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ENERGY: New York's electricity prices trigger call for deregulation (03/13/2008)
Jenny Mandel, ClimateWire reporter
A New York researcher lashed out at rising energy costs this week with a series of recommendations to slash rates by reevaluating regulatory burdens, cutting research and development programs and backing out of the Regional Greenhouse Gas Initiative (RGGI).
Max Schulz, a senior fellow at the Manhattan Institute for Policy Research, said costs are too high in the state's energy system and reliability too low. The state has the second-highest electric costs in the country after Hawaii and Connecticut, he said, even as the New York Independent System Operator group, which operates the bulk electricity grid, have warned of generation and transmission problems starting in 2011.
The answer, Schulz concluded in a paper published this week, lies in a series of measures that would streamline permitting for new power generation facilities and limit electricity cost add-ons.
A major step in facilitating new build of power plants would be to reauthorize a law that expired in 2003, known as Article X, which guaranteed quick licensing approvals by eliminating local permitting and giving the state responsibility for evaluating local concerns.
Schulz also urged a cost-benefit analysis of environmental and energy regulations, reconsideration of acid rain-related rules, state support to relicense the Indian Point nuclear plant, and an overhaul of the state's renewable portfolio standard. Arguing that New York's participation in RGGI will increase energy costs without noticeably addressing global warming, Schulz said the state should back out of any agreement until better carbon capture technologies are available.
Cost vs. benefits
On the cost side he proposed a moratorium on increases to a system benefits charge that funds research and development programs.
Schulz' analysis did not address how far the proposed steps would go toward containing costs or bolstering system reliability, but he joins others in calling for regulatory reform in the state.
Earlier this week, the Federal Energy Regulatory Commission approved a plan aimed at curbing the market power of major suppliers in the New York City market (E&ENews PM, March 10). That plan would replace a fixed revenue cap for certain sales with a market-based cap, and targets a few major players that were deemed by NYISO to have enough heft to push prices up by withholding supply.
The tension between efforts to implement RGGI and other regulatory regimes and concerns over rising electricity costs that result from these efforts is likely to grow in the future. Increases in the price of electricity triggered by climate-related moves are just beginning to appear and, so far, consumers have been pre-occupied with almost-daily gasoline price increases that have now moved to record levels.
So far, environmental groups have said little about the economic impacts of CO2 regulations and politicians have also tended to avoid these issues, especially on the campaign trail.