Key Influences on Energy Policymaking in New York City

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Despite its size and complexity, New York City has frequently been cited for its leadership on sustainability issues (Owen 2004; SustainLane 2006), but renewables deployment is not an area that has drawn much kudos. Several factors appear to be at play.

First, there is no question that concerns over the anticipated energy shortfall dominate local policy debates, because the economic impacts could be so severe. This was made clear during the citywide 29-hour blackout in August 2003, when economic losses to New York City businesses and individuals were in the vicinity of $1 billion (Herman et al. 2003). Frequent blackouts or brownouts could discourage local business expansion or drive businesses out of the city, dramatically harming the city's long-term economic prospects. The decision of the mayors' Energy Policy Task Force to emphasize this problem is thus a rather logical one.

It is noteworthy that the Task Force report essentially ignores renewables as a partial solution to this problem. The bulk of the report focuses on new power plant siting and construction, or on the development of new transmission lines which can import power to the city. In the section on distributed resources, renewable power technologies are identified as a potential source of new supply, but their contribution is downplayed, noted merely for their lack of current market share and the fact they are subject to 'detailed and complicated engineering studies . . . [that require] a substantial commitment of time and resources both by Con Edison and the developer . . .'(New York City Energy Policy Task Force 2004).

14 There is reason to believe that New York City 's planning efforts were partly inspired by planning efforts undertaken by the Greater London Authority. In October 2005, London Deputy Mayor Nicky Gavron visited New York City to attend several meetings regarding an upcoming urban climate change conference. While in New York, she met with New York Deputy Mayor Dan Doctoroff, speaking at length about the 'London Plan', London's strategic land use plan. Shortly thereafter, the New York City Economic Development Corporation's Energy Office was asked to prepare a briefing for Deputy Mayor Doctoroff explaining the London Plan and the Mayor's Energy Strategy in greater detail. In January 2006, Mayor Michael Bloomberg announced his administration was undertaking a long-term growth management plan, covering a range of issues very similar to those addressed by the London Plan; eventually this effort came to be known as plaNYC2030.

15 See www.nyc.gov/planyc2030.

Con Edison' s ambivalence about renewables may be one reason the report was written this way. Con Edison has long expressed concern about renewable energy systems in the city, dating back to 1977, when urban homesteaders had to sue to force the utility to permit the interconnection of a small wind turbine atop an abandoned tenement in lower Manhattan. Con Edison had refused fearing power surges from this two-kilowatt system would damage their ten million-kilowatt network. After a long back-and-forth debate, the New York State Public Service Commission intervened, ruling that Con Ed must allow this windmill and up to 24 others to connect to its grid (Energy Task Force 1977; Greenhouse 1977).

Since then, Con Edison has developed formal interconnection guidelines to facilitate deployment, but the underlying message remains one of caution, emphasizing the need to ensure 'there is no adverse effect on the Company's other Customers, equipment or personnel, while maintaining the quality of service' (Con Edison 2002). Con Edison has updated their interconnection guidelines several times in recent years, most recently in 2006, but their focus on system reliability remains unchanged (Con Edison 2006). Such an orientation is understandable - Con Edison is required by regulators to deliver power wherever and whenever New Yorkers need it ( New York State Public Service Commission 1991). Failure to achieve these Electric Service Standards can result in fines, such as the $1.9 million penalty imposed on Con Edison for a 1999 blackout in upper Manhattan (New York State Public Service Commission 2002) .16

Against this backdrop, energy systems that plug seamlessly into the existing electric grid - such as the new transmissions lines and central station power plants advocated by the Energy Policy Task Force report - hold great appeal. Speaking off-the-record, several Task Force members observed Con Edison offered a robust endorsement of such systems in their meetings, but spoke less favourably about other alternatives.

Lacking significant technical expertise, Task Force members may have felt a need to defer to the utility's concerns on such matters, believing that if renewable power and other alternatives didn' t work out as planned, the citywide financial consequences could be grim. The Electricity Outlook report's emphasis could therefore be viewed as a form of technology path dependency or lock-in (Berkhout 2002; Unruh 2000), where stakeholders find it difficult to change course because embedded system assets like wires, relay switches, and substations do not easily accommodate alternative technological approaches.

