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About New York’s Renewable Portfolio Standard
The 2002 State Energy Plan developed by the New York State Energy Planning Board warned of the possible consequences of New York's heavy dependence on fossil fuel. The plan noted that the State's fossil fuel sources (gas, coal, oil) are largely imported from abroad or out-of-state, have significant long-term negative environmental impacts, and ultimately face depletion. At the request of Governor George Pataki, a proceeding was instituted by the New York State Public Service Commission (PSC) on February 19, 2003 to explore the development of a Renewable Portfolio Standard (RPS). The PSC voted on September 24, 2004 to adopt an RPS, embodying Governor Pataki's goal of increasing the proportion of renewable electricity used by New York consumers from the 2004 baseline of 19.3% to at least 25% by 2013. In establishing the RPS, the PSC noted that the primary benefits expected from implementing the RPS Program include: 1) diversifying the generation resource mix to improve energy security and independence; 2) attracting the economic benefits from renewable resource generators, manufacturers, and installers to New York State; and 3) improving New York's environment by reducing air emissions and other adverse environmental impacts of electricity generation. As a result of the September 24, 2004 action to adopt the State's RPS program, the PSC designated the New York State Energy Research and Development Authority (NYSERDA) as the central procurement administrator of the RPS Program. The PSC ordered the major investor-owned utilities to collect revenues from ratepayers, to be administered by NYSERDA, for the purpose of achieving a mandatory RPS target set at 24% of retail electricity consumption. The RPS program is designed such that the remaining 1% of the 25% goal comes from voluntary purchases made by retail customers. This combination of voluntary and mandatory targets creates a need for proactive participation from all energy stakeholders, including consumers, to achieve the 25% goal. PSC policy seeks to transition the RPS program over time to ensure compatibility with evolving competitive market conditions. A comprehensive program review is scheduled for 2009, at which time the PSC will examine strategies to transition the program into a more market-driven vehicle, which is the ultimate goal for continued renewable energy development in New York State.
NYSERDA's 24% RPS obligation is comprised of two components: a Main Tier and a Customer-Sited Tier. The Main Tier consists primarily of medium to large-scale electric generation facilities that sell their electrical output into the wholesale power market administered by the New York Independent System Operator (NYISO). The Customer-Sited Tier consists of "behind-the-meter" facilities that are not cost-competitive with existing large-scale generation, but have value in their potential to be located near urban load centers where power prices are higher and where localized environmental benefits and avoided distribution system upgrades would be valued highly. Eligible resources and technologies for both the Main and Customer-Sited Tiers are currently prescribed by order of the PSC and may change over time (see the Attachment to the June 28, 2006 Customer-Sited Tier Implementation Order and other PSC decisions at http://www.dps.state.ny.us/03e0188.htm). The RPS program has provisions for evaluating new resources/technologies for eligibility as the program progresses. Procurement approaches for the Main and Customer-Sited Tiers are distinctly different. For eligible Main Tier resources, the program provides financial incentives, on a competitive basis, to encourage the development of renewable energy sources. NYSERDA enters into contracts with developers of renewable resources for the rights to the “RPS Attributes” that attach to the individual megawatt hours when they are generated. RPS Attributes are defined as any and all credits, benefits, emissions reductions, offsets, and allowances, however entitled, that are directly attributable to the electricity delivered by the renewable generator. NYSERDA will not be purchasing electricity. Eligible Customer-Sited Tier resources such as PV, small wind and fuel cells will be provided capacity and/or performance-based incentives in a manner similar to NYSERDA's current New York Energy $martSM programs. NYSERDA’s cumulative RPS energy targets (in MWhs) for the 2006-2013 period, as specified by the September 24, 2004 Order, are as follows:
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