S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8096
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               June 11, 2021
                                ___________
 
 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.  To  further  promote  and incentivize the development of renewable
 energy, New York state  recently  adopted  the  Climate  Leadership  and
 Community  Protection  Act  (CLCPA), which, among other things, mandates
 that by 2030, 70% of electricity consumed in the state  will  come  from
 renewable  resources,  and 100% of such electricity be renewable by 2040
 (CLCPA targets). In 2019, approximately 27 percent of the state's  elec-
 tric load (representing 41,340 gigawatt hours) was supplied by renewable
 resources  - solar, wind, hydroelectric, biomass, fuel cells and similar
 resources.
   3. However, a recently published triennial review of the clean  energy
 standard  (CES)  found  that  falling  commodity  market revenues in the
 wholesale energy markets create a risk that legacy renewable  generators
 may  not  be able to cover their costs. These facilities have options to
 export to neighboring  renewable  portfolio  standard  (RPS)  compliance
 markets and will do so if the renewable energy certificate (REC) revenue
 opportunity is greater than New York's voluntary market.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11681-01-1
              

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   4.  Exports  of  legacy  supply have increased since 2014 by about 0.5
 TWh, and unless reversed would need  to  be  made  up  from  incremental
 sources of supply in order to achieve CLCPA targets. There is a real and
 present  danger  that a significant portion of New York's resources will
 either  cease  operations  or  sell  increasing volumes of their RECs to
 neighboring markets. In either case, New York will not be able to  count
 them towards the CLCPA targets.
   5.  A recent study shows that, in the wake of COVID-19, after reaching
 nearly 164,000 clean energy jobs statewide in 2019, the pandemic  tempo-
 rarily  reversed multi-year growth trends. The clean energy industry can
 serve as a cornerstone for economic recovery, but that must  begin  with
 the retention of New York's existing valuable renewable assets.
   6.  The CES was established in a 2016 public service commission order,
 predating the CLCPA. In its original form, the CES  was  composed  of  a
 tier  1 for the development of new large-scale renewables, a maintenance
 tier 2 to provide short-term relief to economically distressed renewable
 resources, and a tier 3 to support the state's nuclear resources through
 ZECs. In 2018, the public service commission added a program related  to
 offshore  wind  development. Despite numerous appeals from the renewable
 energy and environmental advocates, none of the public  service  commis-
 sion's  actions  modified  the  program  such  that the state's existing
 renewable energy resources would be preserved as a baseline  onto  which
 to  add  in pursuit of the state's laudable and aggressive environmental
 goals.
   7. In 2019, the CLCPA was passed and signed into law. In the meantime,
 during the period between the implementation of the  CES  to  the  CLCPA
 becoming  law  (2016-2019),  exports  of  baseline  renewable generation
 increased by approximately 50 percent - a direct contrast to the  objec-
 tives  of  both  initiatives.  Given that numerous RPS contracts will be
 expiring in the near term, the public service commission has stated that
 it expects this trend to continue, potentially putting New York at  risk
 of not reaching the 70 by 30 target.
   8. Also, in 2019, a separate energy-related bill passed both houses of
 the  legislature. That bill would have created a truly supportive tier 2
 requiring the New York state energy research and  development  authority
 (NYSERDA) to procure RECs from all eligible existing renewable resources
 at  a  discounted  rate  (75%)  of  the  current  tier 1 REC price. That
 proposed legislation rightfully recognized that to  promote  achievement
 of  the  CLCPA targets, and to ensure the continued job growth and other
 benefits attendant to a clean energy economy, New York needs  to  assure
 that  its  existing renewable resources are provided with adequate price
 signals and financial incentives to remain  in  operation  and  to  sell
 their  renewable energy attributes in New York. Absent these assurances,
 it would be difficult if not  impossible  for  the  state  to  meet  the
 recently established targets.
   9.  The  governor  vetoed the tier 2 legislation, citing in large part
 that payments would be made to renewable resources on a  non-competitive
 basis.  However, he ordered NYSERDA and the department of public service
 to  develop  a  program  "to  provide  qualified legacy renewable energy
 resources in New York State with  appropriate  support  to  continue  to
 competitively operate and contribute to the State's clean energy goals."
   10.  In  response to the veto message, NYSERDA filed a petition with a
 proposed framework for a competitive tier 2, which  the  public  service
 commission  adopted  in an October 2020 order modifying the clean energy
 standard. The program would issue annual solicitations over three years,
 with the winning bidders receiving three-year contracts  to  sell  their

