S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4294
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 4, 2019
                                ___________
 
 Introduced by M. of A. CUSICK -- read once and referred to the Committee
   on Energy
 
 AN ACT in relation to maintaining the continued viability of the state's
   existing large-scale, renewable energy resources
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Legislative findings and  intent.  The  legislature  hereby
 finds and determines:
   1. New York is a national leader in developing and implementing policy
 to  promote the development of renewable energy resources, the growth of
 which has significantly benefited the state in numerous ways,  including
 through  reductions  in  pollutants  that  contribute to climate change,
 associated reductions in adverse impacts on public health, and  substan-
 tial job growth in the clean energy sector.
   2.  In  2016,  more  than  twenty percent of the state's electric load
 (representing 2,354 gigawatt hours) was supplied by renewable  resources
 - solar, wind, hydroelectric, biomass, fuel cells and similar resources.
 To  further promote and incentivize the development of renewable energy,
 the New York state public  service  commission  recently  established  a
 clean  energy standard requiring, among other things, that fifty percent
 of the electric load in  the  state  be  served  entirely  by  renewable
 resources by the year 2030 (i.e., 50 by 30 target).
   3.  A  recent  study  shows  that  New  York's clean energy sector now
 employs more than 85,000 workers at more than 7,500 business  establish-
 ments  spread  out  across  the  state, in both the renewable energy and
 energy efficiency sectors. With implementation of the clean energy stan-
 dard, clean energy jobs are anticipated to grow by more than six percent
 per year or double the growth rate of the entire United  States  economy
 in  2016. Proper implementation of the clean energy standard will ensure
 that the state meets these job growth projections.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05544-01-9
              

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   4. To promote achievement of the clean energy standard, and to  ensure
 the  continued job growth and other benefits attendant to a clean energy
 economy, New York needs to assure that its existing large-scale, renewa-
 ble energy sector is provided with adequate price signals and  financial
 incentives  to  remain  in  operation and to sell their renewable energy
 attributes in New York, allowing the state to count the resources toward
 the 50 by 30 target and retain the jobs and tax  payments  supported  by
 these  generators. Absent these assurances, it would be difficult if not
 impossible for the state to meet the recently established target.
   5. New York's ability to  meet  the  clean  energy  standard  will  be
 hampered  if  such  existing  resources  provide  their wholesale energy
 products for delivery to adjacent states, some  of  which  have  enacted
 laws  that provide for a robust market that provides a stronger opportu-
 nity to sell renewable energy attributes than is currently available  in
 New  York. There is a real and present danger that a significant portion
 of New York's existing fleet of large-scale, renewable energy  resources
 will  participate in the programs offered by these other states and thus
 will not be available for consideration in terms of meeting the 50 by 30
 target, and compete effectively with  other  renewable  classes  in  the
 clean energy standard.
   6.  It also is of paramount importance to ensure the fuel diversity of
 the state's energy sector for the purposes of providing energy security,
 system reliability and protection  of  consumers  from  potential  price
 spikes or shortages. For this same reason, it is important for the state
 to take measures to ensure the continued viability and competitive posi-
 tion of a wide variety of large-scale, renewable energy resources in the
 state.
   7.  Accordingly, the overlying intent of this act is to provide exist-
 ing large-scale, renewable energy  resources  in  New  York  state  with
 appropriate financial incentives to continue operations for the foresee-
 able future.
   §  2. Definitions.   1. "Large-scale, renewable energy resource" means
 an electric generating facility that:  (a) sells its energy  within  the
 New  York  control  area  with  a generating capacity of 25 kilowatts or
 more; (b) is deemed an eligible technology type pursuant to  Appendix  A
 of  the  "Order  Adopting  a  Clean Energy Standard" and, in the case of
 hydropower, has a generating capacity less than  50  megawatts;  (c)  is
 physically  located  within the jurisdiction of the New York independent
 system operator; and (d) the associated energy is delivered  in  accord-
 ance  with a New York delivery requirement as described in section three
 of this act.
   2. "Eligible large-scale, renewable energy resource" means an existing
 large-scale, renewable energy resource that: (a) at the time in question
 is not under a contract for the sale of renewable  energy  credits  with
 the New York state energy research and development authority pursuant to
 the  renewable portfolio standard main tier, maintenance tier or custom-
 sited tier program or clean energy standard tier 1  program  implemented
 by  such  authority;  (b)  is not under an existing contract for sale of
 renewable energy credits with a load serving entity; and (c)  is  other-
 wise found by the New York state energy research and development author-
 ity  to  meet  deliverability requirements specified in section three of
 this act, and other eligibility requirements  specified  in  subdivision
 one of this section.
   3.  "Qualified  independent party" shall have the meaning given to the
 term in the New York Generation Attribute Tracking System (NYGATS) oper-

