Wednesday, January 27, 2010

NYSBA Task Force on Global Warming Recommendations Pose Risks to Lower Income Consumers

A New York State Bar Association (NYSBA) Task Force on Global Warming has proposed measures that may be harmful to lower income consumers utility consumers. According to an article in the January 23, 2009 New York Law Journal by the Task Force Chair, Michael B. Gerrard, the Task Force recommends changes in the law to restore the power of the PSC to mandate residential time of use pricing, to subsidize "smart meters," to increase expenditures on renewable energy with funds raised from utility bill surcharges, and to raise the price of RGGI greenhouse gas allowances in New York's "cap and trade" system.

Mandatory Time of Use Pricing
To foster time of use pricing, the Task Force urges legislative changes to
3. Authorize the Public Service Commission (PSC) to require time-of use pricing: Charging higher electricity rates during times of peak demands would tend to spread the peak, allowing more use of low-GHG sources. The Legislature should amend the statute that arguably prohibits the PSC from imposing time-of use pricing.

4. Provide incentives for installation of smart meters: Electric meters that allow time-differentiated charges also encourage low-GHG sources.
The environmental premise of peak-shifting is questionable. It does not reduce overall emissions, and could increase them. During peak times, incremental usage requires more natural gas-fired power plants to run. In off-peak hours, electricity produced by burning coal, which emits far more greenhouse gases than natural gas, may meet the electricity needs of peak-shifting insomniacs who change their habits to take advantage of cheap energy in the middle of the night, and run their dishwashers, washing machines, and air conditioners at 3 AM in the morning.

The New York Legislature revoked the PSC's power to require mandatory residential time of use pricing in the 1980's, and for good reason. See New York Residential Real Time Pricing Experiments Must be Voluntary, PULP Network, August 27, 2007.

Time of use pricing has been offered by utilities for many years, but has been chosen by very few residential customers. Many customers cannot handle the price volatility or lifestyle changes required to shift their electricity usage to nonpeak hours. For example, it may be very harmful to elderly and disabled and homebound persons, particularly those with respiratory ailments that are mitigated by air conditioning. See Not so Smart? High Tech Metering May Harm Low Income Electricity Customers, PULP Network, April 16, 2007.

The Task Force piled onto the utility/NRDC bandwagon for massive deployment of residential "smart meters" even though they may not be cost effective and have been questioned by major consumer groups. See See AARP Opposes PEPCO Plan for Spending on "Smart Meters", PULP Network, June 19, 2009; Rebecca Smith, Smart Meter, Dumb Idea?, Wall Street Journal, April 27, 2009; Consumer Uprising Against California Smart Meter Program, PULP Network, October 28, 2009; Will "Smart" Meters Pass The Test of Time?, PULP Network, Nov. 24, 2009; Niagara Mohawk dba National Grid Seeks Continued Secrecy on Cost of Its "Smart Grid" Proposals, PULP Network, November 25, 2009

The billions of dollars needed to replace existing meters with smart meters could be better used to reduce emissions, for example, by reducing energy consumption through weatherization of structures or upgrading of energy consuming motors and appliances.

The State Bar Association Task Force on Global Warming also endorsed massive conversion of apartments rented with utilities included to electric submetering, which forces tenants to buy electricity from their landlords instead of it being included in rent or obtained from a regulated utility company. The New York submetering regime created by the PSC is a dog's breakfast. It harms tenants and should not be expanded. See PULP's webpage on submetering.

The added cost of renewables and increased price of RGGI allowances is not quantified. But with many Yorkers now losing utility service because they cannot afford it, it must be recognized that the green solutions must be accompanied by a new emphasis on universal, affordable utility service.

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