Ellenbogen on the Comptroller Audit of the Climate Act

On July 16, 2024 the New York State Comptroller Office released an audit of the New York State Energy Research and Development Authority (NYSERDA) and Public Service Commission (PSC) of their implementation efforts for the Climate Leadership and Community Protection Act (Climate Act) titled Climate Act Goals – Planning, Procurements, and Progress Tracking.  The key finding summary states: “While PSC and NYSERDA have taken considerable steps to plan for the transition to renewable energy in accordance with the Climate Act and CES, their plans did not comprise all essential components, including assessing risks to meeting goals and projecting costs.”  As much as I would like to do a post on this, I am stretched too thin.  Fortunately, Richard Ellenbogen sent along his thoughts that I have incorporated into my overview of the background and context of this report.

Ellenbogen is the President [BIO] Allied Converters and frequently copies me on emails that address various issues associated with the Climate Act I have published other articles by Ellenbogen and collaborated on a position paper on New York City’s Local Law 97 with him. There are only a few people in New York that are trying to educate people about the risks of the Climate Act with as much passion as I am, but Richard certainly fits that description.  He comes at the problem as an engineer who truly cares about the environment and how best to improve the environment without unintended consequences.  He has spent an enormous amount of time honing his presentation summarizing the problems he sees but most of all the environmental performance record of his business shows that he is walking the walk.  

Overview

The Climate Act established a New York “Net Zero” target (85% reduction in GHG emissions and 15% offset of emissions) by 2050.  It includes an interim 2030 reduction target of a 40% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council (CAC) was responsible for preparing the Scoping Plan that outlined 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 electrification strategies.  That material was used to develop the Draft Scoping Plan outline of strategies.  After a year-long review, the Scoping Plan was finalized at the end of 2022.  Since then, State agencies and the legislature have been attempting to implement the plans through regulations, PSC orders, and legislation. 

The New York State Comptroller Office audit of NYSERDA and PSC is available in  Climate Act Goals – Planning, Procurements, and Progress Tracking as a pdf format file.  The Audit Highlights section of the report lists the key findings and key recommendations:

Key Findings

While PSC and NYSERDA have taken considerable steps to plan for the transition to renewable energy in accordance with the Climate Act and CES, their plans did not comprise all essential components, including assessing risks to meeting goals and projecting costs. Specifically:

• PSC is using outdated data, and, at times, incorrect calculations, for planning purposes and has not started to address all current and emerging issues that could significantly increase electricity demand and lower projected generation, such as increased push to transition to electric vehicles by 2035 and the cancellation or delay in renewable energy projects. Between 2005 and April 2023, 12% of contracted large-scale renewable projects were canceled. 
• The costs of transitioning to renewable energy are not known, nor have they been reasonably estimated. Moreover, funding sources to cover those costs have not been identified, leaving the ratepayers as the primary source of funding. The lack of alternative funding sources adds additional risk to whether the State can meet its goals timely. Data shows utility costs have already risen sharply over the last two decades and more New Yorkers are having difficulty paying their utility bills. 
• PSC has taken steps to address some risks and issues; however, it has not yet begun to formally review progress toward Climate Act goals with updated generation and electricity demand forecasts. While PSC noted it has until July 2024 to begin this assessment, waiting until that point to fully review all efforts and costs of the transition to renewable energy increases the risk that Climate Act goals will not be met within the established time frame.

Finally, a formal backup plan has not been established in the event Climate Act goals are found to be unachievable within the prescribed time frames, other than PSC suspending or modifying the obligations under the Climate Act and relying on the continued use of fossil fuels to generate electricity until sufficient renewable electric generation is developed. However, continuing to use fossil fuels as a backup plan would delay emission reductions and increase the burden on ratepayers by forcing them to continue to support fossil-fuel generation that otherwise could be retired—including the additional cost of the infrastructure to safely transport the fossil fuels to where they will be used to generate energy.

Key Recommendations

•            Begin the required comprehensive review of the Climate Act, including assessment of progress toward the goals, distribution of systems by load and size, and annual funding commitments and expenditures.

•            Continuously analyze the existing and emerging risks and known issues to ensure they are evaluated and addressed to minimize impact on the State’s ability to meet Climate Act goals.

•            Conduct a detailed analysis of cost estimates to transition to renewable energy sources and meet Climate Act goals. Periodically update and report the results of the analysis to the public.

•            Assess the extent to which ratepayers can reasonably assume the responsibility for covering Climate Act implementation costs. Identify potential alternative funding sources.

Note that the key finding that states that the PSC “has not yet begun to formally review progress toward Climate Act goals with updated generation and electricity demand forecasts.”  It goes on to say that “While PSC noted it has until July 2024 to begin this assessment, waiting until that point to fully review all efforts and costs of the transition to renewable energy increases the risk that Climate Act goals will not be met within the established time frame.”  A couple of weeks ago the PSC released the Clean Energy Standard Biennial Review Report.  I do not think that report uses “updated generation and electricity demand forecasts” but it does conclude that the 2030 goal requiring 70% of the electricity supplied to the grid come from renewable sources will not be met without extraordinary efforts.