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 RECs  to  NYSERDA  at  the  accepted price. NYSERDA's stated goal was to
 procure approximately one-third of the renewable baseline RECs  in  each
 auction.
   11. However, the first ever competitive tier 2 solicitation, completed
 in May 2021, netted awards to just three renewable facilities that total
 less than 14 MW, while the eligible baseline capacity well exceeds 1,000
 MW.  The  low  volume of awards is directly attributable to offers being
 rejected due to a confidential price cap utilized by NYSERDA, which does
 not accurately reflect the price needed to  keep  New  York's  renewable
 resources in New York.
   12.  Even  had  NYSERDA  accurately  valued  existing  renewables, the
 competitive tier 2 program is set to have the contracts from  its  third
 and  final  solicitation  expire  at the conclusion of 2025, a full four
 years before the first CLCPA renewable target date of 2030.  This  chasm
 provides no assurances to renewable resources that they should invest in
 their assets or keep their RECs in the state in the critical years lead-
 ing up to the 70 by 30 target.
   13.  New  York's ability to meet the CLCPA targets 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 opportunity to sell
 renewable energy attributes than is currently available in New York.
   14. 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.
   15.  Accordingly,  the  overlying  intent of this act is to modify the
 competitive tier 2 program such that it appropriately values maintaining
 the state's renewable baseline and provides existing large-scale, renew-
 able energy resources in  New  York  state  with  appropriate  financial
 incentives to continue operations for the foreseeable future.
   § 2. Definitions. As used in this act:
   1.  "Competitive  tier  2  program"  refers  to the renewable baseline
 retention program created within the order modifying  the  clean  energy
 standard and being administered by NYSERDA.
   2.  "Eligible competitive tier 2 resource" shall have the same meaning
 as contained in the order adopting modifications  to  the  clean  energy
 standard:  (a)  existing  non-state-owned  run-of-river  hydropower  and
 existing wind generators located within the State; (b) that have entered
 commercial operation prior to January 1, 2015, and (c) are  not  already
 under contract with NYSERDA.
   3.  "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.
   4.  "Tier  1" means   the program designated as tier 1 pursuant to the
 order adopting a clean energy standard and subsequently  refined  within
 the order modifying the clean energy standard.
   5. "Tier 2 renewable energy credit" refers to a renewable energy cred-
 it generated by an eligible competitive tier 2 resource.
   6.  "Maximum bid price" shall mean the price employed by NYSERDA above
 which offers submitted in  the  competitive  tier  2  program  would  be
 rejected.

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   7.  "Order  adopting a clean energy standard" means the public service
 commission order dated  August  1,  2016  and  entered  in  case  number
 15-E-2203 et seq.
   8.  "Order  modifying  the  clean  energy  standard"  means the public
 service commission order dated October 15, 2020,  and  entered  in  case
 number 15-E-2203 et seq.
   §  3.  Modifications  to the competitive tier 2 program. 1. The public
 service commission, in consultation  with  the  New  York  state  energy
 research   and   development   authority,  shall  modify  the  following
 provisions of the competitive tier 2  program  within  30  days  of  the
 effective  date  of  this  act,  to  provide support to and for eligible
 competitive tier 2 resources.
   2. Maximum bid price. The maximum bid price utilized  by  NYSERDA  for
 each  solicitation conducted within the competitive tier 2 program shall
 be set equal to 75% of NYSERDA's tier 1 REC sale price  established  for
 the  most  recently completed Renewable Energy Standard (RES) compliance
 year for tier 1 RECs.
   3. Program cost cap. The  $200  million  cost  cap  on  total  program
 expenditures imposed by the order modifying the clean energy standard is
 eliminated.  Program  costs will be determined by the volume of accepted
 offers, as determined by NYSERDA's annual  targets,  multiplied  by  the
 price of accepted offers no greater than the maximum bid price.
   4.  Program  duration.  The competitive tier 2 program shall remain in
 place and NYSERDA shall conduct annual solicitations  for  tier  2  RECs
 such that the final solicitation will result in NYSERDA procuring tier 2
 RECs under awarded contracts through the year 2030.
   5.  Annual  targets  for  tier  2 renewable energy credits. The target
 volume of tier 2 RECs in each of NYSERDA's annual  tier  2  solicitation
 shall  be  one-half  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  or
 otherwise under contract with NYSERDA.
   § 4. This act shall take effect immediately.