For Release — Tuesday, June 29, 2004
COUNCIL: BUSINESS FEARS ECONOMIC
HARM FROM RENEWABLE-ENERGY MANDATE;
STATE SHOULD TRY INCENTIVES TO INCREASE USE OF RENEWABLE ENERGY
ALBANY—The Business Council and its member businesses support efforts to create and sustain new kinds of renewable energy resources, but fear that higher energy costs created by renewable energy mandates would hurt New York's businesses, Ed Reinfurt, vice president of The Business Council, told the Public Service Commission (PSC) today.
Instead of requiring businesses and individuals to buy power from more costly renewable sources, the state should instead adopt an aggressive voluntary program based on incentives, Reinfurt said in testimony in Albany today. The testimony was submitted at the last of several public hearings conducted by the PSC on a possible renewable portfolio standard (RPS).
A "recommended decision" issued by an administrative law judge in early June urged the PSC to mandate that 25 percent of the electricity bought by consumers and businesses come from renewable sources-power that is generally more costly than electricity generated by conventional energy sources. The 25 percent renewable-energy standard was first proposed by Governor Pataki in January 2003.
Reinfurt said the commission must answer one critical question before acting on the recommended decision: "Will the renewable power required to be brought on line be cost-competitive and add to the reliability of the system?"
The commission had decided in its last major decision that more affordable power must be given to all rate-payers in the state, Reinfurt said.
"Until we add significant base load capacity in this state, we are not likely to reap the benefits of a truly competitive marketplace where supply will respond to demand," he said. "Supply is now thwarted by an expired sitting-law process and by uncertainty in the financial markets for construction of new base load facilities."
The recommended decision released in June acknowledged that requiring a specific amount of renewable usage being brought on line during each of the years between 2006-2013 will result in a rate increase of 1.8 percent for residential customers, 2 percent for commercial customers, and 2.4 percent for industrial customers, Reinfurt noted.
In fact, Reinfurt added, the cost increases could be much more. Commercial rates in New York City are already 47 percent above the national average.
Encouraging use of renewable resources is important to the state and its environment, Reinfurt said. There are several steps the state should take to further the use of renewable resources without damaging business. These include:
- A voluntary
approach to renewable power. "We believe the Commission should begin
its program to see if its goal of 25 percent renewable power could be
achieved through an aggressive, voluntary program where incentives,
not mandates, underlie the implementing strategy," Reinfurt said.
- A phased-in
implementation that would avoid the pitfalls of a hurried mandate. A
phased-in approach would give users an opportunity to iron out any problems.
- Adoption of broad-based business exemptions. The PSC had indicated that municipal authorities and customers of the New York Power Authority were exempted from renewable power mandates, Reinfurt said. "We believe the potential adverse economic-development impact of the RPS provides a compelling reason to exempt other industries," he said.
Reinfurt also asked the PSC to reject any plan that would have a disproportionate impact on commercial and industrial businesses, whose energy costs are already 47 and 19 percent higher than the national average, respectively.
"Any increase on commercial and industrial customers will exacerbate the competitive problems facing business today," Reinfurt said. "We urge the Commission to direct that no final plan could impose disproportionate impacts on ratepayers."