In addition, the biennial report does not address costs.  It states that:

Appendix A also provides CES funding and expenditures for recent years through 2023. Forward-looking cost estimates for the CES and other costs associated with pursuit of the CLCPA goals are provided separately in the Department of Public Service (DPS) Annual CLCPA Report.  The most recent such report was filed on July 20, 2024. Case 22-M-0149, Proceeding on Motion of the Commission Assessing Implementation of and Compliance with the Requirements and Targets of the Climate Leadership and Community Protection Act, New York State Department of Public Service First Annual Informational Report on Overall Implementation of the Climate Leadership and Community Protection Act (filed July 20, 2024). The next report is expected to be filed later in 2024.

In other words the biennial reports are not going to provide the cost data that the Comptroller audit recommends.

Ellenbogen Commentary

The following was included in an email from Ellenbogen on 17 July 2024.  I have made a few edits for consistency with this article and have added a couple of annotations.

Regarding DiNapoli’s request for more transparent information mentioned in the audit report, he is correct but he is directing his arrows at the wrong targets.  While I have major issues with some of the things that NYSERDA has done over the past couple of years, primarily their silence on the CLCPA, the PSC and NYSERDA are not the ultimate culprits here.  At the BCNYS Renewable Energy Conference, I asked the NYISO speaker why they were screaming between the lines and not just coming out and saying that the entire process is devoid of reality because the people that need to hear it can’t, or are unwilling to, read between the lines.  The NYISO says that, “Because we shut down gas generation too quickly, the system is compromised and has inadequate excess generation during times of extremely high load” which translates to, “If we have too many hot days in a row, there is going to be a blackout and people are going to die.”

In their 2022 6 GW storage report, NYSERDA stated that to get the system to work would require 1000+ hours of storage and the cost at the time was $560 per KWh.  Doing the math, that was $3.36 Trillion dollars for storage that would last only ten years.  That doesn’t include the renewables and transmission that would be required or the hundreds of billions of dollars to electrify the buildings.  The actual cost will be at least ten times NY State’s annual budget, if not more.   It will impose a tax burden on every New Yorker that none of them will be able to afford.  NYSERDA put the number out there, but everyone ignored it and just plowed along as though they could somehow overcome that little detail.  The cost also ignores logistical issues that I have mentioned on numerous occasions.

The problem with agency cost estimates is that they are buried in different reports. The Scoping Plan that outlined how to “achieve the State’s bold clean energy and climate agenda” is the logical place to provide comprehensive cost estimates for all the strategies proposed to achieve the Climate Act mandates.  However, the cost documentation is incomplete, sparsely referenced, and misleading, in short it does not provide the necessary information for estimating ratepayer costs to New Yorkers. 

This is a problem because New York Public Service Law  § 66-p (4), “Establishment of a renewable energy program”, states: “The commission may temporarily suspend or modify the obligations under such program provided that the commission, after conducting a hearing as provided in section twenty of this chapter, makes a finding that the program impedes the provision of safe and adequate electric service; the program is likely to impair existing obligations and agreements; and/or that there is a significant increase in arrears or service disconnections that the commission determines is related to the program”.  It is only possible to determine the impact on ratepayers in arrears or service disconnections if full cost estimates are available.  The Comptroller audit appropriately addresses this shortcoming with the recommendation to “Conduct a detailed analysis of cost estimates to transition to renewable energy sources and meet Climate Act goals” and “Periodically update and report the results of the analysis to the public.”

I agree with Ellenbogen’s following explanation why this information is not available:

No one wants to put the actual number into the public domain because it is so astronomical that the minute it was announced, the project would implode, and the political fallout will be staggering.  Further, I’m sure that the lesson of what happened to Justin Driscoll of NYPA when he told the truth about the process is fresh in everyone’s mind.  The acolytes of this process wanted to hang him upside down from a light pole, as was done to Mussolini.  He was just telling them the truth but that evidently doesn’t mean anything in NY State.  No sane person wants to put that number down on paper and get pilloried for it and called a liar.  Everyone at the state level that knows better is required by law to implement this ridiculous plan that can’t be implemented.  So, they can tell the truth and get fired or they can duck and cover and hope that the law gets changed when it becomes brutally obvious how flawed it really is.  In the interim, everyone is finger pointing, including the state comptroller.

The real targets for DiNapoli should be the Climate Action Council and the legislature that proposed this insanity based upon fantasies with no grounding in reality.  No realistic cost analysis was ever done prior to voting to pass the Climate Act.  The cost analysis for the Draft Scoping Plan was inadequate but the Climate Act Scoping Plan was still approved and that is the fault of the Climate Action Council (CAC).  The few numbers that I have seen in the Climate Act Scoping Plan are so devoid from reality that they would be funny if the situation wasn’t so serious.   You can make stuff up as the Climate Action Council did, but with math and physics, reality will eventually rear its ugly head and that is what is happening now.

