Friday, January 09, 2009

Governor Paterson Announces Energy Agenda in "State of the State" Message: More Efficiency, More Renewables

In his first State of the State Message on January 7 Governor Paterson announced his goal that "45 percent of New York State's electricity needs will be met through improved energy efficiency and greater use of clean renewable energy by 2015." The supporting factsheet summary of his "45 by 15" proposal explains that the state’s mix of renewable electric energy resources – now about 20% -- would go up to 30% , and recites the "goal of decreasing electricity usage by 15 percent." The Governor also called on the PSC to aid in implementation of these goals and to adopt an “on bill” financing program for household energy efficiency improvements.

The Governor's energy efficiency goal is not altogether new: Then-Gov. Spitzer announced a similar “15 by 15” electric energy efficiency plan in 2007. Electricity load had been growing about 2% a year, so Spitzer's 2007 plan would essentially have offset new load growth, i.e., total usage would level off by 2015. Inasmuch as load still grew in the first two years of the original “15 by 15" plan, and was not offset by expanded efficiency programs, reducing total electricty usage 15% by 2015 would seem to require far more robust efforts.

On-Bill Financing
The Governor also mentioned “on bill financing” of energy efficiency. This is proposed as a means to encourage homeowners to reduce their energy usage. They would borrow money from the utility or a third party lender to insulate, replace inefficient furnaces, etc. Then they would repay the loan for the home improvements in installments, added to their monthly utility bills. The cost of the home improvement loan repayments, it is assumed, would be offset by savings due to the successful reduction in energy usage. A "working group" report on this topic was issued December 19, 2008 in the PSC’s “Energy Efficiency Portfolio Standard” (EEPS) proceeding.

About 20% of NY electricity is already from renewable sources (Niagara, St. Lawrence and small hydro are about 18%), the rest is mainly wind, which has been growing rapidly. See NYSERDA fast facts for 2006.

A number of questions come to mind:
  • How would additional renewable resources be obtained? Wind? Where?
  • Are there sufficient transmission resources to enable wind power to displace other generation?
  • Would existing power plants be shut down or used less? Would those power plants still be needed in hours when the wind dies down or for other reliability purposes?
  • Will the cost of getting 10% more from renewable energy sources be more expensive than power produced by the fleet of power plants now running? If so, how much, and how will the increased cost affect New Yorker residents and businesses struggling now to pay their current bills?
The trade association for utilities, the Energy Association of New York State, issued an enthusiastic press release endorsing the Governor's proposals, as did IPPNY, the merchant power group, the NYISO, and the environmental group NRDC.

In addition to the Governor's proposals, there is a State Energy Plan process underway, after years of having no formal energy plan. It is likely that the Governor's "State of the State" proposals will be incorporated into the eventual plan by the State Energy Planning Board, which is comprised of Governor's' appointees.

A new state energy plan is scheduled to be issued for public comment March 31, 2008.

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