The New York State Public Service Commission has denied petitions filed by a group of offshore wind developers and a state renewable energy trade association seeking billions of dollars in additional funding for four proposed offshore wind projects and 86 land-based renewable projects.
The petitions submitted by Empire Offshore Wind LLC, Beacon Wind LLC, Sunrise Wind LLC and the Alliance for Clean Energy New York Inc. were seeking adjustment to renewable energy credit and offshore wind REC purchase and sales agreements entered with NYSERDA to address recent inflationary pressures that are impacting project economics.
The commission found that the contract amendments were not in the best interest of the state’s ratepayers. On a monthly bill basis, granting the request to amend the executed contracts outside the competitive procurement process would have resulted in as high as 6.7% increases for residential customers and as high as 10.5% for commercial/industrial customers on monthly bills, depending on service territory and the level of relief provided, above what was already committed.
“The requested amendments to the contracts would have provided adjustments outside of the competitive procurement process; such relief is fundamentally inconsistent with long-standing commission policy,” said Commission Chair Rory M. Christian.
“The commission has repeatedly stated that competition in the procurement process is necessary to protect ratepayers and provides the soundest approach to mobilize the industry to achieve our critical state goals dependably and cost-effectively, and we do so again.”
In its decision, the commission stressed that it remains fully supportive of the Climate Leadership and Community Protection Act, which codifies decarbonization requirements for various sectors of the economy and adopts ambitious renewable energy deployment targets.
According to the commission, supporters pointed to the state’s clean energy goals and argued that relief is needed to stay on track toward achieving those goals. Opponents generally expressed concern with the increase in prices that will be borne by ratepayers and the disruption of the competitive process that was used to award these projects.
The petitions generally stated that the effects of the COVID-19 pandemic have exposed the projects to unprecedented global and regional supply chain bottlenecks, high inflation, and increases in the cost of capital, driven by rising interest rates. Further, the petitions identified impacts associated with the war in Ukraine, including increased demand for renewable energy and resulting shortages and price increases for key components and equipment.
The American Clean Power Association (ACP) voiced its objections to the commission’s decision, noting that “the NYSPSC has thrown New York’s environmental and clean energy future into peril.”
“Absent a robust offshore wind industry, it will not be possible for New York State to achieve its climate or environmental justice goals,” said ACP CEO Jason Grumet. “Moreover, critical economic benefits from new manufacturing facilities and the revitalization of ports will be squandered along with the creation of good-paying union jobs. New York State has been a national leader in the clean energy transition. We urge New York State to maintain its clean energy commitment and reconsider this decision.”
Photo by Darren McGee – NYSDED; Copyright © NYS Dept. of Economic Dev. (NYSDED)
