The Climate Action Council is responsible for the framework of the New York Climate Leadership and Community Protection Act (Climate Act) transition plan to meet the ambitious net-zero goal by 2050. I recently published an article explaining why I think that they have failed to address key overarching issues. This post illustrates my specific concerns related to affordability based on a more thorough review of the Climate Action Council’s discussions.
Everyone wants to do right by the environment to the extent that they can afford to and not be unduly burdened by the effects of environmental policies. I submitted comments on the Climate Act implementation plan and have written over 250 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good. The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.
Climate Act Background
The Climate Act establishes a “Net Zero” target (85% reduction and 15% offset of emissions) by 2050. The Climate Action Council is responsible for preparing the Scoping Plan that will outline how to “achieve the State’s bold clean energy and climate agenda.” The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the strategies. That material was used to write a Draft Scoping Plan that was released for public comment at the end of 2021. In my recent article I provided a detailed explanation of the plan for the rest of the year and described the lost opportunities for the Council to provide meaningful guidance for the rest of the transition plan implementation. I will only provide highlights here.
The meeting presentation for the 5 December 2022 Climate Action Council meeting described the remaining steps for 2022. That meeting was the last chance for any desired revisions to the Scoping Plan draft. The last draft will be circulated the week of December 12 and the Council will vote on it on December 19, 2022. Next year the Department of Environmental Conservation (DEC) will promulgate enforceable regulations to ensure achievement of the Statewide GHG emission limits. This is a very ambitious schedule and it will be hampered by the fact that the Scoping Plan is only a framework. It does not include a feasibility analysis so it is not clear how regulations can be promulgated when the implementation risks to reliability, affordability, and the environment are unknown.
In my previous article I noted that I was very disappointed by the Climate Action Council response to comments. There is no sign that the Hochul Administration considered the comment period as anything but a bothersome obligation that had to be fulfilled. It was certainly not considered an opportunity to improve, correct, or clarify the Scoping Plan. Because there were over 10,000 unique comments submitted, the Administration used Agency staff to review the comments. Staff organized the comments into themes for presentation to the Council. Summaries of public comments by theme were presented to the Council at five meetings this fall. That is a tremendous amount of information that I have just started looking at in detail.
Affordability Discussion
In my previous article I argued that the Hochul Administration’s leadership on the Climate Action Council inappropriately catered to the ideological biases of the members and, as a result, focused on relatively minor details at the expense of significant overarching issues. I described example issues associated with the lack of response to my personal comments and the lost opportunity to provide meaningful guidance for issues associated with reliability, affordability, and cumulative environmental impacts. My over-riding concern is that conditional guidance is necessary for safe regulatory implementation. This post addresses more detailed issues associated with affordability and provides some insight into the Hochul Administration’s response to public comments.
The discussion of the public stakeholder comments had four components. The meeting presentations had slides that described the public comment themes. An Agency staff person gave an overview of those slides and then explained the Agency staff recommendations to modify the Scoping Plan draft to address those themes. The final component of this review of public comments was a discussion with the Climate Action Council members.
I am going to limit this affordability discussion to the electric system chapter of the Draft Scoping Plan although I know that the reliability issue was discussed elsewhere. The Electricity feedback discussion came up at the 10/25/22 Climate Action Council Meeting. The following slide is the primary instance where affordability is mentioned.
In her presentation on the themes, Jessica Waldorf described the summary electricity themes developed by Agency staff using this slide as part of the presentation. My general impression of the summaries to the Council is that there was clear bias in the theme presentations – anything inconsistent with narrative was disparaged, downplayed, or ignored. In this example, even though affordability was the lead issue in the summary theme slide it was not mentioned in her overview. She summarized phasing out fossil fuel power generation infrastructure without mentioning affordability. The consistent narrative of the Hochul Administration is that the Climate Act transition does not have any affordability issues and it was ignored here. Administration priorities such as the bitcoin mining ban and the reuse of fossil plant sites were highlighted. According to the minutes:
Phasing out fossil fuel power generation infrastructure, including a ban on bitcoin mining and reusing existing fossil fuel power plant sites for battery storage or low-carbon fuel networks, support and opposition to nuclear generation, and continuing the Tier 2 program to support existing hydropower and renewables to ensure baseline renewable generation.