The second key factor influencing local policymaking is New York City' s constrained capacity to act on local energy matters. This situation dates back almost a century, when state rules revoked local control over the electric utility industry, placing it in the hands of state regulators. Until that time, local government had primacy, reflecting the inherently local nature of the DC-power distribution systems then in use. Local authorities determined which utilities could operate in certain parts of the city, and the rules they must follow. In 1907, the New York State Public Service Commission was created to drive out corruption linked to the issuance of these franchise rights (Hirsh 1999; Read 1998). This move had huge consequences, placing local government in a subservient position with regards to rate-setting, power plant location decisions, and what type of power sources are encouraged or discouraged. The city can (and does) provide input to state regulators on these issues, but as seen in Fig. 6.3 has limits on its ability to establish market rules and structures emphasizing renewables.

16 More recently, Con Edison has been criticized for system and management failures associated with a several days-long blackout in central Queens in August 2006. At the time of this writing, news reports were hinting fines levied against Con Edison could reach $100 million.

Fig. 6.3. New York City's role in New York State energy markets and policymaking process (Hammer 2005).

How has the city's disadvantaged policymaking powers influenced its renewables agenda? The New York State Energy Research and Development Authority (NYSERDA) has lead responsibility for renewables planning in the state, and over the years has gained a national reputation as a leader in this field. Several members suggested the mayors Task Force was hamstrung in developing a renewables policy because NYSERDA had yet to promulgate rules on a significant new statewide renewables initiative, the Renewables Portfolio Standard (RPS).17 Rather than risking policy moves that might subsequently be undercut by the RPS, the Task Force chose to focus on other issues. In effect, the institutional environment led the Task Force to behave reactively, waiting for others to act before deciding whether or how to respond.

A third factor influencing local renewables policymaking is an apparent preference for voluntary action on renewables deployment rather than the use of mandates. This policy has permeated the city's approach with both the public and private sectors. As discussed earlier, the high performance buildings guidelines developed by the city's Department of Design and Construction were intended to support voluntary decisions by city agencies constructing new buildings. Local Law 86, the 2005 law requiring LEED certification for new city agency buildings, continues this approach, giving designers and agency officials considerable flexibility when determining how to achieve the minimum point threshold; renewables are again not required.

The city has a limited record of advocacy regarding renewables use by the residential and business sectors. The 2005 announcement that the city would purchase renewable power for the city-owned Brooklyn Army Terminal complex (Con Ed Solutions 2005) was the Bloomberg administration' s first public statement on the subject of green power. Because this purchase was touted as an example for others to follow, we can infer the mayor! preference that households and businesses arrive at similar decisions on their own.

The current high cost of renewable energy in New York City is likely driving this preference for voluntary action. Two recent university studies noted renewable power systems in New York City generate electricity at a cost higher than that available through grid-based electricity sources (Center for Sustainable Energy 2007; Columbia University Workshop on International Energy Management and Policy 2006). For most energy buyers and policymakers, this puts renewables at a significant disadvantage. Mayor Bloomberg's principal energy advisor made exactly this point in 2005 when testifying before the New York City Council about a proposal mandating higher rates of renewable power use by city agencies. Although highly sympathetic to the goals of the legislation, he noted that green power comes at a cost premium, and that the city' s electricity costs were already expected to increase by over $50 million a year due to recent rate hikes. In his view, to increase costs further simply didn't make sense.

The mayor's advisor also made another important point at the hearing, noting 'The cost premium to purchase green power must also be evaluated in terms of competing energy investments . . . Presently, each dollar invested in energy efficiency upgrades will conserve more fossil fuel and therefore protect the environment more than the same dollar invested in renewable energy sources.'(Quiniones 2005)

17 New York State's renewable portfolio standard (RPS) seeks to increase the amount of electricity generated from renewable sources to no less than 25% of the state's power supply by 2013. When the RPS was first established, renewables already accounted for approximately 19% of the state's supply. It is estimated that the RPS will result in 3700 MW of new renewables capacity statewide.

Given limited budget resources, the city 's rate case settlement strategy forcing Con Edison to pursue distributed resources deployment makes great sense because it shifts programmatic and budgetary responsibility away from local government coffers and onto the utility. Such a move also offers the city political coverage, with Con Edison bearing the brunt of any ratepayer backlash rather than local government.

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