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Regulatory Issues

The Renewable Portfolio Standard

A Renewable Portfolio Standard (RPS) is a requirement that a certain percentage of our electricity will come from clean, renewable energy sources, such as wind or solar energy.

The New York State Public Service Commission (PSC) adopted a new renewable energy policy on September 22, 2004 that requires 25 percent of the state's electricity to be supplied from renewable energy sources by 2013. Although the state already produces 19.3 percent of its electricity from renewable energy sources, primarily hydropower, the new Renewable Portfolio Standard (RPS) program will result in about 3,700 megawatts of new renewable energy capacity. The new requirement credits medium- and large-scale facilities that draw on wind, biomass, or ocean energy sources, as well as solar photovoltaic systems, fuel-cell systems, hydropower upgrades, and low-impact, run-of-river hydropower plants of less than 30 megawatts in capacity. The requirement also credits customer-sited fuel cells, solar electric systems, and wind turbines. The RPS program will start in 2006 with a target of roughly 1.3 million megawatt-hours from renewable sources, increasing to nearly 12 million megawatt-hours in 2013.

The PSC estimates that the RPS program will have modest impacts on customer bills, and should cause the state's wholesale energy prices to decline. Overall, the PSC estimates residential customers may see as much as a 0.9 percent reduction in their bills over the life of the program, or an increase of up to 1.68 percent. The projected impact on commercial customers ranges from a 0.78 percent reduction to a 1.79 percent increase, and for industrial customers, from a 1.54 percent reduction to a 2.2 percent increase.

Energy Efficiency and NY's SBC

By investing in energy efficiency, we can conserve energy, reduce our electricity bills, and avoid pollution. In New York, programs to encourage energy conservation and efficiency improvements are managed by the New York State Energy Research and Development Agency (NYSERDA), and paid for by the Systems Benefit Charge, or SBC. The SBC is collected from New Yorkers by utility companies, who then provide the funds to NYSERDA. This system was created after restructuring of the electricity system, in 1996, in the recognition that certain programs that benefit the public-at-large would not be adequately addressed by New York's competitive electricity markets. So, in 1998, New York's Public Service Commission set SBC funding levels for three years indicating that the funds be use for:

Energy efficiency; Research and development (R&D) in energy-related areas, and particularly in renewable resources, environmental monitoring and protection, and combined heat and power; and Energy affordability for low-income utility customers. In 2001, the SBC was increased and renewed for five years, at approximately $150 million annually. This phase of the SBC program expires in 2006 and New York's decision-makers are now considering whether to continue to the SBC program and at what levels.

The programs supported by the SBC encourage individuals and businesses to better understand their own energy use and implement measures to reduce demand for electricity, such as purchasing more efficient appliances, improving industrial processes, upgrading lighting, or installing renewable technologies. Reducing demand for electricity avoids pollution and alleviates the need for new power generating capacity. Further, because increasing demand brings higher prices, conservation can moderate prices for everyone. Because of these important benefits, the SBC programs enjoy wide support from public health, environmental, and consumer advocacy organizations, as well as renewable and efficiency technology industries.

Net metering and clean energy technologies

When businesses, individuals, or commercial offices install renewable energy technologies, they are contributing to the common good by reducing demand for electricity from the grid, avoiding pollution, and moderating electricity prices for all. Therefore, public policies should encourage adoption of on-site renewable energy generation, also called distributed generation or micropower.

Net metering is one such policy. If a consumer produces more electricity than they are using at a certain time, they should be able to sell that electricity back to the grid and have their electric meter run backwards. In this way, having renewable technologies onsite can reduce the consumer's electric bill. Installing wind, solar, or biomass technologies will be that much more affordable.

Current law in New York requires utilities to provide net metering for biomass projects at farms (400kW or less), residential photovoltaic systems of 10 kW or less, residential wind turbines of 25 kW or smaller, and farm-based wind turbines of 125 kW or smaller. For all other applications, utilities are not required to provide net metering at this time.