Good morning and welcome to the Monday edition of the NewYork & New Jersey Energy newsletter. We’ll take a look at the week ahead and look back on what you may have missed last week.
Biden and the governors — including New York’s Kathy Hochul, New Jersey’s Phil Murphy and Maryland’s Wes Moore — share ambitious hopes for the offshore wind industry. They believe offshore wind will help fight climate change with lots of clean power and union jobs.
The governors have been dealing with these woes for months. Now, they want Biden to do more because failure would clearly imperil the president’s goals too. The administration is counting on offshore wind farms to produce at least enough power for 10 million American homes by the end of the decade.
After meetings over the past few months between state-level staffers and Biden administration officials, the governors went public with their concerns, throwing the headaches squarely at the White House. In conversations, officials from New Jersey said a letter to Biden from the governors wasn’t meant to embarrass the president but was a public call to action.
Yet, it’s hard not to see at least some of the governors’ approach as a bit of finger-pointing.
Hochul said New York is committed to making sure the offshore wind projects happen — then quickly turned her attention to the Biden administration. “I do believe that the federal government has a major role to play here,” she told reporters.
For elected officials, severe weather events often provide a test of their mettle — both operational and political. And the difference in approach between the two New York leaders was stark in the lead-up to the downpour, creating a sea of criticism at Adams for what some saw as a delayed response.
— “A new set of storm drains in one of New York City’s most flood-prone areas did little to prevent flash flooding caused by Tropical Storm Ophelia.” (Gothamist)
GET THE TRAIN MOVING: While New Jersey Reps. Rob Menendez and Bill Pascrell remain steadfastly opposed to New York’s congestion pricing plan, they argued Friday that the Metropolitan Transportation Authority should extend New York City’s 7 Subway line to New Jersey, throwing a bone to New Jersey commuters.
“We strongly urge the MTA and New York City to provide additional trans-Hudson rail services to commuters through the expansion of the 7 Train,” Menendez and Pascrell wrote in a letter to the MTA. “While we disagree with the MTA’s decision to move forward with the [congestion pricing] program, we look forward to engaging in a productive dialogue that will both benefit New Jersey residents and further the plan’s stated goal of getting cars off the road.”
The lawmakers pointed to a 2013 study that evaluated extending the 7 Train via a two-track tunnel under the Hudson River to Secaucus, New Jersey, allowing for an estimated rider capacity of 128,000 people per day. — Alex Daugherty
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What we’re watching this week:
MONDAY
— Several New York lawmakers and advocates will gather to “urge Governor Hochul to show urgent climate leadership by passing the NY HEAT Act in next year’s executive budget,” 12:30 p.m. on Zoom.
— The New York Transit Mobility Review Board meets at 3:30 and could unveil the state’s congestion pricing plan for lower Manhattan.
WEDNESDAY
— The New York State Laborers’ Union kicks off a conference on building renewables at Turning Stone.
— High peaks train to track fall foliage in Adirondacks.
— Flawed crab quotas, study says.
NYSERDA SECURES FEDERAL CLEAN ENERGY FINANCING: The state’s energy authority says it has secured access for New York onshore renewables and offshore wind projects to a federal low-interest loan program. NYSERDA announced a memorandum of understanding, which they did not immediately provide, with the U.S. Department of Energy that outlines a process to review applications from renewable developers for financing under the Title 17 Loan Guarantee Program. The DOE webpage outlining the program says that projects supported by state renewable portfolio standards “typically” will not qualify.
The financing support from DOE should “reduce the all-in interest rates charged by third party lenders,” according to federal program guidance. The announcement comes as clean energy developers are asking the state Public Service Commission to increase payments to contracted offshore wind and onshore wind and solar projects, citing higher costs and interest rates driven by inflation. The PSC is expected to act on the requests as soon as mid-October.
Anne Reynolds, executive director for the Alliance for Clean Energy New York, said she appreciated NYSERDA’s attention to financing costs and that the program could be beneficial if interest rates are lower than what developers can access through traditional financing. But she said it does not address the higher costs facing developers. “It negates the interest rate factor that we put in our formula,” she said, but not the other elements driving higher project costs putting their viability at risk. NYSERDA in comments on the ask from ACE rejected the developers’ assertion that high interest rates were unforeseeable and argued they should have factored in that potential risk.
The announcement says projects contracted with NYSERDA already or that contract in the future will be eligible. The loan guarantee program can provide up to 80 percent of eligible project costs, with a tenor of the useful life of the investment capped at 30 years. “Any cost savings that could benefit projects from accessing LPO loans could be shared with New York State ratepayers and potentially enable billions of dollars in savings,” the announcement says. It’s not clear what provision of the current NYSERDA contracts would enable those savings to be captured for ratepayers.
