By William Opalka

ALBANY, N.Y. — The New York Public Service Commission on Thursday approved a 10-year, $5.3 billion Clean Energy Fund, a centerpiece of Gov. Andrew Cuomo’s Reforming the Energy Vision initiative to shift the state to resources that will fight climate change and provide more resilience.

NYPSC Chair Audrey Zibelman said the commission’s action was a milestone in the nearly two-year effort. “I really feel like we’re turning the chapter to the next stage of REV,” she said.

The commission also advanced the docket for the creation of a Clean Energy Standard that would mandate 50% of New York’s electricity come from “clean” energy sources by 2030. The NYPSC is under a Cuomo mandate to create the regulatory framework for the CES by June. Part of that mandate includes creation of financial incentives to keep New York’s upstate nuclear power plants viable until the renewable resources reach their target in 14 years. (See related story, New York Would Require Nuclear Power Mandate, Subsidy.)

Leaders of the Republican-controlled state Senate asked the commission to delay action on the initiatives, saying that while they support the goals of the fund, it should be considered as part of the 2015-2016 budget.

The Clean Energy Fund will advance solar, wind, energy efficiency and other clean tech industries to spur economic development and reduce carbon emissions, officials said. Cuomo said the $5 billion investment will leverage more than $29 billion in private sector funding.

The fund will be administered by the New York State Energy Research and Development Authority and financed through the systems benefit charge paid by ratepayers. It will receive $585 million this year and will be phased down annually, finally reaching zero after a decade.

Goals

In addition to the $29 billion in private investment, the 10-year goals include: 10.6 million MWh and 13.4 million MMBtu of energy efficiency; 88 million MWh of renewable energy; 133 million tons of CO₂ reduction; and $39 billion in customer bill savings.

The order says the traditional method of ratepayer-funded grants and rebates is too limited to effect the changes needed to meet New York’s climate and energy goals.

“The state’s greenhouse gas reduction goals demand that we achieve significantly more than is practical to achieve through current ratepayer-funded direct payment programs,” the orders states. “The status quo must evolve to a model that recognizes the appropriate use of targeted programs combined with spurring private sector involvement to reach the level of scale needed to realize our objectives. Transitioning from predominately government-directed resource acquisition approaches to market-based initiatives that intrinsically recognize the value of clean resources requires careful planning, along with a long-term commitment to the market.”

The projected $39 billion in customer bill savings will come from “innovative projects and private-public partnerships focused on reducing greenhouse gas emissions, making energy more affordable through energy efficiency and renewable energy, and mobilizing private-sector capital,” according to the governor.

Businesses are expected to see lower costs of $1.5 billion over the next 10 years, including an immediate reduction of $91 million from 2016 electric and gas system benefits charges compared to 2015.

The fund includes:

• Market Development ($2.7 billion): NYSERDA initiatives are intended to stimulate consumer demand for clean energy alternatives and energy efficiency while helping to build clean energy supply chains. At least $234.5 million must be invested in low-to-moderate income initiatives during the first three years.
• NY-Sun ($961 million): The fund finalizes the state’s commitment announced in 2014 for growing solar electricity by supporting rapid and continued cost reduction.
• NY Green Bank ($782 million): The fund will complete the capitalization of the bank, which leverages private capital for clean energy projects. The fund will increase the NY Green Bank’s total investment to $1 billion and is expected to leverage an estimated $8 billion in private investment. (See Project Interest Overwhelms New York’s Green Bank.)
• Innovation and Research ($717 million): Research and technology development is intended to drive clean-tech business growth and job creation while providing more energy choices.

Other REV Orders

The commission also approved several orders related to the REV proceeding.

Electric and gas utilities were directed to develop new energy efficiency programs, which included budgets and targets over the next three years (15-M-0252).

An earlier program based on rebates and subsidies expired at the end of 2015, but the REV initiative directed the utilities to develop flexible approaches that aligned with the state’s climate and energy goals.

“The commission directed that with this flexibility, utilities should develop programs that are market-based and include market mechanisms that combine resource acquisition with third-party activities to drive greater value for customers, achieve greater market-wide efficiency savings, target specific system needs and depend less on direct ratepayer support,” the order states.

The NYPSC also established a benefit-cost analysis for evaluating new energy proposals to determine whether they meet REV goals (14-M-0101).

The framework was included in the original REV order last year. Appendix C of Thursday’s order spells out the framework in detail. Utilities were directed to file “Benefit Cost Analysis Handbooks” by June 30.

The commission also expanded the scope of its large-scale renewable energy proceeding to bring it in alignment with the state’s Clean Energy Plan (15-E-0302). The LSR docket is the vehicle in which financial incentives for nuclear plants will be released and public comments gathered.

The Clean Energy Plan was released in December and first laid out the 50% renewable energy goal. The concurrent Clean Energy Standard proceeding formalizes that goal as state policy.