During his successful 1932 run for the White House, New York Gov. Franklin Roosevelt campaigned hard on the issue of electricity affordability. In a speech in Portland, Ore., he told voters that as governor, he had made sure that the New York Public Service Commission was acting “as an agent of the public.” Because electric utilities are monopolies, government’s job was to ensure consumers get a “fair deal” – “adequate service and reasonable rates.”
Alas, under Gov. Cuomo – who’s lining up his own bid for the White House – the Public Service Commission is doing the exact opposite. On July 12, the commission issued a 66-page order that requires the state’s electric utilities to subsidize the development of offshore wind, one of the most expensive methods of producing electricity.
The same day, Cuomo put out a splashy press release touting his desire to “jumpstart” New York’s nonexistent offshore wind industry. The governor wants the state to have 2,400 megawatts of offshore wind by 2030.
But offshore wind is so expensive that investors won’t put a toe in the water without government subsidies. As first reported by the Empire Center’s Ken Girardin, the Public Service Commission obliged those water-shy investors by ordering the state’s electric utilities to “invest in new offshore renewable generation resources to serve their retail customers.”
For some perspective on offshore wind, it’s instructive to consider what executives at NextEra Energy, the world’s biggest wind-energy producer, have said about it. In April, NextEra CEO Jim Robo said offshore wind is “terrible energy policy” and “bad business.” Last year, a different executive at NextEra (which, by the way, has collected some $7.8 billion in tax subsidies since 2008), told analysts it’s “not good for customers to be doing offshore wind relative to solar or onshore wind.” He continued, “to say that we are not fans would be an understatement.”
Cuomo’s plan, which is adamantly opposed by commercial fishing groups, will require covering hundreds of square miles of some of the most heavily fished and navigated waters on the Eastern Seaboard with hundreds of wind turbines.
The potential environmental damage to offshore fisheries – as well as the potential navigation hazard – is obvious. So, too, is the likely cost to ratepayers.
In January, the New York State Energy Research and Development Authority estimated that building the first 800 megawatts of offshore wind will cost about $4.3 billion, or about $5.4 million per megawatt.
Those stratospheric installation costs will mean higher electricity prices. The Energy Information Administration recently estimated that by 2022, offshore wind turbines will likely be producing electricity for about $138 per megawatt-hour.
For comparison, last year, the average wholesale price of electricity in New York was $35.56. That means the energy from Cuomo’s offshore projects will cost nearly four times as much as the electricity now being sold in the state. That’s bad news for New York consumers, who are already paying 40 percent more for their electricity than the US average.
Girardin estimated the plan’s cost to New York ratepayers will likely be about $392 million per year. That works out to about $20 per year for every New Yorker, and that’s just the cost for the first 800 megawatts of offshore capacity. Cuomo wants three times that much.
Even if Cuomo’s dream of 2,400 megawatts of offshore wind becomes a reality, that much capacity won’t even replace the amount of juice now being produced by the Indian Point Energy Center in Buchanan, a plant Cuomo pushed to shutter. The twin-reactor facility on the Hudson River provides about 25 percent of all the electricity consumed in New York City. What will replace Indian Point if it closes as scheduled in 2021? According to the New York Independent System Operator, it will be replaced by electricity from three natural-gas-fired plants.
In short, rather than reduce New York’s reliance on hydrocarbons, Cuomo’s anti-nuclear, pro-renewable agenda is actually increasing the state’s reliance on natural gas, and therefore increasing the likelihood that greenhouse-gas emissions will increase alongside electricity prices.
One thing’s clear: Gov. Cuomo, you are no Franklin Roosevelt.
Robert Bryce is a senior fellow at the Manhattan Institute.
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