“To ensure New York achieves a zero-emissions grid, the financing process for clean energy projects must be streamlined,” Gov. Kathy Hochul said in a statement. “This new partnership between New York State and the U.S. Department of Energy illustrates a shared belief among New York and Federal leaders that time is of the essence. We must pave a clear path forward for clean energy.” — Marie J. French
PSE&G GAS RATES GO … DOWN: For the third time this year, PSE&G is able to lower gas prices, effective Sunday, Oct 1. Last fall, the company was granted a 24.5 percent increase in gas prices, but then a mild winter and other factors drove down commodity prices and have allowed the company to cut rates 18 percent this year, according to the company. — Ry Rivard
BPU TWEAKS WIND BID TIMELINE — The New Jersey Board of Public Utilities continues to tweak the timeline it has for picking a third round of offshore wind projects. After two rounds of bidding that ended in 2019 and 2021, the BPU selected three projects that are all imperiled by inflation and fights over tax treatment. On Wednesday, the board gave its staff the ability to further delay how long the agency considers projects from companies that are also vying to build projects in New York — a factor that is important because some companies’ New Jersey projects may be contingent on whether or not the companies first win work in New York.
But New York has continued to delay announcing the winners of bidding there, so New Jersey is now waiting on companies that are waiting on New York.
In a board order, the BPU found that “changes made to the New York Solicitation Schedule may require Staff to further adjust the Contingent Project Notification Date, as it is currently uncertain and difficult to predict when, exactly, New York will make its Award Announcement. The Board also recognizes that Staff needs the flexibility either to keep the current Contingent Project Notification Date of October 11, 2023, or to adjust it to take into account any subsequent changes to the New York Solicitation Schedule or any subsequent changes to the Third Solicitation evaluation schedule.”
The BPU’s schedule has slowly slipped. Earlier this year, the BPU told bidders it would need to let it know about its contingent projects by July 31 because, in the agency’s words, the BPU has a “statutory obligation to complete its review of eligible projects within 180 days” of a complete application and was aiming to approve projects at a December board meeting. The agency now says it plans to announce winners in January for February of next year.
2024 EMP — The BPU is going to ask for bids from consultants to help put together the 2024 energy master plan. The plan is the Murphy administration’s guiding document on how to hit the governor’s clean energy targets, which have become even more aggressive than in the last master plan, known as the 2019 EMP. Earlier this year, the governor moved a key goal for using all clean energy from 2050 to 2035. He leaves office in early 2026. — Ry Rivard
NEW MURPHY CHIEF’S ENVIRONMENTAL BAGGAGE — POLITICO’s Ry Rivard: Diane Gutierrez-Scaccetti, New Jersey Gov. Phil Murphy’s next chief of staff, is easily applauded by builders and labor unions but greeted skeptically by environmentalists. Starting next Monday, Diane Gutierrez-Scaccetti will be juggling two of the most powerful and difficult jobs in state government: chief of staff to the governor, while also remaining the head of the state Department of Transportation through the end of the year.
She is almost universally viewed as an experienced pick. But while her transportation roles have helped her make friends, as she oversees a shower of road and bridge projects, she’s also been the tip of the spear on controversies that environmentalists have portrayed as a test of Murphy’s seriousness about climate change.
To take three examples of these controversies: Last year, rules meant to protect New Jersey residents and property from flooding were delayed and eventually weakened amid a fight over how they would affect construction projects, including roads. Eventually, when they were finalized, the rule included a carve-out for DOT, even though a year earlier 30 people died in the state amid flash flooding from the remnants of Hurricane Ida, many of them on state roads. The way the rule was delayed and released suggested a behind-the-scenes showdown between the Department of Environmental Protection and DOT — two agencies that have tangled during previous administrations because of often competing missions.
While that fight is over, two others are ongoing: The Turnpike Authority, which Gutierrez-Scaccetti chairs, is supporting an $11 billion road expansion at the mouth of the Holland Tunnel. Meant to relieve traffic and replace an aging bridge, the project has critics in Jersey City and the environmental movement who argue it’s a misguided use of money, particularly at a time when NJ Transit faces a $1 billion budget deficit. The third public controversy is over an NJ Transit plan to spend $546 million on a backup power plant that will likely rely largely on burning natural gas.
