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A stock photo of a vessel servicing an offshore wind farm at sunset

A stock photo of a vessel servicing an offshore wind farm at sunset. Photo: Eddytb Foto/Shutterstock

New York State Denies Higher Rates for Offshore Wind and Renewable Projects

Mike Schuler
Total Views: 1670
October 12, 2023

The New York State Public Service Commission (Commission) has rejected petitions filed by offshore wind developers and a renewable energy trade association, seeking billions of dollars in additional funding from consumers for proposed offshore wind projects and land-based renewable projects amid soaring costs.

The Commission said the decision aims to maintain a robust competitive bidding process that ensures the delivery of renewable energy resources to New York in a fair and cost-effective manner, prioritizing consumer protection.

Project developers had petitioned to amend purchase and sales agreements with the state to raise the rates paid for by consumers due recent inflationary pressures impacting project economics.

“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 emphasized the importance of competition in the procurement process to protect ratepayers and achieve our critical State goals in a reliable and cost-effective manner, and we do so again through today’s action.”

The denied petitions were submitted by Empire Offshore Wind LLC, Beacon Wind LLC, Sunrise Wind LLC, and the Alliance for Clean Energy New York, Inc. (ACENY) related to four proposed offshore wind projects and 86 land-based renewable projects. These petitions sought adjustments to Renewable Energy Credit (REC) and Offshore Wind REC (OREC) purchase and sales agreements entered with the New York State Energy Research and Development Authority.

The purchase and sales agreements set the terms under which the projects will supply renewable power to the state.

Empire Offshore Wind LLC and Beacon Wind LLC, joint ventures between Equinor and BP, are set to develop the Empire Wind 1, Empire Wind 2, and Beacon Wind 1 offshore wind farms, generating approximately 3.3 gigawatts of renewable energy for New York. Sunrise Wind, comprised of Orsted and Eversource, is developing an 880 MW offshore wind project.

The Commission ultimately determined that the contract amendments sought by the petitions were not in the best interest of the State’s ratepayers. Granting the request to amend the contracts outside the competitive procurement process would have resulted in monthly bill increases of up to 6.7 percent for residential customers and up to 10.5 percent for commercial or industrial customers, depending on the service territory and level of relief provided.

The Commission emphasized its full support for the Climate Leadership and Community Protection Act, which establishes decarbonization requirements and ambitious renewable energy deployment targets. The Commission said it will continue to adhere to the Climate Act requirements, preserving competitive procurement processes, ensuring just and reasonable utility rates, and facilitating New York’s goal of having at least 70 percent of electric load served by renewable energy by 2030, developing 9,000 megawatts of offshore wind energy by 2035, and meeting statewide demand with zero emissions resources by 2040.

The petitions received significant comments from stakeholders both in support and opposition to granting financial relief. Supporters highlighted the State’s clean energy goals and argued that relief was necessary to stay on track in achieving those goals, while opponents expressed concerns about price increases for ratepayers and the potential disruption of the competitive process used to award these projects.

The petitions cited the effects of the COVID-19 pandemic, which exposed the projects to global and regional supply chain bottlenecks, high inflation, and increased capital costs driven by rising interest rates. The petitions also mentioned impacts related to the war in Ukraine, including increased demand for renewable energy and resulting shortages and price increases for key components and equipment.

Similar petitions submitted by Clean Path New York LLC for the Clean Path New York project and by H.Q. Energy Services (U.S.) Inc. for the Champlain Hudson Power Express Project are still under review by the Commission.

NYSERDA, which is responsible for leading the coordination of offshore wind projects, responded to the Commission’s order.

“NYSERDA recognizes the critical competitive principles articulated in today’s New York State Public Service Commission order,” said NYSERDA President and CEO Doreen M. Harris. “Based on this order and Governor Hochul’s direction, NYSERDA, as the administrator of the Clean Energy Standard, will act swiftly to continue advancement of large-scale renewable energy projects toward meeting New York’s Climate Act goals.”

Harris further emphasized NYSERDA’s commitment to a cost-effective and timely procurement and development of renewable energy projects on behalf of New Yorkers. NYSERDA will assess the impacts on the contracted portfolio and, in coordination with the Department of Public Service and the renewable energy industry, proceed with an accelerated procurement process that prioritizes competition, simplifies bid requirements, incorporates inflation indexing, and aligns with transmission planning initiatives. Additionally, NYSERDA will announce award decisions for its current offshore wind and land-based renewables procurements in the near future.

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