced that a five-year extension is not warranted at this
time. We must be able to quantify results before making any long-term commitment
to a program of this scale.
And even advocates
of this proposal agree that New York's future electric needs cannot be met
by this means, alone. We have spoken forcefully with respect to the need for
more generating capacity in New York State. New York needs a concerted plan,
one that combines conservation with new capacity—not a five-year commitment
to a systems benefit charge of uncertain impact, while decisions on capacity
are delayed to some uncertain point in the future.
To be specific,
The Business Council submits these objections:
• We oppose
the expansion of the charge from a cumulative total of $78 million per year
to $139 million per year. With New York's energy costs being among the highest
in the nation, we suggest that the rate remain at its current level for industrial
and commercial customers.
• We oppose
the extension of the SBC for five years starting January 1, 2001. Under the
new proposal, the charge is extended beyond the initial three years by an
additional five years, for a total of eight. In effect this would alter the
settlement agreements by singling out only one provision, the SBC, and increasing
and extending it. We believe any extension should be limited to two years,
so the program's effectiveness can be addressed.
• We oppose
structuring the new SBC charges in a way that makes them entirely non-bypassable.
Under the previous SBC program some large customers in commercial and industrial
classes were allowed to bypass the rate. Since the new SBC is not subject
to bypass, some customers in commercial and industrial classes will see SBC
rates that amount to a rate increase of 0.14 cents per kWh. This abrupt increase
in their energy costs cannot help the state's economy.
In summary, we
recommend the extension of the System Benefits Charge for no longer than two
years with the suggestion that the funding levels for commercial and industrials
be restructured or reduced, during which time the actual reduction in projected
load management can be determined. We stress the need to restructure this
proposal to take into account the energy costs faced by commercials and industrials.
Sincerely,
Signed: Daniel
B. Walsh