To her credit the description of the Staff recommendations for changes to the draft Final Scoping Plan did address affordability as the Minutes note:
The responsible and equitable phase out of fossil fuel generation facilities by adding and clarifying text regarding the potential repurpose of fossil fuel generation facilities, coordinating with the New York State Reliability Council and the New York State Independent System Operator in the reliability planning process, prioritizing the retirement or repurposing of fossil fuel generating facilities in Disadvantaged Communities, and maintaining energy affordability and reliability during decarbonization.
On the other hand, the slide used for the presentation put affordability as the last topic.
The final component of the Climate Action Council public comment discussion is Agency Staff response to comments from Climate Action Council Members. Affordability was the first topic raised. According to the minutes:
In response to an inquiry from Dr. Shepson as to the definition of “energy affordability”, Ms. Waldorf responded that the Gas System Transition Subgroup defined it to be consistent with NYS Public Service Commission policy which ensure that consumers don’t suffer from more than 6% of their income on their energy burden.
In response to a comment and inquiry from Raya Salter regarding energy affordability, believing that using the word “maintaining” is a misnomer given her belief that New York is among the most expensive energy cost states, and whether the Inflation Reduction Act opportunities have been considered to reduce energy affordability burdens, Ms. Waldorf responded that the recommendations do address the possibility of price volatility, including the potential for federal funding to mitigate price volatility. Mr. Mas noted that the final Integration Analysis will include references to the potential opportunities from the Inflation Reduction Act within each of the sectors. Ms. Salter noted the importance of keeping equity and justice at the center of the price volatility considerations.
Affordability Lost Opportunity
In my previous post about the Climate Action Council’s lost opportunities to responsibly lead the process, I noted that every jurisdiction that has tried to implement a similar transition plan has seen significant price increases of electricity (see the following figure) The missing piece in the affordability presentation and the apparent direction of the final Scoping Plan is completely ignoring the possibility that the costs of the transition could be so high that the implementation on the Climate Act mandated schedule may not be feasible. My comments raised the concept that implementation should be conditional. If the transition exceeds the affordability, reliability, and environmental impact thresholds determined by the Council that re-assessment at least is appropriate. In my opinion this decision could extend to a full stop on the transition until the technology catches up with the ambition.
In my previous article I said that the Climate Act Council should have discussed affordability but reviewing the documentation that came out after I had drafted the article, they did discuss it. However, the discussion was inadequate because it missed the main point.
Dr. Shepson asked the appropriate question: what does “energy affordability” means in quantitative terms. Waldorf responded that the Gas System Transition Subgroup defined maintaining energy affordability to be consistent with New York State Public Service Commission (PSC) policy which ensures that consumers don’t suffer from more than 6% of their income on their energy burden. Raya Salter said “maintaining” is a misnomer because she believes that New York is among the most expensive energy cost states, so “It is not affordable now.”
As has been the case with every aspect of the Climate Act transition I have looked at in detail, this is more complicated and has implications beyond the pronouncements from the authors of the Scoping Plan. The PSC Energy Affordability Policy (EAP) states: “an energy burden at or below 6% of household income shall be the target level for all 2.3 million low-income households in New York” per Case 14-M-0565, Order Adopting Low Income Program Modifications and Directing Utility Filings, p. 3 issued May 20, 2016. Department of Public Service Proceeding, Case 14-M-0565 – Proceeding on Motion of the Commission to Examine Programs to Address Energy Affordability for Low Income Utility Customers, sets up a Percentage of Income Payment Plan. In the New York plan funding is provided to low-income households such that their energy burden is kept at or below 6%. The relevant problem is that there is an upper limit on program funding. If electricity costs increase too much than that limit will be exceeded and more people will have energy burdens exceeding the 6% of household income policy goal.
