Key Agencies Support $741M Energy Plan; Renewable Power Program to be Financed by Utility Consumers
By Larry Rulison, Business Writer, Albany Times Union, Thursday, December 8, 2005

ALBANY -- Executives from two state agencies testified Wednesday before an Assembly committee in support of a $741 million renewable energy program being paid for by the state's electric customers.

The program, called the Renewable Portfolio Standard, was created by the Public Service Commission last year to reduce the state's dependence on fossil fuels like oil and gas. The program subsidizes renewable energy projects such as wind-power and hydro plants and is financed by a state surcharge on electric bills that began in October.

The goal is to boost the percentage of electricity derived from renewable sources in the state for retail consumption to 25 percent by 2013. It is now about 19 percent.

"With rising prices for energy commodities of all types impacting consumers, few people outside of this room have even noticed that a new tax has been levied on their electricity consumption," said Assemblyman Paul Tonko, D-Amsterdam, chairman of the Assembly's energy committee.

Tonko was joined by Assemblyman Ryan Karben, D-Pearl River, chairman of the newly formed renewable energy subcommittee.

Karben and Tonko peppered officials from the PSC and the New York State Energy Research and Development Authority about the program's costs and the long-term contracts NYSERDA has signed with seven wind and hydro facilities.

"We need to protect consumers," Karben said.

James Gallagher, director of the PSC's Office of Electricity and the Environment, testified that collections from the state's six regulated utilities will be $24 million for 2006 program funding and will increase to $167 million for 2013 program funding. The total cost will be $741 million.

He said that money would help produce 12 million megawatt-hours of electricity from renewable sources by the end of 2013. Fossil-fuel costs in the state are expected to be reduced by at least $360 million, although that number is based on 2003 fuel prices, which subsequently increased dramatically.

The net impact on consumer electric bills will range between a reduction of slightly less than 1 percent to an increase of 2.2 percent depending on the type of customer and where they are located, he said.

John Reese, director of the PSC's Office of Economic Development and Policy Coordination, testified that contracts signed under the program pay renewable energy generators an average "premium" of $22 per megawatt-hour of electricity sold into New York's wholesale electric market. The premium is an economic incentive designed to encourage the development of renewable energy generation. The contracts are being issued through NYSERDA, which has secured 821,617 megawatt-hours of electricity so far.

These cheaper sources of energy are expected to eventually drive down electricity prices throughout the state, said NYSERDA President Peter Smith.

"For example, using wind power to decrease reliance on natural gas and other fossil fuels will not only improve air and water quality, it will reduce pressures on fossil fuel prices ..." he said.

Smith said 98 percent of the power NYSERDA has contracted for in the first year of the program is wind power, most of it from the Maple Ridge Wind Farm in Lewis County.

He also said New York's focus on developing renewable energy sources is having additional economic development impacts. He told the committee the state is working with a wind-turbine manufacturer, which he would not name, that wants to locate operations in New York.

"They see the growth here," he said.