The New York Department of Public Service (DPS) in August gave final approval for the Clean Energy Standard for the State. This will require the state to generate 50% of its electricity from renewable energy sources by 2030, as well as pay upstate nuclear power plants up to $956M over the next two years to maintain them in service. The new standards and the nuclear subsidy will need to be paid for by ratepayers. As a result, the Clean Energy Standard will lead to higher renewable energy charges in New York.

The Clean Energy Standard (CES) stems from Governor Cuomo’s push to convert New York into a national leader in renewable energy. The CES was initiated on January 2016 when Cuomo proposed to increase the Renewable Energy Standard (RES) from 25% renewable resources in 2015 to 50% renewable resources by 2030. This percentage will increase each year thereafter through 2030 based on a triennial review process. The incremental percentage requirements aim to accelerate the State’s percentage of energy produced by renewal resources from 26.31% in 2017 to 30.51% in 2021 and ultimately to 50% by 2030.

In order to achieve this goal Cuomo petitioned for a nuclear subsidy for the upstate nuclear plants in New York. These plants include Fitzpatrick, Ginna, and Nine Mile Point. All three plants were at a risk of retiring due to poor economics. The proposed “Zero Emissions Credit” (ZEC) would allow for these three struggling nuclear plants to remain in operation during the state’s transition to 50% renewables by 2030.

Qualifying nuclear facilities can be offered a multi-year contract with NYSERDA for the purchase of ZECs. The order calls for the ZEC prices to be based on the federal government’s projected societal cost of carbon. Starting in April 2017, nuclear facilities will be paid $17.48/MWh for the first two years. The ZEC price will then be adjusted every two years for a total of 12 years (6 two-year periods).

The effect of the CES on customer bills will be two fold. First, a monthly charge to fulfill the RES part of the clean energy mandate will be added on. Second, a monthly charge to meet the ZEC part of the CES will also be incurred. RES fees will be incurred by customers beginning in January, 2017. The RES fee is estimated to be $0.17/MWh or ¢.017/KWh times a customer’s monthly electricity usage (based on a renewable energy credit price of $23.28). ZEC fees will start in April, 2017 and customers are expected to see the charge included in their May bills. The ZEC charge is estimated to be up to $3.5/MWh or ¢0.35/KWh times a customer’s monthly electricity usage.