PoliticoPro: Upstate New York business group asks for review of downstate transmission costs
May 20th, 2025
The group wants state officials to reconsider having ratepayers statewide pay for a Long Island transmission project originally pitched as supporting offshore wind.
By: Marie J. French 05/20/2025 – Read Here
ALBANY, New York — A Long Island transmission upgrade — originally approved to unlock more offshore wind — has escaped the federal wrecking ball targeting such projects.
But the upgrade developers’ disavowal of offshore wind has drawn cost concerns from an upstate business group. That’s because the new transmission lines will be paid for by ratepayers statewide based on their electricity use, instead of those who benefit most paying a greater share.
The state’s utility regulator approved this cost allocation throughout the state — similar to the subsidies for upstate nuclear plants — explicitly because the project would support achievement of New York’s climate goals by unlocking more offshore wind. If the project, known as Propel NY, is no longer linked to that goal, then upstate ratepayers shouldn’t be on the hook, said Justin Wilcox, executive director of the Upstate United advocacy group.
“With offshore wind projects being cancelled, costs skyrocketing and claims from the developer that the project has little to do with wind energy, it may be time to revisit why this project was approved and how upstate got stuck with footing a significant portion of the bill,” Wilcox said.
Why it matters: The debate over who should pay for the Propel project mirrors the larger conflict over how — and how much — New York residents should pay for the state’s climate goals. The state will not meet its 70 percent renewable energy by 2030 goal in part due to a lack of offshore wind development.
Questions about the Propel project are also part of continued fallout in New York from President Donald Trump’s targeting of wind energy. Trump has paused construction on one offshore wind project and ordered permitting to stop for others.
Rebranding success: Propel faced uncertainty in recent months as the U.S. Army Corps of Engineers reviewed whether it was a “wind-related” project. Such projects have been subject to a permitting review following Trump’s executive order on wind in January.
Propel is being developed by the New York Power Authority and New York Transco. The project’s website stripped references to offshore wind from its website and reframed the project as needed for reliability.
The pivot persuaded the Army Corps.
“The applicant submitted supplemental information clarifying that the project is not wind-dependent,” said Army Corps spokesperson James D’Ambrosio in a statement last week. “Following review of this information by the New York District and Army Corps Headquarters, it was determined that the project can proceed and will not be considered offshore wind related under the presidential memorandum on wind energy projects.”
Propel still needs to secure its federal permits, though. And the project is still in settlement talks for state approvals from the Public Service Commission. Propel was selected through a competitive process run by the New York Independent System Operator, which runs the state’s grid and ensures reliability.
Shannon Baxevanis, a spokesperson for the project, said the developers are “focused on permitting, constructing and ultimately energizing this NYISO -selected bi-directional transmission infrastructure investment and are committed to delivering a cost-efficient and effective project that benefits all New Yorkers.”
Key context: The $3.26 billion transmission upgrade is expected to cost the average residential customer about $1.90 each month. It involves four new substations and six new underground transmission lines over 90 miles, including two water crossings connecting Long Island’s grid to New York City and Westchester County.
The project originates from New York’s “public policy transmission need” process. Propel won out against other developers competing to meet the Public Service Commission’s identified need to enable more than 3,000 megawatts of offshore wind on Long Island.
Like two previously approved public policy-driven transmission projects, 75 percent of Propel’s costs were initially set to be recovered from beneficiaries — in this case, those beneficiaries would likely be electricity customers in New York City and on Long Island who would see lower costs as electricity flowed more easily around the region. The remaining 25 percent would be recovered from ratepayers across the state based on their electricity usage.
But Con Edison and the Long Island Power Authority challenged this added cost for their customers. Instead, the two utilities successfully argued 100 percent of the costs should be recovered from ratepayers statewide based on their energy use.
Upstate Democratic and Republican lawmakers opposed the proposal.
The crux of the argument was that Propel was being built to support offshore wind and New York climate goals.
The Public Service Commission agreed — noting that ratepayers statewide were being asked to fund subsidies for nuclear, offshore wind and transmission lines to bring clean energy to New York City.
“The entire focus of the identified transmission need is on facilitating compliance with the [Climate Leadership and Community Protection Act] by ensuring that offshore wind energy is accessible to the rest of the State whenever it is being produced,” the commission’s May 2022 order states.
Propel’s developers have since distanced themselves from any link to wind, instead highlighting reliability and resiliency benefits. The shift doesn’t sit right with Wilcox.
“These changing circumstances call into question the justifications provided to the Public Service Commission and whether the project is even necessary, let alone whether upstate ratepayers should be on the hook for a project that benefits downstate and seems to be increasingly searching for a public policy rationale,” he said.
Other transmission costs: Since the 2022 decision on Propel, other transmission projects linked to the state’s climate law have also been approved for statewide cost recovery. That includes billions in upstate transmission upgrades specifically linked to the state’s 2019 climate law.
What’s next: The Federal Energy Regulatory Commission has approved Propel’s cost recovery mechanism and a hefty profit margin on its costs. Upstate United is still considering potential action at the state Public Service Commission, Wilcox said.