Relates to the regional greenhouse initiative and the effect on electricity markets.
Ayes (29): DeFrancisco, Bonacic, Farley, Flanagan, Golden, Griffo, Grisanti, Hannon, Lanza, Larkin, Little, Marcellino, Nozzolio, O'Mara, Ranzenhofer, Robach, Savino, Seward, Young, Valesky, Diaz, Dilan, Breslin, Parker, Peralta, Stavisky, Kennedy, Espaillat, Hassell-Thompson
Ayes W/R (8): LaValle, Martins, Krueger, Rivera, Gianaris, Montgomery, Perkins, Squadron
TITLE OF BILL: An act to amend the public service law, in relation to the regional greenhouse gas initiative
PURPOSE: To direct the Public Service Commission (PSC) to initiate a stakeholder process and promulgate rules aimed at addressing competitive imbalances between New York State generators who participate in the RGGI program and generators in non-RGGI states who do not.
SUMMARY OF PROVISIONS: Section 1: Sets forth the legislative intent
Section 2. Amends the Public Service Law by adding a new section that authorizes and directs the PSC to develop a mechanism aimed at eliminating or minimizing competitive disadvantages those New York State generators who participate in the RGGI program face when competing with out of state generators who do not participate, and thereby avoid the additional cost impacts Further, this section sets a timeline for a stakeholder process on this subject, that requires implementation by July, 2016.
Section 3: Sets forth the effective date
JUSTIFICATION: Governor Pataki, began the process of forming the Regional Greenhouse Gas Initiative in 2003 and carbon auctions have been ongoing since 2008. The money from these programs is derived from the purchase of carbon off-sets by companies who produce emissions, and the money is Used to fund several programs, including, Green-Jobs Green New York and On-Bill recovery. While some of the benefits of these programs are well-known, the costs that they impose on generators in New York State are substantial. Further, the costs are slated to increase very soon due to efforts to lower the RGGI cap by 45%, which will raise prices in the RGGI auction and further increase costs for New York fossil fuel generators. The problem this bill addresses, is that there are states who neighbor New York (like Pennsylvania and New Jersey) who do not participate in RGGI, but still import power to our state. The fact that these carbon intensive generators do not face the costs associated with RGGI, but produce pollution that still impacts New York's air quality and environmental health, creates an unlevel playing field and an unacceptable double standard. By directing, the PSC to initiate and complete a stakeholder process to address these inequities we are taking an important step to support New York's energy economy and the environment.
LEGISLATIVE HISTORY: This is a new bill
FISCAL IMPLICATIONS: None
