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Zack Hutchins
Director of Communications

December 14, 2005

Public Service Commission okays $175 million 'systems benefit charge' on energy

The state Public Service Commission (PSC) has approved five more years of a program that will add $175 million a year to the energy bills of business and residential ratepayers. The decision means a $25 million-a-year increase in the so-called "systems benefit charge" (SBC).

“We are extremely disappointed that the state’s Public Service Commission chose to extend this program and increase its funding,” said Business Council President Daniel B. Walsh. “New York’s high energy costs are a significant burden to our state’s economic growth and policies such as the SBC increase the cost of energy to employers.”

Since 1998 the state has charged energy customers more than $800 million to support the program. The New York State Energy Research and Development Corporation says the conservation and efficiency programs funded by the charge have reduced annual electric bills by $230 million. (In its initial report on the renewal of the fund, The Business Council failed to make clear that this calculation refers to annual, as opposed to total, savings from the program.)

In remarks submitted to the PSC in March, the Council strongly opposed any increase in the program’s funding.

“In 1998, the system benefit charge was implemented to provide funding for energy efficiency programs—and to spur the development of renewable energy sources,” Anne Van Buren, the Council’s director of energy and telecommunications, wrote in a March 4 letter to the PSC.

“Since then, however, the Commission has adopted an entirely different approach to the development of renewable energy—the renewable portfolio standard (RPS), a mandatory purchase quota requiring that renewables comprise 25 percent of electricity sources by 2013,” the letter continued.

The PSC imposed the current systems benefit charge over strong objections from The Business Council in January of 2001. The Council had argued that the $78 million tax should be restructured and reduced or eliminated for business ratepayers. Instead, the PSC increased it to $150 million.

New York is already the nation’s second most energy-efficient state as measured by energy consumption per capita, and there are other taxpayer-funded government programs available to finance energy-efficiency programs. The New York Power Authority (NYPA) commits $100 million a year to such programs, and the Long Island Power Authority (LIPA) is conducting a 10-year, $355 million Clean Energy Initiative, which includes numerous energy efficiency, renewable and low-income programs.

The state's master energy plan calls on state leaders to adopt policies that reduce energy costs.

The current SBC adds $150 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.