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 ating rules promulgated by the New York state energy research and devel-
 opment authority.
   4. "Load serving entity" or "load serving entities" means and includes
 all  investor-owned distribution utilities (in their capacity as commod-
 ity suppliers), energy service companies, community  choice  aggregation
 programs  not  served  by  energy service companies, municipal utilities
 under the jurisdiction of the  public  service  commission,  and  retail
 customers  that  self-supply with electricity through the New York inde-
 pendent system operator.
   5. "Renewable energy credit" means  a  tradable,  non-tangible  energy
 commodity  that represents proof that 1 megawatt-hour (MWh) of electric-
 ity was generated from a renewable energy resource. To be  eligible  for
 sale  in  New York state and to meet the procurement obligations of load
 serving entities, each renewable energy credit must be  registered  with
 the New York generation attribute tracking systems.
   6.  "Tier  1"  means  the program designated as tier 1 pursuant to the
 clean energy standard order.
   7. "Tier 2 renewable energy credit" refers to a renewable energy cred-
 it generated by an eligible large-scale, renewable energy resource.
   8. "Order adopting a clean energy standard" means the  public  service
 commission  order dated August 1, 2016, and entered in case number 15-E-
 0302 et seq.
   § 3. Deliverability. Energy from an  eligible  large-scale,  renewable
 energy resource shall be deemed to comply with the New York deliverabil-
 ity  requirement  if  either it is: (a) delivered into a market adminis-
 tered by the New York independent system operator  for  end-use  in  New
 York state; (b) delivered through a wholesale meter under the control of
 a  utility,  public authority or municipal electric company such that it
 can be measured, and such that consumption within New York state can  be
 tracked  and  verified  by  such  entity  or by the New York independent
 system operator; or (c) delivered to a customer in New York state, where
 such delivery shall be subject to independent verification  by  the  New
 York  state  energy  research  and  development authority or a qualified
 independent party.
   § 4. Program for eligible  large-scale,  renewable  energy  resources.
 Notwithstanding  any  other provision of law to the contrary, including,
 but not limited to, any order, rule or regulation  promulgated  pursuant
 to  the public service law, the public authorities law, and/or the state
 administrative procedure act, the public service commission, in  consul-
 tation  with the New York state energy research and development authori-
 ty, shall adopt a program within 120 days of the effective date of  this
 act, to provide support to and for eligible large-scale, renewable ener-
 gy  resources  through  a  market for tier 2 renewable energy credits as
 defined herein to ensure the continued viability of eligible  large-sca-
 le, renewable energy resources for the purpose of meeting the state's 50
 by  30 target. In developing such program, the public service commission
 shall create an obligation on load serving entities to purchase  tier  2
 renewable  energy  credits  from  eligible large-scale, renewable energy
 resources through a process and requirements as fully described below:
   1. Annual targets for tier 2  renewable  energy  credits.  The  public
 service  commission  shall  provide  annual targets and mandates for the
 acquisition of tier 2 renewable energy credits by load serving  entities
 for the years 2019 to 2030 that ensures market demand for tier 2 renewa-
 ble  energy  credits for all resources that become eligible large-scale,
 renewable energy resources during such timeframe for purposes of achiev-
 ing the 50 by 30 target. The targets to be  established  by  the  public

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 service  commission  should  reflect  the  quantity  of renewable energy
 generation that is serving  total  electric  load  in  New  York  state,
 excluding generation from facilities owned by the power authority of the
 state of New York and excluding hydropower from generators with a capac-
 ity greater than 50 megawatts.
   2.  Load  serving entities' tier 2 renewable energy credit obligation.
 Each load serving entity shall be responsible for  acquiring  a  defined
 quantity  of tier 2 renewable energy credits based upon the total tier 2
 load serving entity obligation target  allocated  to  all  load  serving
 entities  proportional  to  the  load  each  serves; i.e., determined by
 multiplying each load serving entity's actual load for the prior year by
 the percentage GWh target for that  year.  The  New  York  state  energy
 research and development authority shall publish each load serving enti-
 ty's  annual obligation for each annual compliance period on its website
 or by other appropriate means by December 1 of the  year  prior  to  the
 year such published annual obligation shall apply.
   3.  Tier  2 renewable energy credit price. By each December 1 prior to
 the annual compliance period, the public service commission shall estab-
 lish a tier 2 renewable energy credit price to be set at 75  percent  of
 the  weighted average cost per renewable energy credit that the New York
 state energy research and development authority paid to acquire  renewa-
 ble energy credits from resources under the clean energy standard tier 1
 program in the prior calendar year.
   4.  Financial  hardship.  Those eligible large-scale, renewable energy
 resources for which the tier 2 renewable energy credit price is insuffi-
 cient may seek additional financial assistance from the New  York  state
 energy  research  and  development  authority through contracts having a
 minimum duration of ten years for the purpose of ensuring the  continued
 viability and availability of such resources toward meeting the 50 by 30
 target.    The  New York state energy research and development authority
 shall apply the following criteria in  determining  the  eligibility  of
 such  eligible  large-scale,  renewable energy resources to receive such
 financial assistance, which shall be paid as an increment above the tier
 2 renewable energy credit price determined pursuant to subdivision three
 of this section:
   (a) A showing of financial hardship;
   (b) The basis for and reasonableness of expected operating and capital
 costs. This evaluation may include, among other things, a comparison  to
 prior years' costs and a comparison to costs of like generation;
   (c)  The  existence  of any other cash sources available to the large-
 scale, renewable energy resource, such as: (i) tax benefits; (ii) subsi-
 dies; (iii) contracts; and (iv) other sources,  including  restructuring
 financing;
   (d)  Whether market rules are increasing the costs of the large-scale,
 renewable energy resource and, if so, whether any steps can be taken  to
 reduce such costs;
   (e) Whether the large-scale, renewable energy resource's real property
 tax  assessment  is consistent with the assessments imposed in similarly
 situated facilities elsewhere, and if not, what action has been taken to
 address such assessment;
   (f) Whether the large-scale, renewable energy resource is required  to
 operate  as  part of a package of assets that is financially viable as a
 whole;
   (g) Whether  the  large-scale,  renewable  energy  resource  generates
 enough  revenue,  based on expected output, to cover its operating costs
 and enjoy a reasonable return;

