By Theodore Skerpon
In 1978, Congress passed the Public Utilities Regulatory Policies Act, which said that Non-Utility Generators – or NUGs – must be allowed to compete with utility generators provided their cost would be lower than “avoided costs,” meaning cheaper than what it cost utilities to produce.
That made sense; however, in a desire to stimulate construction of these facilities, New York State passed a “six cent law” that mandated a minimum six cent purchase price, when many utility generators could produce at one-third that cost.
After a massive spike in electric rates over the next decade, a Senate hearing was conducted. Senate Energy Committee Chairman J. Bennett Johnson concluded, “PURPA has exceeded all expectations in producing non-utility generation, and we are now coming to grips with problems arising from that fact. In some instances, states have encouraged the over-development of qualifying facilities under PURPA by setting the price for power bought under the statute too high and by requiring utilities to buy power they do not need.”
The above is important to note as we embrace a ramp-up of renewable energy in an effort to mitigate greenhouse gases. In New York, two critical initiatives are at play, and the outcomes will have a significant impact and be positive if done correctly.
One is an absolute need to invest in infrastructure, both natural gas and electric transmission, which is part of Gov. Andrew Cuomo’s Energy Highway Blueprint initiative. The other is the Reforming the Energy Vision initiative, whose cornerstone is the introduction and advancement of “distributed generation” – smaller, more localized power generation by fossil or renewable fuels.
Moving forward, we must consider rates and avoid expensive mistakes, starting with but not limited to:
• Expediting identified transmission work that will address safety and reliability concerns, along with alleviating billions of dollars in “congestion costs” paid by power-hungry downstate regions.
• Applying reasonable incentives to hydropower commensurate with those provided to wind, solar and storage, with intent to expand existing hydropower projects, primarily upstate.
• Preserving critical fuel diversity provided by existing baseload generation, particularly safely licensed nuclear generation.
• Advancing environmentally compliant and cost effective distributed generation through REV when market prices adjust to leveling of rates through transmission upgrades, as we pursue the noble objectives of the brand new New York State Energy Plan.
Theodore Skerpon is president and business manager for IBEW Local 97 and chairman of state IBEW Utility Labor Council.