New York moves to electrify buildings

Politico

28-07-2025

Presented by
Good morning and welcome to the weekly Monday edition of the New York & New Jersey Energy newsletter. We'll take a look at the week ahead and look back on what you may have missed last week.
NEW YORK MOVES TOWARD ELECTRIFYING NEW BUILDINGS: The state's code council signed off on new rules requiring buildings to forgo fossil fuels starting next year. The State Fire Prevention and Building Code Council approved the new code on Friday, more than two years after the provisions were included in the state budget. 'Buildings have 40 percent of our state emissions so by cutting out building emissions, this is going to be an incredible step forward for our environmental goals,' said Assemblymember Emily Gallagher, who championed the issue in the Legislature, at a virtual press conference celebrating the latest step. 'This was a real battle to get passed.'
The new code requires new single-family homes, small commercial buildings and new residential construction with seven stories or less to be electrified starting next year. All buildings will face the same requirements in 2029, with some exceptions. Environmental groups supported the new rules, which align with the state's emissions reduction plans. Business groups, the fossil fuel industry and homebuilders oppose the new requirements. 'Every new mandate adds cost, delays projects, and prices thousands of New York families out of the market,' said Mike Fazio, executive vice president of the New York State Builders Association. 'A one-size-fits-all electrification mandate ignores the diversity of New York's housing markets, climate zones, and infrastructure capacity, and working families will pay the price.' The statewide rules were based on New York City's local law mandating electrification in new buildings.
Environmentalists also celebrated a recent legal victory. A federal judge for New York's Northern District rejected arguments from homebuilders, the propane industry and others that the state's new building requirements are preempted by federal law. The plaintiffs in that case plan to appeal the ruling, their lawyer said. In California, a federal appeals court blocked Berkeley's ban on new gas buildings based on a federal preemption argument.
Another outstanding issue is a statutory provision directing the utility regulator to define an exemption for buildings where electric service 'cannot be reasonably provided by the grid.' This caveat was key to getting utility buy-in and for Assembly Democrats to sign off on the measure, but environmental advocates worried it might weaken the mandate. 'The [Department of Public Service] is trying to find that spot where they're not undermining the intent of the law and really saving this exemption for situations where it's just unreasonable to electrify new construction,' said Michael Hernandez, Rewiring America's New York policy director. The current proposal, which hasn't yet been finalized by the commission, would limit exemptions to when electric service for a fully electric option would take 18 months longer than providing traditional electric and gas service. — Marie J. French
SIERRA CLUB FIGHTS FOR ANDY'S FARM — The New Jersey chapter of the Sierra Club is on the same side as the Trump administration in a fight to stop an affordable housing project in Cranbury. In a lengthy statement on Friday afternoon, the club waded into the fight over Andy's Farm, which the town plans to seize through eminent domain to make way for scores of affordable housing units.
'Using eminent domain to kick a family off of their farm that they have owned for generations is despicable,' said Taylor McFarland, the Sierra Club chapter's conservation and program manager. 'Cranbury needs to do a better job of finding suitable locations for affordable housing. There is no excuse. This is a massive overreach by the Township to unjustly seize land that has been in a family since 1850, displacing their livelihood and erasing their history. It is an abuse of power that sets a slippery slope for towns trying to meet their affordable housing mandates.'
The farm fight has rallied conservatives and members of the MAGA movement, including Agriculture Secretary Brooke Rollins who said in a social media post last month that 'the Biden-style government takeover of our family farms is over.' — Ry Rivard
HAPPY MONDAY MORNING: Let us know if you have tips, story ideas or life advice. We're always here at [e-mail] and [e-mail]. And if you like this letter, please tell a friend and/or loved one to sign up.
Editor's Note: Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories.
Here's what we're watching this week:
MONDAY— The MTA's committees meet, starting at 8:30 a.m.
— The Gateway Development Commission meets, 4 World Trade Center, 23rd Floor, 11 a.m.
