Rate relief politics

Politico

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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.
Driving the day
RATE RELIEF POLITICS — Immediately after the Murphy administration unveiled its $430 million utility rate relief plan last week at a press conference flanked by Democratic lawmakers, Republican lawmakers who were not there began jumping on the plan as a kind of an election year political gimmick.
But, reading between the lines of their statements, Republicans seemed not to actually oppose the plan, which will knock from $100 to $250 off electric bills in coming months, depending on a ratepayer's income.
Senate Republican Leader Anthony Bucco said his criticism isn't of the plan, it's of the problem the plan is meant to address.
'They have to do something,' he said in an interview. 'But we shouldn't be in this position to begin with. And don't call it relief — it's really not relief — they are taking it from the taxpayers and giving it back to them.'
What Bucco means is that money for rate relief package comes from charges and fees that utility customers have paid or will pay in some form or another. In a written press release the governor's office was clear about where the money is coming from — the state Clean Energy Fund, the state Board of Public Utilities' share of Regional Greenhouse Gas Initiative proceeds and the Solar Alternative Compliance Payment account, which is funded by payments from utilities that didn't buy enough solar energy credits.
Normal customers might be forgiven for not knowing what any of that means, but the Republican criticism is that the rate relief plan is basically a rebate program, though that's the way many government aid programs work.
From the Democrats' point of view, by using money that wasn't intended for rate relief — like RGGI and Clean Energy Fund money, in particular — the administration was able to cushion the blow of rising rates without drawing on general fund dollars that could soon be needed for other unexpected costs.
'We have larger issues coming up,' Senate President Nick Scutari said, specifically naming holes in the state budget that could come from cuts the Republican Congress is looking to make to Medicaid.
In the near term, the fight over how the rate relief plan is paid for is a sub-fight in the larger one Republicans are itching to have with Democrats over the Murphy administration's clean energy policies, which relied heavily on decarbonizing the grid by boxing out natural gas and relying on an offshore wind industry that hasn't materialized.
Murphy, Scutari and Assembly Speaker Craig Coughlin all acknowledged there is a supply-demand problem facing New Jersey and that the rate relief is only a short-term fix for long-term issues. Notably, when they asked about what to do, they talked about solar, nuclear and, in Murphy's case, offshore wind.
Former Senate President Steve Sweeney, who is running for governor, put out a statement urging the state, and by implication his former colleagues still in government, to 'embrace all forms of energy,' including natural gas.
Republicans have been saying this for a while, but Bucco said Democrats 'conduct their business in an echo chamber' and are not open to talking. Still, Sweeney is not alone among Democrats. Assemblymember Wayne DeAngelo, the Mercer County Democrat who oversees the chamber's utilities committee, has also talked about the need for gas.
It's still an open question if New Jersey will go that route, and that is going to be another main tension as Republicans look to use energy policy and power prices in the general election to elect lawmakers and perhaps even a governor who could undo Murphy's clean energy policies. — Ry Rivard
TRUMP FUNDING GATEWAY — The Trump administration is recommending $700 million in the 2026 budget for the Hudson River train tunnel, the $16 billion project to bolster the connection between New York and New Jersey. The funding recommendation by the Federal Transit Administration is a sign that President Donald Trump is no longer attempting to upend the Gateway program, as he did by slow rolling it during his first term.
Elements of the tunnel project are already under construction and employing union workers. According to a recent Regional Plan Association report, the Gateway program could generate 'close to $445 billion in economic benefits' in coming decades. — Ry Rivard
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Around New York
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— Trees are under threat from invasive species.
What you may have missed
TORRES TALKS: Rep. Ritchie Torres is keeping a close eye on the mayor's race as he mulls a run for governor in 2026 and promotes an 'abundance' agenda.
And while he remains a steadfast supporter of Andrew Cuomo, he criticized the ex-governor's decision to shutter a nuclear plant during his Albany tenure.
While Torres praised Cuomo as an effective governor and 'one of the greatest builders of infrastructure in the 21st century,' there's one major decision he says was a mistake: shutting down the Indian Point nuclear plant, which he said led to more greenhouse gas emissions.
'I feel like there's a growing recognition in the Democratic Party that we undervalued the role of nuclear in decarbonizing,' Torres said.