In a second email Ellenbogen continued:

The issue isn’t that the PSC and NYSERDA aren’t planning properly.  If you look at the three key findings quoted from the Audit highlights above, they are unachievable under any circumstances.  It wouldn’t matter what NYSERDA and the PSC did.  They can’t pull rabbits out of hats last I checked.

There is a Climate Action Council mandate (section 16 of § 75-0103) to consider efforts at other jurisdictions: “The council shall identify existing climate change mitigation and adaptation efforts at the federal, state, and local levels and may make recommendations regarding how such policies may improve the state’s efforts”. Ellenbogen points out the there are lessons to be learned at other jurisdictions that have attempted to decarbonize using wind and solar that have been ignored.  Why?

The math behind the solar and wind utility system doesn’t work.  It hasn’t worked anywhere it has been tried and the time frames have been measured in decades to get to a fraction of a renewable system, not 10 years or 20 years like the CLCPA requires.  Germany is 34 years in, controls the banking system in their jurisdiction which NY State does not, and they’ve only gotten to 34% renewables after about 34 years with energy costs twice those of France next door.  Their politicians are paying for that.  The costs are rising because they are being required to install transmission that only operates 15% of the time for solar or 30% for wind where it would operate 93% of the time for fossil or nuclear.  That increases the transmission cost per megawatt-hour.   Offshore wind bids are coming in at three times the price of current generation.  Projects are being canceled because of high transmission costs and material costs.  Building electrification is prohibitively expensive.  How can you plan for that?  

Why didn’t the legislature request a cost analysis prior to passing the bill?  Why didn’t the Climate Action Council do a cost analysis of what they were proposing?  It’s because it was driven by a couple of college professors that have absolutely no understanding of procurement, energy, economics, or basically anything else in the real world.  In their minds, no cost was too high to eliminate fossil fuels from the state.  The question for politicians today is whether spiraling energy costs brought on by this bill are going to make re-election more difficult.

The net-zero transition plan requires “Distributed Emission Free Resources” or DEFR’s that don’t exist in the present day aside from nuclear and that is a dirty word in NY State.  Even if the State made the rational decision to decarbonize the electric sector with nuclear instead of wind and solar, it would also take about 30 – 40 years to build enough nuclear capacity to meet the state’s needs if they started today.  Waiting for an alternative new technology to fulfill the DEFR requirement will take even longer.  None of these time frames fits within the CLCPA mandate.

The only mistake that the PSC and NYSERDA made was not speaking up in 2019 before this mess was passed but Cuomo was ruling with an iron hand at the time.  What makes this all so senseless is that nothing NY State does is going to impact Climate Change.  I’m not saying that we should do nothing, but we should be intelligent in our planning.  Saying that NY State is an energy leader is a joke.  We’re only a leader in chasing our businesses to other states where they are assured of an adequate energy supply.  In 20 years NY State is going to be an example of what not to do.

The backup plan for the near term to ensure sufficient generation would require the construction of fossil fuel plants which will draw the ire of the lunatic fringe that has no understanding of energy or math.  I gave them a backup plan in comments I submitted to the record for Department of Public Service Proceeding 15-E-0302 but numerous groups will fight against that.  When the level of desperation gets high enough, they will be implemented.  Unfortunately, there may have to be a major blackout to bring people to their senses.

Conclusion

The Comptroller Climate Act Goals – Planning, Procurements, and Progress Tracking and the PSC Clean Energy Standard Biennial Review Report both acknowledge that Climate Act implementation is not going as planned.  I believe Ellenbogen agrees with me that all the recommendations in the audit report should be implemented as soon as possible:

•            Begin the required comprehensive review of the Climate Act, including assessment of progress toward the goals, distribution of systems by load and size, and annual funding commitments and expenditures.

•            Continuously analyze the existing and emerging risks and known issues to ensure they are evaluated and addressed to minimize impact on the State’s ability to meet Climate Act goals.

•            Conduct a detailed analysis of cost estimates to transition to renewable energy sources and meet Climate Act goals. Periodically update and report the results of the analysis to the public.

•            Assess the extent to which ratepayers can reasonably assume the responsibility for covering Climate Act implementation costs. Identify potential alternative funding sources.

Richard Ellenbogen and I have long argued that a clear and transparent accounting of all the costs to meet the Climate Act goals is not available.  It is heartening to see that the Comptroller audit agrees with our position that this information is necessary.  The biennial review report concludes that the 2030 electric grid goal for 70% renewable energy is not likely.  It is time for New York State to acknowledge these problems should be resolved before continuing.  I recommend a pause in implementation until all the recommendations in the audit report are implemented and a feasibility study reconciles the electric system projections in the Scoping Plan and the New York Independent System Operator resource adequacy analyses.

Ellenbogen sums up the situation:

There is nothing happening now that I didn’t tell them would happen five years ago.  I’m not Nostradamus.  I just know how to count.