Objectives

To determine if the Public Service Commission (PSC) and the New York State Energy Research and Development Authority (NYSERDA) adequately planned to achieve the Climate Leadership and Community Protection Act (Climate Act) goals, followed proper procurement practices for projects designed to reach the goals, and appropriately tracked and monitored progress toward meeting those goals. The audit covered the period from January 2016 through October 2023 for PSC. The audit covered the period from January 2016 through November 2021 for NYSERDA.

About the Program

The Climate Act, effective January 1, 2020, is one of the most ambitious laws designed to address the negative impacts of climate change in the United States. The Climate Act builds on the 2015 New York State Energy Plan and the Clean Energy Standard (CES) designed to fight climate change, reduce air pollution, and ensure a diverse and reliable low-carbon energy supply. The Climate Act requires that a minimum of 70% of statewide electric generation secured by load-serving entities (entities subject to PSC jurisdiction that secure energy to serve the State’s end-use customers) be generated by renewable energy systems by 2030, and by 2040, the statewide electrical demand system must be zero emissions.

The Climate Act required that PSC establish a renewable energy program and issue a comprehensive review of the energy program every 2 years. Another statute, the Accelerated Renewable Energy Growth and Community Benefit Act, directed PSC to establish new transmission planning processes and restructure or repurpose the electric transmission infrastructure as needed to meet Climate Act goals.

NYSERDA works along with PSC to achieve CES and PSC-implemented Climate Act goals, and PSC Orders provide NYSERDA with the authority to solicit production of renewable energy related to the Climate Act and CES.

The Climate Act was expected to have both fiscal and programmatic impacts on several State agencies and authorities. However, when the CES and Climate Act were passed, no State or federal funding was budgeted. Currently, almost all funding to support the CES and Climate Act programs is ratepayer based. New York State ratepayers have contributed almost $2.6 billion to the CES program from 2016 through 2021.

Key Findings

While PSC and NYSERDA have taken considerable steps to plan for the transition to renewable energy in accordance with the Climate Act and CES, their plans did not comprise all essential components, including assessing risks to meeting goals and projecting costs. Specifically:

• PSC is using outdated data, and, at times, incorrect calculations, for planning purposes and has not started to address all current and emerging issues that could significantly increase electricity demand and lower projected generation, such as increased push to transition to electric vehicles by 2035 and the cancellation or delay in renewable energy projects. Between 2005 and April 2023, 12% of contracted large-scale renewable projects were canceled.
• The costs of transitioning to renewable energy are not known, nor have they been reasonably estimated. Moreover, funding sources to cover those costs have not been identified, leaving the ratepayers as the primary source of funding. The lack of alternative funding sources adds additional risk to whether the State can meet its goals timely. Data shows utility costs have already risen sharply over the last two decades and more New Yorkers are having difficulty paying their utility bills.
• PSC has taken steps to address some risks and issues; however, it has not yet begun to formally review progress toward Climate Act goals with updated generation and electricity demand forecasts. While PSC noted it has until July 2024 to begin this assessment, waiting until that point to fully review all efforts and costs of the transition to renewable energy increases the risk that Climate Act goals will not be met within the established time frame.

Finally, a formal backup plan has not been established in the event Climate Act goals are found to be unachievable within the prescribed time frames, other than PSC suspending or modifying the obligations under the Climate Act and relying on the continued use of fossil fuels to generate electricity until sufficient renewable electric generation is developed. However, continuing to use fossil fuels as a backup plan would delay emission reductions and increase the burden on ratepayers by forcing them to continue to support fossil-fuel generation that otherwise could be retired—including the additional cost of the infrastructure to safely transport the fossil fuels to where they will be used to generate energy.

Key Recommendations

• Begin the required comprehensive review of the Climate Act, including assessment of progress toward the goals, distribution of systems by load and size, and annual funding commitments and expenditures.
• Continuously analyze the existing and emerging risks and known issues to ensure they are evaluated and addressed to minimize impact on the State’s ability to meet Climate Act goals.
• Conduct a detailed analysis of cost estimates to transition to renewable energy sources and meet Climate Act goals. Periodically update and report the results of the analysis to the public.
• Assess the extent to which ratepayers can reasonably assume the responsibility for covering Climate Act implementation costs. Identify potential alternative funding sources.