Cuomo defended his decision, pointing to the safety risks of a terrorist attack or earthquake to the plant located near a major population center.
'Do you understand the danger that Indian Point poses? It would be catastrophic if anything happened at Indian Point,' Cuomo told reporters.
Cuomo said he supported nuclear power upstate. The governor backed massive subsidies to keep those plants open.
Torres said he had a 'bias' toward clean energy, although he didn't completely rule out gas power plants to maintain the reliability of the electric grid. Torres sees permitting as a major barrier for clean energy in New York.
Earlier this week, he sent a letter to Hochul, Adams and Trump celebrating a Supreme Court decision limiting federal environmental reviews.
'As an abundance Democrat, there is a presumption against rules and regulations that inhibit the building of new clean energy, affordable housing and infrastructure,' Torres said. — Marie J. French
$430M FOR NJ RATE RELIEF — POLITICO's Ry Rivard: New Jersey Gov. Phil Murphy's administration is providing customers with $430 million in electric bill rate relief, a sum that the Democrat and his allies in the Legislature acknowledge is only a short-term solution for rising energy costs.
The relief package includes $100 for all 3.9 million residential ratepayers in the state and another $150 for low- and moderate-income ratepayers.
SLIMMED-DOWN GAS MEASURE — POLITICO's Marie J. French: Democratic lawmakers in New York are planning to include major changes to a gas transition bill that are aimed at addressing regional concerns and clearing the way for its passage.
Planned amendments to the NY HEAT Act, which were obtained by POLITICO and are not yet final, include renaming the bill and allowing more flexibility for gas utilities to opt out of the transition. Limits on gas utilities expanding their service territory and language on a 6 percent affordability goal are also on the chopping block.
'There's still some changes as we speak,' said Democratic Sen. Liz Krueger, who's sponsoring the bill.
SENATE MOVES MORE UTILITY BILLS: New York Senate Democrats passed another handful of utility measures aimed at reining in rate increases and expanding customer protections on Thursday. The push reflects mounting frustration with rate hikes, as another utility is expected to file a proposed increase in the coming months and several are pending before the Public Service Commission. The bills join several others on utility regulation the Senate passed in January that haven't moved in the Assembly. Only one from that earlier tranche is headed to the governor's desk — Sen. Michelle Hinchey's and Assemblymember Jonathan Jacobson's measure to limit and standardize estimated billing by utilities.
The package slated for passage on Thursday includes Sen. Leroy Comrie's expanded requirement for utilities to notify customers of proposed rate hikes. Currently, utilities are required to publish in local newspapers and send notices in bills. The Department of Public Service also posts on their website. This would require utilities to additionally text or email customers. That's moving in Assembly committees and is sponsored by Assemblymember Zohran Mamdani, who is running for New York City mayor.
The Senate also passed a bill allowing the commission to consider non-economic damages when penalizing utilities. Hinchey also shepherded through a measure to change the Public Service Commission by expanding it to eight members with another with consumer advocacy experience. An even number of commissioners raises the theoretical possibility of a tie vote. Her bill also bars utility employees from serving on the commission for two years. Hinchey also has a measure to require more reporting on planned capital expenditures by utilities, including specific details about projects. The rate case process includes substantial information about proposed utility capital spending, which is scrutinized by the DPS and other parties. That bill has already passed the Assembly and will head to the governor's desk.
Sen. Shelly Mayer, who has slammed Con Ed's proposed rate hike, also advanced a bill to extend the time period for rate cases from 11 to 14 months. That could alleviate rate compression when utilities are entitled to recover revenues deferred during a lengthy settlement process. Mayer also proposed returning 100 percent of excess returns earned by utilities over their authorized return on equity to ratepayers. Currently, shareholders get to keep a portion while the rest is returned to customers. Policymakers view this as encouraging utilities to be as efficient as possible and preserving benefits for customers.
Other bills advanced include notification requirements if customers exceed a certain cost of usage (S8062) and a 24/7 toll-free number to report outages, which utilities already maintain, according to the department (S6200).
