This post describes the comments submitted on the Climate Leadership and Community Protection Act (Climate Act) Draft Scoping Plan by the owner of PKG Equipment, Inc. outside of Rochester in Chili, NY. His concerns highlighted one of the transition issues that is not being considered by the Climate Action Council.
PKG Equipment is a second-generation, family-owned company. It is a manufacturer and service provider of equipment typically used in the finishing, chemical manufacturing, steel manufacturing and glass manufacturing industries. PKG Equipment was founded in 1969 by Sam Pontarelli, the current management team’s father, and two partners who sold their shares to him in the1970s. During the 1970s, the company began fabricating plating equipment using thermoplastics, and it purchased European plastic welding and forming machines in the early 1980s. PKG Equipment began manufacturing turnkey plating systems and also became a distributor for related equipment.
Stephen Pontarelli is the CEO and with a little bit of help from me prepared the following comments.
I live in the Rochester area and own PKG Equipment, Inc. that employs 25 people. Energy costs are a major consideration for my family and our business. I am submitting these comments because the Climate Action Council has not done a satisfactory job explaining what the Climate Act transition will cost, how it might threaten energy reliability, or how it will affect my business.
I have been unable to find any detailed cost information. What is the expected cost of electricity? I have seen articles that noted that energy costs in Germany have increased markedly as they implement a similar transition. What is New York going to do differently than those other jurisdictions that have seen cost increases?
I understand that the transition plan boils down to electrifying everything. I am particularly concerned about heating our manufacturing facility. It sounds like the preferred electrification approach is to use heat pumps. My understanding is that they only work well during the coldest periods of the winter if the structure is very well insulated, has improved window treatments, and reduces air infiltration. There are a number of considerations that make those improvements problematic. Will there be support available to upgrade our building’s insulation and windows? How am I supposed to minimize air infiltration at the loading dock? Also, our manufacturing process uses natural gas for our curing ovens and heat treating. Replacing that equipment alone would approach $1,000,000. That doesn’t include getting the appropriate amount of electricity to the building. We would need a ridiculous amount of electricity to run this equipment. Our small business can’t afford this transition.
I understand that the future electric grid is supposed to rely on intermittent wind and solar generating resources. I figured out that your scenarios for future implementation call for about 150% of the total existing generating capacity of the state, that land-based wind is supposed to increase by nearly an order of magnitude, and that battery energy storage capacity will be close to today’s fossil generating resources. Surely developing all those resources is going to be incredibly expensive so it seems certain that energy costs for my business and home will increase markedly. I think it is necessary to include a clear explanation of all the control measures proposed, the assumptions used to project the costs, and a description of the emissions reductions expected for the Draft Scoping Plan strategies.
There is another worrisome aspect of future energy resources. The Draft Scoping Plan mentions a zero-carbon firm resource as a necessary component. I think it is incredibly risky to rely on an unproven resource. Finally, I was asked to consider bidding on a component system for an offshore wind turbine project. I cannot imagine, based on my background and expertise, that all the components necessary for those systems will be available to be installed per the proposed schedule. At the same time, I have heard that there is considerable pressure to stop all investments in existing fossil fuel infrastructure. I am concerned that shutting down systems based on an unrealistic implementation schedule for a technology like offshore wind that has not developed the infrastructure to transport and install the turbines is a serious risk to reliability. Therefore, I recommend that implementation is conditional based on determining upfront standards of affordability and reliability once costs for the unproven zero-carbon firm resource are determined and the development issues associated with offshore wind are known so that a realistic schedule can be developed.
I am not willing to accept higher costs, lower standards of energy reliability, or limitations to my business operations unless there is a clear tangible benefit. I have read compelling arguments that the Draft Scoping Plan benefits are over-stated and that in fact the actual costs of the program far exceed the benefits. In that regard, I don’t understand what is meant when the costs and benefits are presented “relative to the Reference Case”. Given the fact that total New York State greenhouse gas emissions are less than the annual increase in global greenhouse gas emissions, the obvious conclusion is that upfront standards of affordability and reliability must be set such that the Climate Act transition does not do more harm than good to New York State.
Frankly when I have thought about the industrial transition from natural gas to electricity that will be mandated by the Climate Act, I thought mostly about big manufacturing companies. I have seen no sign that the Climate Action Council hasn’t been thinking the same thing. The fact is that PKG Equipment represents the smaller companies that do not use natural gas for most of their processes but only for a couple of pieces of equipment. Replacing that equipment will be a major burden for small companies. In addition, those processes will require a lot of power that will very likely require service upgrades for their building and depending on the location distribution system upgrades.
I know the Pontarelli family. They all are from New York, want to stay in New York, and, through their hard work, provide jobs for 25 people. They are representative of many other small companies throughout the state. I despair that the financial impositions of the Climate Act will force them and the other similar companies to leave New York in order to remain competitive with businesses outside of New York.