 A. 4294                             5
 
   (h) Whether the generation facility generates enough revenue  to  make
 necessary capital improvements;
   (i)  Whether  the  large-scale,  renewable  energy  resource generates
 enough revenue to cover its fixed costs, including:  (i)  debt  service;
 (ii) property taxes; (iii) security costs; and (iv) other costs;
   (j)  Whether  the large-scale, renewable energy resource has attempted
 to make use of other renewables programs available to it, such as volun-
 tary green markets; and
   (k) The regional economic importance of the resource. This  evaluation
 may  include  job creation and retention, regional spending for fuel and
 other goods and services, contribution to local tax base, fuel  diversi-
 ty,  greenhouse  gas  reduction,  enhanced forest health, flood control,
 municipal water supply, ecological stewardship  and  other  non-economic
 factors  on  a region-specific basis.  Any contract entered into with an
 eligible large-scale, renewable energy resource pursuant to this  subdi-
 vision  shall  include a reasonable return, and take the form of a fixed
 price increment to the tier 2 renewable energy  credit  price  that  the
 generator  is  receiving  from  a  load  serving  entity  or a financial
 contract for differences to adjust based on fluctuations in the  tier  2
 renewable  energy  credit price. The totality of all increments provided
 to resources pursuant to this subdivision shall be recovered from deliv-
 ery customers in the same manner as in the renewable portfolio  standard
 program maintenance tier.
   5.  Procedures.  To  implement  the  tier  2  renewable  energy credit
 program, the public service commission shall also adopt within 120  days
 of  the  effective date of this act the following procedures and related
 requirements:
   (a) The public service commission shall establish procedures  consist-
 ent with the procedures developed under the clean energy standard tier 1
 program  to  determine  the eligibility of large-scale, renewable energy
 resources to participate in the program adopted pursuant to this act and
 to certify such eligible large-scale, renewable  energy  resources.  All
 resources  that  have previously been found by the New York state energy
 research and development authority to meet the eligibility and delivera-
 bility requirements in force under the renewable portfolio  standard  or
 clean  energy  standard programs shall be deemed to meet eligibility and
 deliverability requirements of this act.
   (b) The public service commission, with the assistance of the New York
 state energy research and development authority, shall develop an  equi-
 table  process  by  which load serving entities acquire tier 2 renewable
 energy credits from eligible large-scale,  renewable  energy  resources,
 which  may include the designation of the New York state energy research
 and development authority as the central procurement entity for  tier  2
 renewable energy credits, whereby the New York state energy research and
 development authority would ensure the registration of all tier 2 renew-
 able  energy  resources from generators in New York generation attribute
 tracking systems, purchase the required targeted amount of tier 2 renew-
 able energy credits, and re-sell the tier 2 renewable energy credits  to
 load  serving  entities  on an annual basis in order to facilitate their
 collective efficient compliance. The public service commission, with the
 assistance of the New York state energy research and development author-
 ity, shall also develop and implement protocols in the event that  there
 is  an  oversupply  or  undersupply  of  tier 2 renewable energy credits
 offered for sale, relative to the tier 2 renewable energy  credit  obli-
 gation applied to the load serving entities, provided that the protocols

 A. 4294                             6
 
 should  recognize and prioritize the realization of economic benefits in
 New York from generators located in New York.
   (c)  The  public  service commission shall develop procedures by which
 eligible large-scale, renewable energy resources  may  obtain  contracts
 from  the New York state energy research and development authority under
 subdivision four of this section in accordance with the requirements  of
 the  state  administrative  procedure  act.  Such procedures shall, on a
 case-by-case basis, authorize  eligible  large-scale,  renewable  energy
 resources  to  petition  the  public service commission for a finding of
 financial hardship, which finding shall be based  upon  a  determination
 that  the  established  tier  2  renewable  energy credits determined in
 accordance with subdivision three of this section  are  insufficient  to
 ensure  the  viability  of  the  resource. The public service commission
 shall make a final decision with respect to  such  contract  within  120
 days after a hardship petition is received.
   (d)  Each  load  serving  entity shall demonstrate compliance with the
 requirements of this section through an annual compliance filing  pursu-
 ant  to  a  process established by the public service commission that is
 consistent with the compliance filing requirements established  pursuant
 to the tier 1 program.
   § 5. This act shall take effect immediately.