Reprinted from the New York Journal News, Sunday April 10, 2005

COMMUNITY VIEW

New York State’s Energy Programs in Jeopardy

by Edna Sussman

New York’s model energy programs are in danger of being eviscerated and must be saved. A revenue stream based on a surcharge to certain electricity users now directly funds the New York State Energy Research and Development Authority (NYSERDA) for the implementation of programs to foster energy efficiency and conservation and to develop renewable energy resources. A budget amendment recently delivered by the state legislature in its response to the governor’s budget requires that these monies go through the annual state budget appropriation process instead. The increasing demand for electricity in New York, the compelling reasons for moving towards energy diversity and independence, and the importance of protecting the environment, all require that the existing funding mechanism be preserved to safeguard NYSERDA’s programming.

NYSERDA’s energy programs have made New York State a national leader. The programs in their current form have a proven record. They have:

· achieved a state wide energy bill saving of $194 million annually, a number expected to rise to $380 million when the programs are fully implemented
· led to the creation and retention of 4,200 jobs
· equated to removing 203,000 cars from New York’s roadways
· helped prevent blackouts and supported grid reliability by reducing peak demand by the equivalent of three large power plants
· improved air quality by significantly reducing smog-producing nitrogen oxide, acid-rain producing sulfur dioxide and global warming CO2 emissions

These successes have been possible because NYSERDA had available to it the secure multi-year budgets necessary. Energy programs and projects typically have multi-year development cycles and require long term certainty for planning and implementation. Long-term predictability is also necessary to attract investment by the financial community and to develop the skilled work force needed to support the manufacture, installation and maintenance of new energy technologies. Subjection to the annual budget appropriations cycle, with its inherent uncertainty regarding the timing and level of funding, will dissuade such long term commitments and investment.

The devastating effect the funding change would have is highlighted by its inevitable impact on New York’s new Renewable Portfolio Standard program which was developed, after several years of extensive proceedings with the participation of dozens of stakeholders, to increase renewable energy’s share of the electricity generation in the state. The introduction of additional renewable energy in New York requires massive investment by renewable energy developers. Such investments can only be justified if long term purchase contracts are available. For example, one of the wind farms recently contracted for by NYSERDA pursuant to the RPS program is reported by its developer, PPM Energy, to cost over $300 million. This investment was to be made possible by the ten-year purchase contract NYSERDA awarded, a contract NYSERDA will not be in a position to offer under the new funding mechanism. Business will not invest capital in renewable energy projects of any scope in New York if the funds required for such projects are subjected to the vagaries and political uncertainties inherent in the annual budget appropriations process.

Moreover, if these funds were included in the general budget, there would be a real possibility, notwithstanding any asserted intentions to the contrary, that the funds would be diverted to other purposes. In other states, including Connecticut and Wisconsin, which have adopted this approach to funding energy efficiency programs, a significant portion of the energy efficiency program funding has in fact been diverted to provide general revenues.

The press reports suggest that the legislative change was enacted because of dissatisfaction with the mismanagement of some state authorities. This is a classic case of throwing away the baby with the bath water. No negative study of NYSERDA was issued. Quite the contrary, NYSERDA is highly transparent. Its programs are evaluated through several mechanisms, including annual reviews by an independent entity, periodic reviews by an independent advisory group, reviews by the Pubic Service Commission in proceedings open to public and stakeholder participation, and extensive periodic audits by the State’s Comptroller’s office. Indeed, the Comptroller has recommended that other agencies adopt some of NYSERDA’s self-assessment techniques.

No analysis by the legislature of the impact of subjecting energy efficiency and renewable energy programming funds to the annual budget appropriation process has been released and it does not appear that any was conducted. Such a cavalier approach to energy, an issue of the highest priority given the growing need for electricity, the global situation, the high cost of energy and the very poor quality of the air in many parts of New York, should not be tolerated and the budget amendment with respect to NYSERDA’s funding should not survive the budget process.

The writer is the President of Sustainable Westchester

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