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 6168 IN SENATE (PREFILED) January 8, 2014 ___________Introduced by Sens. MAZIARZ, O'MARA, RANZENHOFER, RITCHIE -- read twice and ordered printed, and when printed to be committed to the Committee on Energy and Telecommunications AN ACT to amend the public service law, in relation to the regional greenhouse gas initiative THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The public service law is amended by adding a new section 77-a to read as follows: S 77-A. LEGISLATIVE INTENT. THE LEGISLATURE HEREBY FINDS AND DECLARES THAT IT IS IN THE BEST PUBLIC POLICY INTERESTS OF THE STATE, ITS BUSI- NESSES AND ITS CITIZENS TO ENSURE THAT, TO THE GREATEST EXTENT POSSIBLE, THE LETTER AND SPIRIT OF ITS ENVIRONMENTAL REGULATIONS AIMED AT REDUCING CARBON DIOXIDE EMISSIONS AND IMPROVING AIR QUALITY UNDER THE REGIONAL GREENHOUSE GAS INITIATIVE (RGGI), ESTABLISHED BY REGULATION OF THE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, ARE ENFORCED FOR ANY GENERATOR WHO DOES BUSINESS IN THE NEW YORK STATE ENERGY MARKET. THIS POLICY CHANGE IS NECESSARY BECAUSE STATES THAT SURROUND NEW YORK THAT DO NOT PARTICIPATE IN RGGI, BUT WHO DO EXPORT POWER TO NEW YORK STATE, HAVE A DISTINCT COMPETITIVE ADVANTAGE OVER IN-STATE POWER GENERA- TORS. WHILE THE GOALS OF THE RGGI PROGRAM ARE LAUDABLE, IN-STATE FOSSIL FUEL GENERATORS ARE EXPERIENCING SIGNIFICANT INCREASES IN THEIR COSTS AS A RESULT OF THE NEED TO BUY CARBON DIOXIDE EMISSION ALLOWANCES IN THE RGGI AUCTION, ESTABLISHED BY REGULATION OF THE NEW YORK STATE ENERGY AND RESEARCH DEVELOPMENT AUTHORITY. HOWEVER, OUT-OF-STATE FOSSIL FUEL GENER- ATORS IN NON-RGGI STATES MAY USE THE SAME EXACT FUEL AND PRODUCE THE GREATER EMISSIONS ASSOCIATED WITH THAT FUEL, BUT ARE STILL ABLE TO EXPORT POWER TO NEW YORK AT A CHEAPER PRICE BECAUSE THEY ARE NOT SUBJECT TO THE COSTS ASSOCIATED WITH RGGI. THIS STATE OF AFFAIRS HURTS IN-STATE POWER GENERATORS, THREATENS JOBS AND ENCOURAGES THE IMPORTATION OF POLLUTION INTENSIVE POWER FROM OTHER STATES. THE LEGISLATURE FURTHER DECLARES THAT IT IS IN THE BEST ECONOMIC AND ENVIRONMENTAL INTERESTS OF THE STATE TO ADOPT POLICIES THAT SUPPORT JOBEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11841-02-3 S. 6168 2
RETENTION AND CREATION IN THE POWER GENERATION SECTOR IN THE STATE OF NEW YORK, AND TO SEEK TO LIMIT POLLUTION AND ENVIRONMENTAL DEGRADATION WHETHER IT EMANATES FROM WITHIN THE STATE OR FROM ANOTHER STATE. THE COMMISSION WORKING WITH THE NEW YORK STATE ENERGY RESEARCH AND DEVELOP- MENT AUTHORITY AND THE FEDERALLY DESIGNATED BULK SYSTEM OPERATOR, ARE THE STATE ENTITIES WITH THE EXPERTISE AND AUTHORITY TO RECTIFY THIS PROBLEM THROUGH APPROPRIATE REGULATORY ACTIVITY. THEREFORE, THIS LEGISLATION DIRECTS THE COMMISSION TO INITIATE A STAKEHOLDER PROCESS, CONSISTENT WITH SECTION SEVENTY-SEVEN-B OF THIS ARTICLE, WITH THE GOAL OF THE COMMISSION ISSUING AN ORDER AIMED AT ELIM- INATING ANY UNFAIR FINANCIAL OR ENVIRONMENTAL ADVANTAGE THAT AN OUT-OF- STATE POWER GENERATOR MAY ENJOY BECAUSE THE STATE IN WHICH IT IS LOCATED DOES NOT PARTICIPATE IN THE RGGI PROGRAM. S 2. The public service law is amended by adding a new section 77-b to read as follows: S 77-B. REGIONAL GREENHOUSE GAS INITIATIVE; EFFECT ON ELECTRICITY MARKETS. 