Possible Modifications to Goals, Targets, Procurement Rules, Budgets and Collections
NY-ADR
10/7/09 N.Y. St. Reg. PSC-40-09-00009-P
NEW YORK STATE REGISTER
VOLUME XXXI, ISSUE 40
October 07, 2009
RULE MAKING ACTIVITIES
PUBLIC SERVICE COMMISSION
PROPOSED RULE MAKING
NO HEARING(S) SCHEDULED
I.D No. PSC-40-09-00009-P
Possible Modifications to Goals, Targets, Procurement Rules, Budgets and Collections
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:
Proposed Action:
The Commission is considering, as part of a planned 2009 comprehensive review, whether to adopt modifications to its Renewable Portfolio Standard (RPS) program.
Statutory authority:
Public Service Law, sections 4(1), 5(2) and 66(1)
Subject:
Possible modifications to goals, targets, procurement rules, budgets and collections.
Purpose:
To encourage electric energy generation in the State from renewable resources.
Substance of proposed rule:
The New York State Public Service Commission is considering, as part of a planned 2009 comprehensive review, whether to adopt modifications to its Renewable Portfolio Standard (RPS) program established in Case 03-E-0188. The RPS program has been the State‘s primary policy initiative to promote the development of new renewable energy resources. It is an integral part of an effort to achieve an overall goal of increasing the percentage of electricity consumed by retail customers in the state that is generated by renewable resources to 25 percent by 2013. The RPS program is designed to achieve the share of that goal attributable to retail customers under the jurisdiction of the Commission; it excludes shares attributable to the voluntary market and to retail customers served by the New York Power Authority and the Long Island Power Authority, two entities not under the jurisdiction of the Commission. To date, the Commission has authorized the collection from ratepayers of approximately $741.5 million through 2013 to fund the RPS program through 2013 based upon cost projections made in 2003. These collections were authorized with the expectation that additional collections would be necessary after 2013 to pay the continued cost of RPS contracts beyond 2013 until they expire. The collection amounts did not include funding for maintenance contracts, administration and evaluation expenses, or amounts incurred as a New York State Cost Recovery Fee.
The New York State Energy Research and Development Authority (NYSERDA) is the designated administrator of the RPS program. Resources for the RPS program are procured by NYSERDA in two "tiers". The first or “Main Tier” consists primarily of medium to large-scale electric generation facilities that deliver their electrical output into the wholesale power market administered by the New York Independent System Operator and are generally awarded performance-based incentive payment contracts on a competitive basis. The second or “Customer-Sited Tier” consists of smaller, "behind-the-meter" resources that produce electricity for use on site and upon application to NYSERDA receive a one-time incentive payment or a combination of a one-time payment and performance-based incentives. The RPS program also currently provides financial incentives within the structure of the Main Tier to maintain the operation of certain existing facilities considered "Maintenance Resources". Maintenance contracts are only awarded on a case-by-case basis after rigorous Commission review and approval.
Three Main Tier solicitations have been completed to date. NYSERDA is currently administering 30 contracts for procured Main Tier RPS resources including wind, hydroelectric and biomass facilities expected to generate about 2.69 million MWhs in 2013. That level of generation represents approximately 27% of the original Main Tier target of 9,854,038 MWh established by the Commission. The total cost of the first three solicitations over the life of the contracts is approximately $458.2 million. In addition, a fourth Main Tier solicitation request for proposals was issued on September 8, 2009 with a budget of approximately $95 million.
Two maintenance contracts have been awarded to date to ensure that two existing direct combustion biomass facilities operate at an annual rate of up to about 259,000 MWhs with a total cost over the life of the contracts of approximately $33.9 million.
The Customer-Sited Tier currently has a budget of $103.3 million for procurements through 2009. The Customer-Sited Tier budget was enhanced in 2009 to accommodate robust demand for solar photovoltaic and anaerobic digester applications. On the basis of that budget and the current rate of demand, it is expected that the funding through December 2009 will result in approximately 32 MW of installed capacity that will produce about 96,000 MWh annually. That level of generation represents approximately 48% of the original Customer-Sited Tier target of 201,130 MWh established by the Commission.
Finally, the Commission has additionally authorized up to $25.6 million for administration and evaluation costs and up to $12.1 million if incurred as a New York State Cost Recovery Fee through 2013. All together, the RPS program costs described above equal approximately $728.1 million. Interest earnings on RPS funds that have been collected but not yet expended and funds received as a result of forfeiture of letters of credit will offset a portion of these costs.
The Commission has required a comprehensive review of the RPS program in 2009 and has provided a list of topics for consideration in that 2009 Review. As part of that review, Staff of the Department of Public Service (Staff) is preparing an RPS Mid-Course Report (the “Report”) which addresses these topics.
It is anticipated that the Report will be finalized and made publicly available in the near future. The Commission has already received extensive comments from parties as to whether the RPS program should be continued, and if so, how it can be improved. The Commission has also received two evaluation reports prepared by third-party contractors and a draft report filed by NYSERDA. The Report builds on the comments by stakeholders and NYSERDA reports, in light of current facts and circumstances, and will address funding and a number of additional issues that affect the long-term viability of the RPS program.
Text of proposed rule and any required statements and analyses may be obtained by filing a Document Request Form (F-96) located on our website http://www.dps.state.ny.us/f96dir.htm. For questions, contact:
Leann Ayer, Public Service Commission, 3 Empire State Plaza, Albany, New York 12223-1350, (518) 486-2655, email: [email protected]
Data, views or arguments may be submitted to:
Jaclyn A. Brilling, Secretary, Public Service Commission, 3 Empire State Plaza, Albany, New York 12223-1350, (518) 474-6530, email: [email protected]
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement
Statements and analyses are not submitted with this notice because the proposed rule is within the definition contained in section 102(2)(a)(ii) of the State Administrative Procedure Act.
(03-E-0188SP22)
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