GREENIDGE APPEAL CONTINUES: An administrative law judge has narrowed down the issues that will be considered in an appeal of the Department of Environmental Conservation’s decision to deny a renewed air permit for a cryptocurrency mining operation. Elizabeth Phillips ruled in Greenidge Generation’s appeal for its gas power plant on Seneca Lake on Monday. The judge rejected an effort by environmental groups and opponents of the project to dismiss the appeal but also determined that DEC could deny the permit because the project is inconsistent with the state’s Climate Leadership and Community Protection Act.
The company has continued operations as it challenges the initial decision from the Hochul administration to refuse to renew a Title V permit. The judge’s rejection of the motion for summary judgment means Greenidge’s appeal continues on the limited set of issues Phillips identified for “adjudication.”
Environmental groups pushing to shut down the plant framed the decision as a victory because most of the issues Greenidge proposed for review by the judge were rejected. “This is a big win for the climate and New Yorkers. On issue after issue, the judge rejected Greenidge’s arguments,” said Mandy DeRoche, an attorney at Earthjustice. “We look forward to working quickly to resolve the few remaining issues in this case as expeditiously as possible.”
The judge agreed with DEC staff that the plant’s permit renewal would be inconsistent with the state’s climate law. But Phillips found that DEC “staff did not ask for and Greenidge did not provide any basis for finding a grid reliability need or any other justification for the facility during the review process. This will be an issue for adjudication.” The climate law allows state agencies to make decisions inconsistent with the emissions limits if they provide a detailed justification.
Phillips also set for review potential mitigation measures that result in immediate lessening or elimination of the inconsistency with the state’s emissions limits, are located on-site and are “real, additional, quantifiable, permanent, verifiable, and enforceable.” The judge found that Greenidge’s proposal to shut down in 2040 did not require adjudication because it’s beyond the timeframe for the permit. The third and final issue is that Greenidge will have to show it will not disproportionately burden a disadvantaged community. Greenidge hasn’t presented any evidence on these issues, DeRoche said. “They’re getting a second, maybe a third bite at the apple,” she said.
“The primary issue in this decision was whether our appeal of DEC’s denial of our standard permit renewal application would proceed and, on that score, our opponents lost convincingly,” Greenidge said in a statement, citing the rejection of a summary judgment request from advocates. “We continue to operate and look forward to making our case that DEC’s June 2022 denial was fundamentally incorrect on the letter and spirit of the law.”
DEC’s authority to deny permits under the climate law has been upheld before, but this is the first permit renewal case to rely on the state’s emissions reductions requirements. The state has previously rejected permits for re-powerings of gas plants in New York City and the Hudson Valley. The NRG Astoria plant ultimately dropped its plans and sold to an offshore wind developer. The Danskammer plant paused its appeal for a year in June.
Greenidge or the other parties could appeal elements of the decision to DEC’s Dereth Glance, regional director for region 7, ahead of an Oct. 25 deadline. DeRoche said Earthjustice is reviewing the decision to determine whether an appeal is warranted. — Marie J. French
BUSINESS GROUPS TARGET CLIMATE LAW: Mounting private sector concerns surrounding New York’s climate law have led prominent business organizations to launch a campaign calling for a “reassessment” of its implementation. The Business Council of New York, The Partnership for New York City and local chambers of commerce on Tuesday will unveil an independent expenditure committee to highlight to the general public the issues a transition to cleaner forms of energy in the coming years could create.
The groups have already committed six figures to spend on radio and digital ads. They plan to raise more than $1 million by next month for the effort. The campaign is expected to be a months-long effort. One person briefed on the details told Playbook the goal is to eventually “open up a conversation about recommendations” to ease the impact of the transition.
There’s a needle that the business organizations are trying to thread here: They agree climate change is a problem that needs to be addressed, but are concerned an aggressive timeline for transitioning away from fossil fuels will hurt businesses and consumers alike. “New York is at a crossroads,” said Business Council President and CEO Heather Mulligan in a statement to Playbook. “We are a worldwide leader in environmental initiatives and green energy policies, and we must and will continue to be the leader. But, we must also look at the policies and determine what is feasible, what is affordable, and what is best for the future of the state.”
The campaign comes as Gov. Kathy Hochul’s administration is grappling with requests from offshore wind and onshore renewables developers for bigger subsidies. Agencies are also analyzing a cap-and-trade program to meet the state’s emissions reduction targets that has raised cost concerns from the governor and some Democratic lawmakers. That will likely increase costs for businesses and consumers with costs for fossil fuels passed on to utility bills and at the pump. The Business Council has previously been supportive of a cap-and-trade program as the most effective, market-friendly way to achieve the state’s goals. — Nick Reisman
