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January 24, 2001

PSC okays $150 million 'systems benefit charge' on energy
Action follows steps to approve new power plants—and PSC says NYS needs even more

The state Public Service Commission (PSC) Wednesday approved a new five-year, $150 million annual "systems benefit charge" (SBC) on energy to support programs in energy efficiency, demand reduction, R&D, and affordability for low-income utility customers.

The charge will replace the current SBC, which is $78 million a year. It will take effect Feb. 1, 2001, and continue through 2005.

The new charge is higher than the $138 million charge first proposed by the PSC. It will apply to all utility customers in all cases. (The current SBC can be bypassed by businesses in some large bilateral energy contracts.)

The Council had urged the PSC to restructure it, limit it to two years, and reduce or eliminate it for business users. These concerns were driven in large part by The Council's belief that there needed to be a comparable emphasis on the siting of new power plants.

The state has since sited 11 temporary plants in New York City and Long Island and approved a permanent power plant near Oswego. (See story, below.)

"Today's decision is not the outcome we had sought on the SBC, but we appreciate both these recent plant sitings and the PSC's forceful assurances that New York must site even more power plants and do so faster," said Business Council President Daniel B. Walsh.

"Now we must monitor programs that will be supported by this new energy charge to see if they actually produce the significant peak-load reductions which have been projected," he added. "If they do, business will save money. If they don't, this will turn out to be an energy fee increase with no commensurate energy savings."

Maureen O. Helmer, PSC chairman, emphasized that demand-management approaches will not be enough to meet future energy needs.

"While load reduction and energy efficiency programs are important components of New York's strategy, California has demonstrated the risk involved in solely relying on these initiatives to meet future energy needs," Helmer said.

"As our economy continues to grow, so too does our demand for electricity. To keep pace, we must increase our state's capacity to generate electricity by siting new, cleaner, state-of-the-art power plants. Today, the Commission has demonstrated its commitment to the demand side of the equation; I hope environmentalists and community leaders will now join us in our efforts to address the supply problem."

Programs supported by the new SBC will be administered by the New York State Energy Research and Development Authority (NYSERDA). Comprehensive reports on these programs are to be issued in 2002 and 2004. NYSERDA must draft a master operating plan by Feb. 15.

A key focus of the programs is R&D on energy alternatives designed to reduce peak-load demand in New York.

The current SBC adds $78 million in charges to electricity bills in New York. It funds research and development, low-income residential customers, and technology programs. These programs are administered by NYSERDA.

The PSC originally proposed extending it by five years, increasing it to $138 million a year, and eliminating the bypass provision.

The PSC's release is at www.dps.state.ny.us.