Times Union: Power lines will be upgraded, but who really pays?

February 26th, 2023

By Rick Karlin

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ALBANY – New York’s upstate-downstate division is longstanding and can take many forms. One of the newest iterations of this geographic split emerged earlier this month over electricity rates, amid the push for green energy.

Earlier in February, the state Public Service Commission approved a sweeping set of upgrades to power lines that bring electricity from upstate to New York City and the surrounding metropolitan area.

The 62 separate upgrades along individual transmission lines are designed to reduce congestion in the flow of power from solar and wind plants upstate to downstate.

That’s needed to meet the goals of the state’s 2019 Climate Leadership and Community Protection Act, or CLCPA, which calls for decarbonizing the power grid by 2040.

In order to do that, new renewable or non-fossil fuel sources of power such as solar and wind are being built upstate, where land is plentiful and cheap. That emission-free power, though, then needs to get downstate, where the bulk of New York’s population and electricity needs are found.

There have long been bottlenecks, or congestion in the power line grid bringing electricity from north to south in New York. This latest move is designed to fix that.

The decision to move ahead on the upgrades was hailed by PSC Chairman Rory Christian.

“The Commission recognizes the need to address congestion in certain parts of the State where renewable energy is already bottled and where additional generation projects are in development or likely to be developed in the future,” he said.

Also hailing the move were developers of solar and wind projects, represented by the Alliance for Clean Energy.

“In order to keep moving towards our clean energy goals, New York needed grid investments,” said Anne Reynolds, executive director of the Alliance. “This will allow electricity generating projects to deliver the clean power they make and will facilitate additional renewable energy projects coming online.”

Not everyone is happy, though.

“Upstate ratepayers should not be forced to subsidize downstate,” said Justin Wilcox, executive director of Upstate United, a group that represents industries across upstate.

“The rushed decisions being made to meet the state’s unrealistic climate goals will make New York State even more unaffordable, send New Yorkers packing, and put family-owned businesses under,” he added.

The problem, said Wilcox, is how the costs for the transmission lines will be paid for.

The upgrades will be done by four utility companies: Central Hudson Gas & Electric; New York State Electric & Gas; National Grid; and Rochester Gas and Electric. Cost of the upgrades is estimated at $4.4 billion although PSC staffers said it could rise to $6.6 billion.

Those costs will be recouped through higher electricity costs that will go back to the utility companies. The expenses will be borne equally in real dollar terms among all ratepayers in the state.

Because the CLCPA is a statewide initiative, that’s different from the older way of apportioning more of the costs to those who are benefiting. But that means, proportionately, upstaters will see a steeper percentage increase than their downstate counterparts.

According to the PSC’s order approving the projects, the largest industrial users served, for instance, by Con Edison, which is downstate, would see an average 3.8 percent increase.

For National Grid customers upstate, the average would be 8.2 percent, or more than double. For residential users, rates should be modest, maybe a few dollars per month more.

But for energy-intensive industries like steel or aluminum plants, glass factories, paper mills and the newer microchip makers, the increases will be significant. And many of those heavy industries, to the extent that they are still in New York, are upstate.

“This is a real problem,” said Robert Rock, who operates Certified Grinding, a small 18-person machine shop in Rochester. They precision grind metal parts that go in everything from copiers to paper mills. He figures the cost to him in higher electric rates will add about 10 percent to his $55,000 annual electric bill.

“We’re competing against companies in Pennsylvania and New Jersey and the Midwest and who are formidable competitors and every time the government of New York does something like this they make us less and less competitive,” said Rock.

“We already pay more than $75,000 in electricity bills annually, and after this first wave of project approvals, we could see those bills climb upwards of $87,000,” added Brett Pennefeather, president of Eck Plastic Arts, a Binghamton company that produces plastic parts for manufacturers.

“There needs to be a more structured and equitable approach to curbing climate change. Not a haphazard one,” Pennefeather added.

Two of the five Public Service Commissioners, John Howard and Diane Burman, voted against the plan for that reason. The others, Chairman Rory Christian, John Maggiore, David Valesky, James Alesi and Tracey Edwards, supported the plan.

Howard cited this disproportionate increase upstate as the main reason for his opposition.

“This has been my ongoing complaint,” he said during the PSC’s vote to approve the program on Feb. 16.

“I don’t believe that the load share ratio in anyway is equitable,” he said, referring to how the powerline upgrade costs would be borne by power users.

There is also an irony that Howard and Wilcox both pointed out.

Most of the power production and use that is upstate is already low or no-carbon since the region relies heavily on hydroelectric and nuclear power from facilities in western and Northern New York.

But downstate customers rely largely on the kind of carbon-emitting gas plants in and around New York City that the climate plan envisions phasing out in favor of renewables from solar and wind farms.

There’s been even more reliance on fossil fuels since the Indian Point nuclear plant was shut down in 2021. That gap will eventually be backfilled by the new solar and wind plants, but that will take time – and the power line upgrades.

Currently, though, energy generated upstate is 91 percent emission-free. Downstate, it’s only 9 percent.

“Those customers who have the least carbon impact on the state will be paying nearly double compared to those customers that have the highest impact on the state,” said Howard.

No one on the PSC questioned the need to shift to clean energy by building out a solar and wind system.

“To successfully decarbonize we need to have a robust transmission system,” Christian said.

And the PSC in a later statement stressed that upgrades are needed to reach the CLCPA’s goals. “New York is making significant upgrades and additions to the State’s existing transmission and distribution systems to integrate new large-scale renewable energy projects into the State’s energy supply, and we must ensure that these investments are smart and cost-effective. The PSC decision earlier this month recognizes the need to address congestion in certain parts of the State where renewable energy is already bottled and where additional generation projects are in development or likely to be developed in the future.”

Howard agreed with the need for upgrades but stressed that he questioned the way it was being paid for.

Formal protests against the upgrades, and how they’ll be funded, were few.

In the PSC filings, a group known as the Multiple Intervenors, lodged objections. That’s an organization comprising 55 of the state’s largest electricity users. The group doesn’t reveal membership because they don’t align on all of the issues they face.

But it’s a good bet that some of state’s surviving heavy industries such as steel mills in Central and Western New York as well as paper mills in the Upper Hudson Valley north of Albany, will be hit by significant price hikes. Those large industries already have monthly power bills of several hundred thousand dollars.

Howard noted that, during a recent national meeting of utility regulators, his counterparts from other states, had pointed to the New York plan as something they’ve been avoiding, for fear of driving out industry.

The power line cost debate is just one small piece in the state’s ambitious plan to decarbonize – reaching 70 percent renewable power by 2030 and 100 percent by 2040. There are other cost questions including the overall price tag for switching from gas and diesel cars and trucks to electric vehicles and a move toward using electricity to heat and cool buildings as well as to cook food.

With that in mind, Public Service Commission staffers have embarked on a study to examine the costs associated with the CLCPA. And they warned commissioners that they may have to eventually revisit the years-long power line upgrading costs as well.

It’s those upward creeping costs, that businessmen like Rock say are damaging the business climate.

“New York State eats a company one bite at a time. But they are killing us when you look at those aggregate costs,” he said.