Joint Utilities Oppose NYSERDA's Request to Reprice Existing Renewable Energy Contracts

Strategic Insights -

In a move to ease financing for large renewable energy projects, the New York State Energy Research and Development Authority (NYSERDA) petitioned the Public Service Commission to allow developers to convert existing fixed-price renewable energy credit (REC) contracts to indexed-price REC contracts. However, the Joint Utilities, consisting of Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New York, Inc., New York State Electric & Gas Corporation, Niagara Mohawk Power Corporation d/b/a National Grid, Orange and Rockland Utilities, Inc., and Rochester Gas and Electric Corporation, have expressed opposition to this proposal. The Joint Utilities argue that revising the existing contracts would shift risks and costs from renewable energy developers to utility customers and lack assurance of lower financing costs to benefit customers.

Key Takeaways:

  • The Joint Utilities, consisting of six major utilities, oppose NYSERDA's proposal to convert existing fixed-price REC contracts to indexed-price REC contracts.
  • The proposed change would shift risks and costs from renewable energy developers to utility customers.
  • The Joint Utilities believe that revising the existing contracts lacks assurance of lower financing costs to benefit customers, especially since these projects likely already have financing in place.
  • The Commission's approval of Index RECs for future procurements did not produce the same financial benefits that NYSERDA claims will be achieved with the proposed conversion.
  • The Joint Utilities urge the Commission to consider a methodology that would ensure financial benefits from the proposed conversion flow primarily to customers.
  • The Joint Utilities also suggest reconsidering utility ownership of resources as a cost-effective way to support clean energy goals and benefit customers.

Statistics:

  • The Joint Utilities comprise six major utilities in New York State.
  • NYSERDA petitioned the Commission to change the terms of existing fixed-price REC contracts on August 10, 2020.
  • The notification was published in the New York State Register on August 12, 2020.
  • Comments were due on October 13, 2020.
  • The proposed change aims to improve the developer's risk profile and resolve challenges related to securing financing for large, renewable energy projects.
  • The Commission's approval of Index RECs for future procurements was based on a competitive bid process.

Sources:

  • NYSERDA Petition Regarding Clean Energy Standard, Voluntary Conversion of Existing Fixed REC Price Terms to Index REC Price Terms (Conversion Petition)
  • Joint Utilities Comments on NYSERDA Petition Seeking Authority for Voluntary Conversion of Existing Fixed-Price REC Contracts to Indexed-Price REC Contracts
  • New York State Register (August 12, 2020), I.D. No. PSC-32-20-00010-P, p. 16.