How should we pay for cleaning up downstate New York’s energy supply, and who should foot the bill?
That’s what Public Service Commissioner John Howard asked at the Commission’s most recent meeting. The answers are of particular interest to upstaters, who are expected to share in the cost of bringing cleaner energy downstate.
The bill will come from such big-ticket items as the $3 billion Champlain-Hudson Power Express, the $11 billion onshore-wind Clean Path New York project, and billions more for offshore wind, the most expensive utility scale energy source.
The state’s method of distributing the costs across ratepayers statewide is known as “load share ratio,” meaning each utility pays based on its share of statewide electricity use. It doesn’t matter if their customers are not actually getting any electricity from the new sources. They still pay.
The justification for making upstaters share in the cost is that presumably everyone in the state will benefit by avoiding climate change. This is misleading.
First, New York’s statutorily-mandated target of an 85 percent reduction in greenhouse gas emissions will have no effect at all on climate change. That doesn’t mean New York shouldn’t take action to reduce its own greenhouse gas emissions. But as long as China and India keep increasing their use of coal power, the world’s warming trajectory will be unaffected.
But even if cutting New York’s emissions could prevent climate change, it’s normally the party that’s causing the harm that pays to prevent it.
Upstate’s electricity profile is around 90 percent emissions-free because of reliance on hydroelectric and nuclear power. Downstate is the reverse. It’s clear where New York’s electricity-related climate emissions are coming from.
And, ironically, the strong contingent of climate activists in downstate politics has helped to facilitate a rise in the region’s greenhouse gas emissions, having forced the closure of the emissions-free Indian Point nuclear plant.
So, if emissions from electricity production are harming the state, it’s downstate that’s causing the harm.
The problem for downstate is that its clean energy transition is going to be very expensive – too expensive to easily afford through utility rate hikes. Raising their rates enough to cover the costs of clean energy would be especially hard on poorer ratepayers.
But there are poor and moderate-income New Yorkers upstate, too. Where’s the justice in raising their electricity costs?
If some of the cost had been covered in the state budget, that would have shifted the cost to taxpayers broadly. Because a disproportionate share of tax revenue comes from downstate, where this clean energy will be used, that would have been a more equitable apportionment.
Ultimately, those who suggest we can easily and inexpensively transition to clean energy are fooling themselves. But they won’t fool ratepayers when higher energy bills come due.
James E. Hanley is a senior policy analyst at the Empire Center.
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