Shepson and Salter almost got to the main point but fell short. It is not sufficient to just reference the PSC Energy Affordability Policy. The Climate Action Council should have discussed the implications of the metric and whether it is appropriate for this application. The discussion should have addressed the following. It is not clear whether all low-income households comply with that metric now. What is the status of the funding relative to the upper limit on program funding? If in the future that metric is exceeded then what? There also is a presumption that energy poverty is only a problem with lower income households but the numbers affected are tied to the definition of an acceptable energy burden. The Council should have discussed these over-arching issues and current state policies explained to the Council. I also believe that the State should track the status of energy poverty burden current status numbers. It is not available as far as I can tell on the Open NY website that is the supposed repository of all New York quantitative data.
I submitted the following comment on the Draft Scoping Plan that addressed these issues. Apparently, it did not rise to the level where it was a theme that should have been addressed.
Because there are limitations to existing technology the Final Scoping Plan must incorporate conditions based on reliability and affordability. The Climate Action Council should define the criteria for reliability and affordability and then establish conditions incorporating those criteria. For example, a recent legislative proposal included a requirement for state agencies to identify policies to ensure affordable housing and affordable electricity (defined as electricity costs no more than 6% of a residential customer’s income) for all-electric buildings. Alternatively, Addressing Energy Poverty in the US offers other possible criteria:
“According to the U.S. Department of Energy, the average energy burden for low-income households is 8.6%. That is three times higher than for non-low income households, which is about 3%. And according to the Kleinman Center for Energy Policy at University of Pennsylvania, more than one-third of US households are experiencing “energy poverty,” having difficulty affording the energy they need to keep the lights on and heat and cool their home.”
Once the Council has established the appropriate affordability metric and the current status of that metric has been determined, then a condition using the metric can be established. For example, if the criterion is that the average energy burden cannot increase above the average and the Integration Analysis projects that a certain mitigation strategy could lead to an increase above the average then that strategy should not be implemented until the costs come down or a subsidy can be set up to prevent exceeding the criterion.
Ultimately, I believe the Council should have spent more time discussing what the quantitative measure of affordability should be. It is not clear when, at the end of 2021, there were 1.267 million utility accounts in arrears totaling $1.7 billion whether the PSC Energy Affordability Policy is working and how well it represents the current state of utility costs. Raya Salter is correct saying there is a problem now and even maintaining current levels is unacceptable.
I believe that the Council should establish an affordability metric and provide status information. If the costs exceed some acceptability threshold that they define, then I believe there should be a response. I believe that the tremendous costs of the Climate Act transition will exceed any reasonable threshold for acceptability.
I am also disappointed that the Council did not work with the Climate Justice Working Group on the topic of affordability for those least able to afford energy price increases. For all the social justice concerns addressed why wasn’t prevention of regressive energy price increases on disadvantaged communities a priority. The poor will be hit hardest by any energy price increase and there was nary a peep of concern. There should have been a push to provide the energy poverty metric determined by census tract so that any disproportionate impacts on disadvantaged communities could be tracked and addressed.
Conclusion
The affordability issue is a prime example of the Hochul Administration’s failure to address any issues raised that are inconsistent with their narrative. In this case the narrative is that the costs of inaction are greater than the costs of action and that cost impacts to will be small and manageable. This flies in the face of the results at all other jurisdictions that have tried to implement something similar.
I am disappointed that my comments on affordability did not rise to the level of a theme whereby they warranted a mention in the Agency Staff presentation on public comments received. More concerning is that the concerns of the Climate Action Council members were given short shrift. Shepson and Salter almost got to the core issue that there are “what if” questions related to the 6% PSC policy but in the rush to meet the deadline they got an answer that was not responsive. The Stafff answer does not address how to quantify reliability vis-à-vis the PSC policy and does not necessarily address the on-going problem of energy affordability.
Pragmatic Environmentalist of New York 