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"Not only will it help us meet our growing demand for electricity, but it also will provide additional benefits by increasing fuel diversity for our state's generation portfolio, reducing our exposure to fossil fuel price spikes and supply interruptions, increasing economic development activity from a growing renewable energy industry, and improving our environment."

- Commission Chairman William M. Flynn

Syracuse, New York - September 23, 2004 [SolarAccess.com] In a move that could kick-start a burgeoning regional renewable energy market on the East Coast, The New York State Public Service Commission has voted to enact an ambitious renewable portfolio standard (RPS) demanding that by 2013, a one-quarter of electricity sold to consumers in the state be derived from renewable energy technologies. This could amount to as much as 3,700 MW of new renewable energy capacity.

This latest RPS target is a boost up from the current 19.3 percent, which is primarily accomplished through older, large hydro facilities. The new goal of 25 percent, however, will be met mostly through non-hydro renewables like wind power, solar, and fuel cells.

"The development and use of more renewable energy resources has been a long-standing policy objective of New York State, and Governor Pataki strengthened that commitment when he proposed the 25 percent goal in his 2003 State of the State address," Commission Chairman William M. Flynn said. "The policy we are adopting today balances a wide range of interests. Not only will it help us meet our growing demand for electricity, but it also will provide additional benefits by increasing fuel diversity for our state's generation portfolio, reducing our exposure to fossil fuel price spikes and supply interruptions, increasing economic development activity from a growing renewable energy industry, and improving our environment.

In addition to establishing the 25 percent goal and a start date of January 1, 2006, the policy framework addresses the fundamental components of New York's RPS Program, including: determining what types of facilities should be eligible for participation in the RPS Program, choosing an appropriate procurement structure, and identifying issues that must be addressed during the RPS implementation phase. Other key policy decisions include establishing two tiers of eligible resources, recognizing the importance of the state's existing green marketing program by relying on it to provide at least one percent of the renewable sales necessary to meet the overall 25 percent goal, and committing to a review of the RPS in 2009.

The RPS Program will consist of two tiers of eligible resources: a "Main Tier" consisting of medium-to-large-scale electric generation facilities, and a "Customer-Sited Tier" consisting of smaller, on-site -- or "behind-the-meter" -- technologies. As determined by the Commission, renewable resources eligible to participate in the Main Tier of the RPS Program will include wind, hydroelectric, biomass (e.g., woody or herbaceous farm residue, harvested wood), biogas (e.g., methane, manure digestion), liquid biofuel, and ocean or tidal power facilities. Eligible resources in the Customer-Sited Tier include fuel cells, solar photovoltaic (PV) and wind technologies.

"We're pretty excited about this," said Colin Murchie, Legislative Director for the Solar Energy Industries Assocation (SEIA) which worked alongside other groups to steer Pataki and the NYPSC in this direction. "This represents guaranteed long-term funding, and a couple extra MW of solar a year."

This development could also have regional effects when coupled with other states' efforts. New Jersey has been particularly supportive of renewable energy with their own RPS and generous buy-down rebates for solar PV systems. Pennsylvania is eyeing an RPS of their own.

"If Pennsylvania passes an RPS, we might start to see a real regional market for solar."

New York State's RPS is not a typical one enacted through state legislation, however, it is an enforceable order bearing similar weight and penalties on the utilities if the goals are not met. And like other state RPSs, it will greatly boost the development of renewable energy projects. Smaller projects like small fuel cells and solar PV will likely get approximately 9-10 million a year in rebate buy-downs, according to Murchie.

With respect to waste to energy (WTE), the Commission determined that electricity generated from the mass incineration of municipal solid waste is not eligible for the RPS Program. However, a WTE facility that meets the criteria for eligible renewable biomass and can separately convert the biomass portion of its fuel into energy will be eligible. Recognizing the rapid pace of change and the potential for development of new WTE and other generation technology, the Commission directed staff to develop a mechanism for considering the addition of appropriate renewable resources to the RPS Program eligibility list going forward. The Commission also called for the development of a method to provide RPS funding in the future for certain existing facilities that can demonstrate a financial need for RPS incentives to remain operational.

The RPS Program will promote the development of eligible renewable resources by using revenues derived from a non-bypassable, volumetric charge on the delivery portion of customers' electric bills. Collection of this charge will begin in the fourth quarter of 2005 and will be based initially on the estimated market price of the renewable resources needed to meet the RPS Program's 2006 target of approximately 1.3 million MWh. This initial charge will be subject to review and adjustment to reflect actual costs.

RPS Program funds collected by the state's regulated, investor-owned electric transmission and distribution companies will be transferred to the New York State Energy Research and Development Authority (NYSERDA), which will be responsible for administering an incentive-based procurement Program. Under this central procurement Program, NYSERDA will competitively select projects in both Program tiers. The Commission directed Department of Public Service staff and NYSERDA to develop an implementation plan that will include the details of NYSERDA's role as procurement administrator as well as the process for soliciting and selecting projects. Once developed, this plan will be issued for public comment and subject to Commission approval.

Customer bill impacts for the RPS are expected to be modest. In fact, wholesale energy prices will likely decline as a result of adding substantial amounts of renewable resources, thereby offsetting some of the Program costs and associated bill impacts. For residential customers, over the life of the Program, cumulative bill impacts are forecast to range from a reduction of 0.9 percent to an increase of 1.68 percent; for commercial customers, estimated bill impacts range from a 0.78 percent reduction to a 1.79 percent increase; and for industrial consumers, bill impacts could range from a reduction of 1.54 percent to an increase of 2.2 percent. The cumulative cost of premium payments, projected to range between $582 million and $762 million for renewable projects, is expected to be offset by approximately $362 million in wholesale energy cost reductions as New York reduces its reliance upon fossil fuels.

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