— A virtual press conference, hosted by NRDC, to announce a legal petition demanding EPA to step in because New York State and the City of Syracuse 'have failed to address the city's lead water crisis,' 1 p.m.
TUESDAY— The New York Power Authority board of trustees meets, 9 a.m.
WEDNESDAY— The MTA board meets, 9 a.m.
— New Jersey BPU holds a virtual stakeholder meeting on the readoption of Electric Discount Energy Competition Act-related rules, 10 a.m.
— The Nuclear Innovation Alliance releases a new guide for state policymakers, with discussion about New York's plans, 11 a.m., virtual.
AROUND NEW YORK
— New York's climate law is on trial.
— The heat here and distant wildfires hammer your lungs.
Around New Jersey
— Sen. Andy Kim visited the South Jersey Port in Paulsboro — we used to call it the 'wind port' — and said he 'met with EEW CEO Charlie Lamb to discuss how regional stakeholders and EEW can work together to maximize the port's potential and drive South Jersey's growth.' The offshore wind industry that was supposed to anchor the port, and EEW's presence is, of course, in dire straits.
— Will the next governor keep funding NJ Transit as Murphy has?
What you may have missed
DEVELOPERS RESET AFTER OFFSHORE WIND ORDER: The Public Service Commission's decision to halt work on a transmission project to support offshore wind has developers who were competing for the job eyeing their options. The commission last week terminated a selection process for transmission infrastructure to connect nearly 5,000 megawatts of offshore wind to New York City's grid. The commission cited concerns about ratepayer costs and lack of federal support making it unlikely that the project would be needed on the timeframe initially envisioned. Bidders and stakeholders have 30 days from the PSC's decision to challenge it by filing a petition for rehearing.
One developer — Viridon — is considering its next steps. 'This decision was extremely disappointing to anyone concerned about downstate reliability, affordability and the future of clean energy in New York,' said Basil Seggos, a former New York DEC commissioner whose clients now include Viridon. 'Trump deserves the lion's share of blame due to his pause on wind. But the PSC acted too quickly and rashly, ignoring its own ability to modify the process and leaving the state — and ratepayers — with fewer energy planning options in a time of spiking demand. The Commission should quickly reconvene to get this planning process back on track.'
Others were more circumspect.
PJM HITS CAP WITH CAPACITY PRICE — POLITICO's Ry Rivard: The nation's largest power market will see another increase in wholesale electricity prices — but utility customers are unlikely to face the type of dramatic spike next summer like the one they're paying for now.
Power prices in PJM Interconnection's latest capacity auction increased by 22 percent to $329 per megawatt day, a level PJM said it expects to translate to a year-over-year increase of a 1.5 to 5 percent in some customers' bills, depending on their state. Consumers in some areas could see a drop in retail rates when they take effect next summer, PJM added.
'While the PJM auction results reach new highs and reflects PJMs flawed market design, due to some changes that NJBPU advocated for, we don't anticipate a comparable bill impact as we did this summer at this time,' New Jersey Board of Public Utilities President Christine Guhl-Sadovy said in a statement.
The capacity market auction, which locks down power supplies for the coming year in the energy market for 13 states and Washington, D.C., has drawn increased scrutiny since rates surged by more than $200 last year to hit $270/MWd.
That drove dramatic, double-digit rate increases for customers, including a $25 per month bill increase in New Jersey that caused political uproar. PSEG, the owner of New Jersey's largest utility, said Tuesday it does not expect a major rate increase because of the new PJM auction results.
The new capacity price is $59 more than last year, an increase that showed the ongoing constraints on energy supplies across the region. The figure is also bumping up against the price cap PJM agreed to following pressure from Pennsylvania's Democratic Gov. Josh Shapiro. Many market watchers expected bids from power generators to come in as high as possible — and they did.
That cap goes away, though, after the next auction later this year. That will create major uncertainty about how far prices could surge in coming years, especially given rising demand for power from artificial intelligence data centers and bottlenecks in building the natural gas and nuclear power plants that President Donald Trump is seeking.
