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Good morning and welcome to the weekly Monday edition of the New York & New Jersey Energy newsletter. We’ll take a look at the week ahead and look back on what you may have missed last week.
QUICK FIX
ANOTHER BLOW FOR EQUINOR — POLITICO’s Marie J. French: Gov. Kathy Hochul dealt another blow Friday to the state’s leading offshore wind developer just a week after the company was rejected for increased payments for its three large-scale projects. The Democratic governor on Friday vetoed a bill that Equinor lobbied vociferously for to allow the city of Long Beach to permit a transmission line for one of its state-contracted offshore wind projects through a park.
The contentious bill led to an ugly debate in the state Assembly with the Republican lawmaker representing the area challenging it on the basis of local opposition, but Democrats passed it despite accusations of violating “home rule” principles. But Hochul said local leaders should have the final say and rejected the bill. “It is incumbent on renewable energy developers to cultivate and maintain strong ties to their host communities throughout the planning, siting and operation of all large-scale projects,” Hochul wrote in a veto message. The Long Beach city council “has made clear that, while it supports the State’s efforts to transition from the use of fossil fuels, it would not support or authorize any alienation of parkland in furtherance of this project.”
Equinor, in partnership with BP, has three of the four offshore wind projects under contract with NYSERDA but has warned it may cancel those agreements because project costs have risen dramatically since the deals were inked. The Public Service Commission, in a decision supported by Hochul, last week rejected a request for bigger subsidies from Equinor and other renewable developers.
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Here’s what we’re watching this week:
TUESDAY
— A joint New York legislative hearing on packaging waste reduction is held, 9:30 a.m., Hearing Room C, LOB, Albany.
— NYSERDA holds a public stakeholder meeting to gather input on the proposed criteria for determining cost-effectiveness of changes to the Energy Conservation Construction Code of New York State (Energy Code) [PDF], 6 p.m., Medgar Evers College – Founders Auditorium, 1650 Bedford Avenue, Brooklyn.
— New York DEC holds a virtual information session on a funding opportunity for urban and community forestry projects in disadvantaged communities, 1 p.m.
THURSDAY
— The Alliance for Clean Energy New York holds its fall conference, Albany Capital Center.
— NYSERDA holds a public stakeholder meeting to gather input on the proposed criteria for determining cost-effectiveness of changes to the Energy Conservation Construction Code of New York State (Energy Code) [PDF], 6 p.m., webinar.
Around New York
— Newsday covers the fallout of the state’s decision to reject cost increases for New York’s contracted offshore wind projects.
— The EPA is cracking down on lead fuel for small planes.
— After a major pipe break, Watertown continues to face water supply issues.
— Concerns are being raised about Hudson River shipping anchorage rules, again.
— A mudslide raised concerns about train service in Westchester County.
What you may have missed
ORSTED’S NOT-SO-GUARANTEE — POLITICO’s Ry Rivard: In recent weeks, the company expected to build New Jersey’s first offshore wind farm has sent or appeared to guarantee the state $300 million — a sign that, amid a bumpy road for the industry, it still intends to build the project.
But that money isn’t all a sure thing. In particular, a $100 million guarantee that energy company Orsted made this month to build the wind farm, known as Ocean Wind 1, includes several ways for the company to avoid making the payment.
Even though the New Jersey Board of Public Utilities has publicly described the payment as irrevocable, the four-member board last week approved an agreement that includes loopholes, including one that is hidden from the public by redactions in a board-approved deal.
The $100 million was one of the key things lawmakers and Gov. Phil Murphy’s administration obtained earlier this year before they would approve a law to save Ocean Wind 1 from financial uncertainty. That law allows Orsted to keep hundreds of millions of dollars in federal tax incentives that the company otherwise would be required to pass along to state utility customers.
CLEANUP BEGINS AT LIBERTY STATE PARK: The New Jersey Department of Environmental Protection and the Army Corps of Engineers on Wednesday celebrated the start of their work to clean up some 240 acres of polluted land in the heart of the state’s most visited park.
