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The Business Council strongly supports this legislation that would repeal the $600 million increase in energy assessments adopted with the FY 2010 state budget.
Specifically, this bill would repeal Part NN of chapter 59 of the laws of 2009, which increased the Public Service Commission's Section 18-A assessment on energy utilities from .3 percent of gross operating revenues to 2 percent of gross operating revenues, a near seven-fold increase. Importantly, repeal of this additional assessment – which is being used for General Fund relief – will leave intact the pre-existing assessment dedicated to support of the Public Service Commission.
This “temporary state energy and utility service conservation assessment” will increase annual costs on business and residents by more than $500 million per year, or an aggregate $2.5 billion between now and its planned sunset in 2014.
The Business Council strongly opposed this assessment when it was first proposed. With industrial and commercial electric power costs already about 40 percent above national averages, energy costs are the second most significant cost-competitiveness factor cited by our members.
New York's high energy costs are driven by a growing array of state-imposed assessments – the System Benefit Charge, the Renewable Portfolio charge, and new costs related to the purchase of CO2 emission allowances – which together add between 10 and 15 percent to the cost of electric power.
New York's already high energy costs have had an adverse impact on energy-dependent business sectors.
This new assessment is now hitting industrial firms and other major energy consumers, and the impact is significant, with individual companies reporting increases costs in the $10,000 to $1 million per year range.
Moreover, this assessment hits all in-state energy consumers, including individuals, small businesses and others, during a period when many are facing significant economic hardship.
In addition to its immediate adverse impacts, we are also concerned that this “temporary” assessment will be retained past 2014, or increased further, to support ongoing state spending. The adoption of an energy assessment purely as a means to enhance revenue during an economic crisis is extremely short-sighted fiscal and economic policy, and it should be repealed before further damage is done to New York's economy.
We applaud this proposal to roll back the Section 18-A assessment, and strongly support its adoption.