PJM HEARS FROM GOVS — The region's governors are continuing their pressure campaign against PJM. On Wednesday, as a representative spoke at a PJM meeting about their bosses' concerns, the governors announced a conference in September to consider 'necessary organizational and mission changes in PJM governance.'
NEW ENERGY PATHWAYS — POLITICO's Marie J. French: Gov. Kathy Hochul's administration sees no reasonable way for New York to achieve its climate law targets on schedule.
NYC LOSING MORE FOSSIL PLANTS: A fleet of floating fossil fuel units that run on the hottest days to keep the lights on plan to retire next year as their profits drop. ArcLight's Alpha Generation, which owns the barge-mounted peaker plants, filed retirement notices with the state's independent grid operator earlier this month for the Narrows and Gowanus plants, proposing to shut down in July next year.
The 1970s combustion turbines have high emissions rates when they run and were targeted for retirement by regulations under former Gov. Andrew Cuomo. Gowanus and Narrows proposed shutting down during the summer to comply but have been kept online year-round by the New York Independent System Operator to ensure reliability. They're not expected to be needed after the 1,250-megawatt Champlain Hudson Power Express, a transmission line to bring power from Canada into the city, is completed next year. The arrival of that additional energy, subsidized through a contract with NYSERDA, is expected to help clean up the city's grid. The new resource is also expected to lower electricity prices — and thus, profits for existing fossil generators.
'With the entry of CHPE next summer, we expect market prices to be insufficient to support continued operations,' said Matt Schwall, director of regulator affairs at AlphaGen. The deactivation notice filed with the NYISO kicks off a review by the grid operator to check whether New York City's grid can still meet demand without these combustion turbines, even under the most stressful conditions. That could lead to the units being kept online longer by the NYISO, but is not expected under current forecasts. 'To the extent the barges are retained for reliability beyond CHPE's entry, it reflects that the value of these dispatchable assets has not been reflected in market prices,' Schwall said.
The owner of the two Brooklyn plants (formerly known as Astoria Generating Company and Eastern Generation) previously made plans for the future based on the shifting winds of state policy. The company proposed shutting down the 32 Narrows barge units while repowering the Gowanus facility with eight more efficient combustion turbines in 2018, but dropped that proposal after Gov. Kathy Hochul's administration rejected permits for similar gas projects due to the state's climate goals. The company instead prioritized battery storage opportunities, although those haven't moved toward construction given a need for contracts or other financial support.
While the power industry is watching with interest Hochul's shifting stance toward more openness to natural gas and its potential role in the state's energy future, none have yet moved to apply for a new gas plant permit. Given the reliance of new resources in New York (right now, renewables and storage) on out-of-market subsidies, it appears that private developers are so far unwilling to risk the yearslong process without additional signals from the state. The two barge sites do offer potential advantages for future power infrastructure, Schwall said. 'Given the critical electric and fuel interconnections, there is opportunity at these sites for a second life, both in the form of energy storage and repowered gas generation to support system reliability and the state's renewable goals,' he said. 'We are hopeful the state will invite and support such investments.' — Marie J. French
DEP FLOOD RULE DEETS — The New Jersey Department of Environmental Protection on Monday released 273 pages of amendments to and responses to comment about its sprawling package of coastal flood rules.
Netflix details too: In response to a request from POLITICO, the department released a public comment letter CSG Law wrote on behalf of Netflix, which received a carve out for its $1 billion plan to redevelop Fort Monmouth into a film and television studio.
John Valeri Jr., an attorney who is representing Netflix, wrote last November that if the company had to comply with the flood rules 'significant portions of the property dedicated for future development, including studios, may not be achievable.' In particular, certain buildings would have to be elevated or flood-proofed, which would be an 'extremely expensive enterprise, and was never considered as part of Netflix's decision' or is 'not generally an option for Netflix, particularly their stages, because the activity must rest on solid ground.' — Ry Rivard