SARATOGA SPRINGS, N.Y. — More than 150 people turned out last week for the Independent Power Producers of New York’s 34th annual fall conference, where the group’s president, Gavin Donohue, remarked that it’s so far been a “year of change” in the state.
“In 2019, New York’s energy landscape has seen the appointment of two new commissioners at the [Public Service Commission], a new head of the ISO, a resource adequacy proceeding at the PSC, and we’re dealing with the implementation of the ‘Green New Deal’ in New York,” Donohue said.
Donohue will be a point person in implementing the Green New Deal — known also as Climate Leadership and Community Protection Act (A8429). In July, State Senate Minority Leader John J. Flanagan appointed him to the Climate Action Council, a 22-member body created under the new energy law enacted earlier that month.
The new law requires 70% of the state’s electricity to come from renewable sources by 2030, and for power generators to be zero-emitting by 2040.
The following is more of what we heard at the conference:
Federal Collision Course
FERC Commissioner Richard Glick said the commission has also experienced a year of changes, with a lot of people coming and going, and only three commissioners serving after the recent departure of Cheryl LaFleur.
He said rumors are circulating that President Trump will soon nominate a fourth commissioner, “so we’re still in limbo,” Glick said. “Every time someone leaves or someone comes, it’s a different dynamic. … It’s just different with three versus four.”
He also addressed “issues about who can vote on what,” explaining that he will recuse himself on some proceedings until Nov. 29 because of ethics rules that prevent federal officials from being involved in a matter they were working on in the private sector. (See Glick Recusal May Mean No MOPR Ruling Before December.)
One key issue facing FERC is the debate over state versus federal jurisdiction in the energy space, he said.
“The Federal Power Act says that the states have jurisdiction over energy and resource decision-making,” Glick said. “FERC does have jurisdiction clearly over the markets, and wholesale markets, and that includes capacity markets.”
However, FERC lacks the authority to tell a state that it cannot force its utilities to buy more renewable energy — or even coal, he said. The point gets lost sometimes in the effort to see that state policies don’t adversely affect wholesale or capacity markets.
“The bigger issue is, what’s the price of this debate that’s going on right now?” Glick said. “New York’s a great example … with the new climate change law … and higher targets, so that’s going to continue to cause some friction in the capacity markets.
“My concern is that if we try to get some pushback from the states, and either directly or indirectly make it very difficult for the states to pursue their resource policies, we’re really endangering the future of capacity markets.
“Some people argue that we don’t need capacity markets. … There’s talk of the New York resource adequacy proceeding that’s going on, but there’s also Illinois and New Jersey … at least some of [their] commissioners suggested that they may look into figuring out if they should require their states get their utilities to drop out of PJM.
“There’s a real question not only about capacity markets, but the future of RTOs,” Glick said. “At the very least, we need to figure out a way to accommodate state policy and move forward on a less combative approach. The road that FERC has taken in the past … is leading on a collision course with a number of states.”
Future of Natural Gas Pipelines
Glick also addressed the future of natural gas pipelines, the subject of another panel discussion. While developers have had difficulties getting projects permitted in New York, he focused on the federal side.
“The pipeline siting processes that we have at FERC in my opinion are antiquated and don’t address the issues we need to address in the 21st century,” he said. “FERC has somewhat developed a reputation of being a rubber stamp for natural gas pipeline siting, and I think a little of that is deserved. … A lot of times, we’ll grant a certificate to build a pipeline … and the law says you have eminent domain once FERC gives you the certificate … and it turns out there are all these environmental issues no one knew about, and it’s too late — they’ve already bought up the land and dug up the holes.”
The commission needs to revise its siting guidelines, he said, and do more to mitigate greenhouse gas emissions.
“Unfortunately, the commission again puts its head in the sand and decides not to address that issue at all,” Glick said. “I think that creates a lot of uncertainty.”
Brian Jones, senior vice president of consultancy M.J. Bradley and Associates, presented a study commissioned by National Grid and completed in June, called the “Life Cycle Analysis of the Northeast Supply Enhancement Project.”
“It’s very difficult to squeeze out fossil fuel from the economy; it’s everywhere,” Jones said. “Many folks are looking at hitting the highest [carbon] intensity fuels first and incrementally working up, because it’s a difficult transition to make in the economy. There are low-income, environmental justice issues … but natural gas has a role to play.”
Liz Moran, environmental policy director for the New York Public Interest Research Group, said, “It’s one thing to say there is a bridge role for natural gas, but how long will a new pipeline be expected to last? We have to start phasing this out.”
Chris Raup, director of Consolidated Edison’s Reforming the Energy Vision demonstration projects, said “we don’t see a lack of natural gas infrastructure causing electric reliability problems. We think that the dual-fuel requirements that are in place will prevent generation problems from happening.”
Con Ed earlier this year instituted a natural gas moratorium for new customers in Westchester County, as did National Grid for new customers in Brooklyn, Queens and Long Island. (See NYPSC OKs Westchester Plan, Expands EV Charging.)
“I do think you may see generators more and more running on fuel oil as natural gas headroom on the system is soaked up,” Raup said. “The temperature at which generators are required to switch over to fuel oil may rise, so that has a negative overall emissions impact on the air quality in the city.”
NY Carbon Pricing
Glick also commended New York for “taking a look at” pricing carbon in the state’s wholesale energy markets, a three-year effort by NYISO and the PSC that is nearing completion, with the latest study delayed a couple months to ensure that it captures all the effects of the new energy law enacted in July. (See NYISO Management Committee Briefs: July 31, 2019.)
Aaron Breidenbaugh, of Luthin Associates and Consumer Power Advocates, asked PSC Chair John B. Rhodes what the state is planning or thinking.
“It’s become apparent to us as original supporters of carbon pricing that, as it’s proposed right now, it’s not going to achieve the results by itself, and we’re very concerned that we could end up paying both for the carbon pricing and for out-of-market contracts to achieve the [targets],” Breidenbaugh said. “Where is the state right now on that?”
“When carbon pricing was first proposed, we were interested,” Rhodes said. “As it has been shaped and subjected to analysis, we remained interested,” adding that the commission’s interest hinges on carbon pricing being “a more effective instrument of state policy” that allows “better achievement of the goals for fewer dollars.”
The latest work by Analysis Group will help “illuminate” what the PSC should make of that policy, he said, noting that the new energy bill signed in July includes carbon pricing policy questions.
“I fully expect that the Climate Action Council mechanism will be spinning up, and one of the first orders of business will be figuring out what to do about carbon pricing,” Rhodes said. “The bill’s remit is economy-wide … and that has kicked in a timing factor. As a policy matter, if this can work, and it’s better than what we’re doing now, then we should switch horses and do it.”
NYISO CEO Rich Dewey said, “The status quo is not sustainable … but our markets have never been static for 20 years.”
Todd Snitchler, CEO of the Electric Power Supply Association, hit on the same theme, saying, “We can’t be static.”
“The logjam at the federal level could become unblocked soon,” Snitchler said, possibly referring to a change of administrations in the 2020 presidential election. “We have to be ready … we don’t need inspiration, but we do need to tell our story better… to better respond, to better engage.”
– Michael Kuser