At a ceremonial groundbreaking, officials hailed the cleanup, which is the start of a massive redo of the Liberty State Park. About 40 percent of the park has long been off limits because of the legacy pollution, including unexploded World War I-era ordnance. The Jersey City park, with sweeping views of Manhattan, New York Harbor and the Statue of Liberty, has long been neglected. The park redo also represents a calming of tensions between environmental groups and allies and lobbyists of billionaire Paul Fireman, who owns an adjacent golf course and has previously advanced his own plans for the park. Some of his allies offered praise for the ground breaking, in a sign of the easing of those tensions. a Fireman-backed group, the People’s Park Foundation, praised the cleanup. — Ry Rivard
MULTIPLE INTERVENORS DISPATCH: State officials told large energy users who could see costs rise significantly under New York’s planned cap-and-trade program that ensuring industries don’t decamp from the state is a key priority. “It’s not negotiable that we need to prevent leakage of industrial manufacturing and other economic activity,” said NYSERDA’s director of policy and analysis Vlad Gutman-Britten at the Multiple Intervenors annual meeting at the Albany Capital Center on Wednesday. The cap-and-invest program is still targeted to begin in 2025, with “leanings” expected to be shared with the public later this year and final regulations sometime in 2024. The first compliance deadline for covered entities would likely be 2026, “assuming that we stick to this timeline, which is an ambitious one, I will say,” said Jon Binder, deputy commissioner at the Department of Environmental Conservation for Climate Change, Air Resources and Energy.
Independent Power Producers of New York president and CEO Gavin Donohue related the proposal to the Regional Greenhouse Gas Initiative for the power sector and outlined priorities for the incumbent generators he represents as the state works on the cap-and-trade program. Donohue said there are lots of questions about how the state will deal with costs for large energy users while spurring emission reductions. “There’s a political fallout if allowance prices get too high,” he said. But “we need to make sure whatever program is in place, if you believe in getting to this clean energy standard and adhering to the goals, you need to make the number high enough, so that you actually get things built that the law requires.”
The panel on cap-and-invest also featured comments from Jim Hanley, a fellow at the conservative-leaning Empire Center whose position has been partly funded by the home heating oil industry. Hanley has been critical of the climate law goals, raising concerns about the costs and feasibility. “I think ultimately the law will be changed because it can’t be achieved, and because I don’t think that affordability really can be accomplished,” Hanley said.
The state’s independent grid operator has pushed for a carbon price in the electric market for years, and New York Independent System Operator president and CEO Rich Dewey said they’re supporting an economy-wide program since it would be more effective. “I don’t sense that there’s a canned, predetermined answer. They want it to be as effective as possible, but they’re also obviously very concerned about affordability,” Dewey said of the state agencies. “When you think about the [climate law] and what it’s going to take to be successful or what the biggest risks of the overall policy program are, it’s a reliability event that calls into question the integrity of the system or its costs that are just so high that people can’t afford it.” — Marie J. French
TRANSMISSION LINE INFLATION ASKS PENDING: The New York Public Service Commission still faces two requests for contract adjustments from developers of two transmission lines contracted to bring clean energy into New York City. The pending petitions from developers of Clean Path and the Champlain Hudson Power Express were largely predicated on the requests from offshore wind and onshore renewable developers being granted. That makes their approval appear unlikely based on the principles of competitive solicitations reaffirmed by the commission last week.
The developers sought higher payments for Tier 4 renewable energy credits funded by ratepayers for different reasons. Clean Path NY, which has a longer time horizon and is still in the permitting phase, asked for an increase based on contracted Tier 1 renewables getting higher prices. The transmission line, backed by renewable developer Invenergy, NYPA and energyRe, will carry electricity linked to in-state renewables into New York City with NYPA’s pumped storage facility to provide firm capacity. Because contracts with renewable projects were linked to the Tier 1 prices, Clean Path asked for an increase if the onshore developers were granted higher prices. The Clean Path developers are reviewing the order, Amy Varghese, vice president of Clean Path NY External Affairs said in a statement. “The Clean Path NY team is continuing to advance this critical project in service of New York’s urgent energy reliability and resiliency needs,” she said. “It is imperative that the renewable generation projects included in Clean Path NY and the broader industry across New York are stabilized swiftly for the health, safety, and wellbeing of our communities and the integrity of state’s electric grid.”
