August 25, 2005
New York's consumers may face rising electricity bills
A $24 million annual surcharge will be added to New Yorkers’ electric bills starting in October, as a result of a renewable-portfolio mandate imposed by the state’s Public Service Commission (PSC).
The order by the PSC came as an interstate group of regulatory officials moved forward with a plan under which New York would join other Northeastern states in mandating reduced power-plant emissions, which could raise energy costs still further.
The renewable-portfolio mandate, which the Council had urged the PSC not to enact, will require that 25 percent of electricity purchased in New York by 2013 be from renewable resources.
“The state’s move to mandate which sources consumers must buy electricity from will create a seller’s market for selected sources,” Business Council President Daniel B. Walsh said. “New York’s electricity costs are already among the highest in the nation. This will undoubtedly drive them up further.”
In June of 2004, an administrative law judge recommended that the state adopt the portfolio to increase use of renewable resources.
The Business Council had urged the Public Service Commission to study the impact the decision would have on consumers’ costs before taking any action.
The administrative law judge projected increases in costs of 1.8 percent for residential customers and even higher, 2.4 percent, for industrial customers, Walsh said. “At a time when New York State has been hemorrhaging jobs, especially in its manufacturing sector, that's unconscionable.”
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 will hurt New York businesses’ ability to keep and create jobs, the Council’s vice president, Edward Reinfurt said in testimony submitted to the PSC during one of the last public hearings conducted by the PSC on the renewable portfolio mandate.
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.
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 state’s Energy Plan notes that energy prices in New York are higher than in many competing locations, and calls for policies that will reduce energy costs for business and residential consumers.
"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," Reinfurt said. "Supply is now thwarted by an expired siting-law process and by uncertainty in the financial markets for construction of new base load facilities."
Meanwhile, officials from New York and other states working together as the Regional Greenhouse Gas Initiative continued work on a proposal that may increase electric costs still further. The interstate group seeks to reduce carbon dioxide emissions, in an effort to reduce global warming.
The interstate group, initiated by Governor Pataki and leaders in other states, is proposing to freeze power plant emissions in 2009 and then reduce them by 10 percent by 2020.
A New York Times story reported that officials acknowledged that freezing emission levels and reducing them could result in higher energy prices, without affecting global temperatures significantly.
“We're not going to solve the problem of global warming in the Northeastern states," Dale S. Bryk, a senior attorney with the Natural Resources Defense Council, told the Times.
Bryk said the real consequence of the preliminary agreement would be the “cooperative” example it sets for the rest of the nation.
The proposal made this week by the interstate group included no mention of how it would affect electric prices for consumers. But a Pennsylvania state official told the Times that electric rates "could go up in the short run by 5 to 10 percent for residential customers" as a result of the plan.