1. THE COMMISSION IS HEREBY AUTHORIZED AND DIRECTED TO DEVELOP A MECHANISM FOR THE PURPOSE OF ELIMINATING, OR MINIMIZING TO THE GREAT- EST EXTENT PRACTICABLE, THE COMPETITIVE ADVANTAGES IN THE STATE'S ELEC- TRICITY MARKETS THAT OUT-OF-STATE POWER GENERATORS HAVE OVER IN-STATE POWER GENERATORS DUE TO NEW YORK STATE'S PARTICIPATION IN THE REGIONAL GREENHOUSE GAS INITIATIVE, ESTABLISHED BY REGULATION OF THE NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION. SUCH MECHANISM SHALL BE DEVELOPED PURSUANT TO A STAKEHOLDER PROCESS THROUGH A PROCEEDING TO BE ESTABLISHED BY THE COMMISSION WITHIN ONE MONTH OF THE ENACTMENT OF THIS SECTION. THE COMMISSION MAY, IN ITS DISCRETION, CONSULT WITH THE NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY AND THE FEDERALLY DESIGNATED BULK SYSTEM OPERATOR SERVING NEW YORK STATE'S ELECTRIC SYSTEM IN DEVELOPING SUCH MECHANISM. WITHIN SIX MONTHS OF THE COMMISSION HAVING ESTABLISHED A PROCEEDING PURSUANT TO THIS SECTION, THE DEPARTMENT SHALL ISSUE A REPORT, BASED UPON THE STAKEHOLDER PROCESS IN SUCH PROCEEDING, THAT DESCRIBES THE MECHANISM, ITS FUNCTION, ITS POSITIVE ATTRIBUTES, AND ANY OF ITS ANTICIPATED NEGATIVE CONSEQUENCES, AS WELL AS HOW THOSE CONSEQUENCES COULD BE MINIMIZED OR MITIGATED. SUCH REPORT SHALL BE PROVIDED FOR PUBLIC STAKEHOLDER REVIEW AND COMMENT DURING A THREE MONTH PERIOD. WITHIN ONE MONTH OF COMPLETING THE PUBLIC STAKE- HOLDER REVIEW AND COMMENT PERIOD ON SUCH REPORT, THE COMMISSION SHALL REVISE SUCH MECHANISM, AS NEEDED AND TAKING INTO ACCOUNT SUCH PUBLIC STAKEHOLDER COMMENTS, AS THE COMMISSION DEEMS TO BE IN THE PUBLIC INTER- EST AND CONSISTENT WITH THE LEGISLATIVE INTENT EXPRESSED PURSUANT TO SECTION SEVENTY-SEVEN-A OF THIS ARTICLE. WITHIN THREE MONTHS OF SUCH MECHANISM HAVING BEEN REVISED, AS NEEDED, AND MADE AVAILABLE TO STAKE- HOLDERS IN SUCH PROCEEDING, THE COMMISSION SHALL ISSUE AN ORDER IMPLE- MENTING SUCH MECHANISM NO LATER THAN JULY FIRST, TWO THOUSAND SIXTEEN. 2. FOR THE PURPOSES OF THIS SECTION AND SECTION SEVENTY-SEVEN-A OF THIS ARTICLE, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS: A. "COMPETITIVE ADVANTAGE" SHALL MEAN ANY ADVANTAGE OR BENEFIT, FINAN- CIAL OR OTHERWISE, THAT EXISTS FOR AN OUT-OF-STATE POWER GENERATOR IN CONNECTION WITH THE IMPOSITION OF THE REQUIREMENTS OF THE REGIONAL GREENHOUSE GAS INITIATIVE, ESTABLISHED BY REGULATION OF THE NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, ON IN-STATE POWER GENER- ATORS. A "COMPETITIVE ADVANTAGE" MAY INCLUDE, AMONG OTHER THINGS, AVOIDED COSTS SUCH AS INFRASTRUCTURE IMPROVEMENTS, TAXES, PENALTIES, COSTS OF ENVIRONMENTAL COMPLIANCE, AND ADMINISTRATIVE AND REPORTING COSTS.S. 6168 3
B. "IN-STATE POWER GENERATOR" SHALL MEAN A POWER GENERATOR PHYSICALLY LOCATED IN NEW YORK STATE. C. "OUT-OF-STATE POWER GENERATOR" SHALL MEAN A POWER GENERATOR PHYS- ICALLY LOCATED IN A STATE OR PROVINCE THAT DOES NOT PARTICIPATE IN THE REGIONAL GREENHOUSE GAS INITIATIVE, ESTABLISHED BY REGULATION OF THE NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, THAT IS SELLING POWER IN NEW YORK STATE. S 3. This act shall take effect immediately.