The Champlain Hudson Power Express is further advanced and currently under construction. A spokesperson did not respond to a request for comment beyond referring to the PSC’s press release on last week’s decision, which simply says both transmission requests are pending. The Department of Public Service deadline for comments on Champlain Hudson’s request is Nov. 20. — Marie J. French
OIL MAJORS MOVE TO DISMISS NJ CLIMATE SUIT: Oil companies are moving to dismiss New Jersey’s lawsuit alleging the fossil fuel industry deceived the public about climate change. The lawsuit, filed a year ago in state Superior Court in Mercer County, resembles other lawsuits that have been filed by states and cities across the country, including a recent high-profile case brought by California. While there are elements of New Jersey law that could give the state more leverage there, the oil companies, along with an industry trade group, argue the case should be dismissed for involving issues far too big for state court.
“New Jersey’s courts lack the authority to regulate lawful activity beyond the state’s borders,” said Theodore J. Boutrous Jr. of Gibson, Dunn and Crutcher, an attorney for Chevron, which filed on behalf of other major oil companies, as well as the American Petroleum Institute, the industry trade group. “The U.S. Constitution precludes New Jersey from applying its state laws to resolve disputes over interstate and international conduct.”
The state Attorney General’s Office did not immediately reply to a request for comment. When the lawsuit was filed last fall, Attorney General Matthew Platkin said it was “long overdue that the facts be aired in a New Jersey court, and the perpetrators of the disinformation campaign pay for the harms they’ve caused,” which the lawsuit described as sea-level rise, floods, heat waves and many more problems associated with human-caused climate change. — Ry Rivard
NYSERDA’s NEXT STEPS — POLITICO’s Marie J. French: Gov. Kathy Hochul’s administration has a challenging path ahead to keep the state’s ambitious renewable energy goals within reach and cement her green credentials. The Public Service Commission’s order last week rejected requests from clean energy developers for additional subsidies, setting the stage for companies to cancel their contracts if they can’t see a profitable path forward. The commission largely left the next steps up to NYSERDA, with minimal direction for how the authority should proceed.
Hochul has directed the authority to explore an expedited procurement process to ensure the state can meet its goals. “That’s a big signal, right,” John O’Leary, the governor’s deputy secretary of energy and the environment, said of the expedited procurement plan. “And we’ll be working with the clean energy industry to craft that in a way that can keep up the momentum.” How NYSERDA navigates the next several months has major implications for the state’s 70 percent renewable electricity by 2030 target, which is enshrined in New York’s climate law. The at-risk projects represent 25 percent of the forecast electricity demand that year.
BUILDING BUDGET ASK: A coalition of environmental groups wants Gov. Kathy Hochul to include major steps toward decarbonizing the building sector in her executive budget, including emissions limits specific to the sector. The “Building Electrification and Equity Platform,” outlined in a letter to the governor sent Monday, includes elements of the NY HEAT Act and is backed by NRDC, Alliance for a Green Economy, NYPIRG, Environmental Advocates NY, Building Decarbonization Coalition, NY Renews and more.
The requests include an end to the 100 foot rule that requires other ratepayers to subsidize new hookups and gas utilities’ “obligation to serve” new customers so they can pursue “union-friendly neighborhood-scale building decarbonization projects.” The letter also asks for Hochul to back a 6 percent of income limit for energy bills. The signatories want a retrofit readiness fund for low-income households to pay for “pre-retrofit investments (i.e., structural upgrades, electrical upgrades, and lead, mold, and asbestos remediation) to address deferred maintenance and health hazards that block weatherization and electrification projects.” Plus, they want the Department of Environmental Conservation to set a sector-specific limit on the buildings in the state, which would presumably run contrary to work on an economy-wide cap-and-trade program, and for the Public Service Commission to set declining limits for gas utilities. — Marie J. French