The package does little to address significant drivers of rate hikes cited by Public Service Commission members and utility officials including investments to maintain and upgrade the systems — in some cases driven by growing electrification supported by state policies — and local property taxes on new and existing infrastructure. Con Ed, the largest taxpayer in New York City, estimates that a third of customer bills go toward paying taxes. 'What we're saying is that we need transparency, we need accountability,' said Senate Majority Leader Andrea Stewart-Cousins. 'Until we get that, until we have the Public Service Commission work on consumers' behalf, not just listening to the utility, I think we'll be at a better point.'
'We're trying to save the planet as well as save access to utilities,' said Stewart-Cousins. Hinchey also noted that gas utilities are investing heavily in their systems, including expanding the system. 'We know a lot of this is also fossil fuel infrastructure,' she said. Mayer said a significant portion of Con Ed's proposed rate hike is improving their existing system, not moving to renewables. 'Obviously they need to upgrade their existing structure, but we're trying to strike a balance here with the investment in renewables at the same time,' she said. Utilities don't build renewable generation, but do have to upgrade their systems to accommodate growing amounts of distributed renewable energy and more electric demand from EVs and building heating. The PSC has also approved billions in transmission projects to support the climate law.
Upstate United, a business group, criticized Senate Democrats for failing to acknowledge costs driven by the climate law. The group backs a bill sponsored by Comrie to break out costs from state policies on utility bills. ''While it may be politically convenient to obscure the cost of government mandates buried in a utility bill, what everyday New Yorkers need is a better explanation of the factors driving up the cost of energy supply and delivery. New Yorkers deserve transparency, not finger-pointing,' said Justin Wilcox, Upstate United's executive director. — Marie J. French
ATLANTIC SHORES' 'RESET' — Atlantic Shores asked the Board of Public Utilities to terminate the formal project award it received in 2021. The offshore wind farm, a joint venture of Shell and French energy company EDF, was the first in the state to receive all the federal permits necessary to build but for several years it struggled to make its project pencil out, citing supply chain issues and inflation. A petition filed this week with the BPU blames the Trump administration for canceling a necessary permit and asks the state to considered the project canceled. But the company is not giving up on building a wind farm off the New Jersey coast and called the current era a 'reset period' after which it hopes a version of the project can be built.
'This filing marks the closing of a chapter, but not the end for Atlantic Shores,' CEO Joris Veldhoven said in a statement.
The project was in trouble before Trump took office and then things got worse. Gov. Phil Murphy's administration decided in February not to provide financial backing to new offshore wind projects. Atlantic Shores had previously said it needed more money to make its project work; by closing that door, Murphy killed the project, a decision even some of the governor's environmental allies have questioned.
Atlantic Shores' messaging contrasts with Danish energy giant Orsted's behavior in 2023, which was to abruptly kill two wind farms planned in the state and then try to get out of paying a fee for backing out of one of the projects. Atlantic Shores' arrangement with the state, which predated the one Orsted was fighting over, does not include a penalty for exiting. Indeed, it was inked in an era of exuberance about offshore wind that has proven at very least premature if not unfounded. As Atlantic Shores notes in its filing, every single offshore wind deal between 2019 and 2022 in New Jersey, New York and Massachusetts resulted in projects either being canceled or renegotiated.
Even though the offshore wind industry is on shaky ground, Murphy still seems to be confident it will eventually happen. At an unrelated event on Thursday, the governor pointedly talked about the wind industry — where every project ever approved in New Jersey is dead or delayed — in the present tense.
'We have — still, I'm going to use the present tense because we haven't given up — we have the largest offshore wind program in America,' he said. — Ry Rivard
REVENGE OF THE COWS: Republican lawmakers and dairy farmers are slamming what they call a 'crazy' idea to cap the number of cows allowed on dairy farms. The proposal, advanced by New York City Democrats and environmental groups, would prohibit new permits for dairy farms with more than 700 cows.
'We're going to force these folks out and force those cows to be relocated to other states,' said Republican state Sen. George Borrello, referring to the measure's potential fallout.
Milk is big business in New York, which ranks fifth in the U.S. in production. Dairy is the largest part of the state's agricultural industry too, and the state is supporting new dairy processing facilities.
But dairies have also been going out of business over the past decade, facing rising costs and thin margins. The number of cows in the state, meanwhile, hasn't dropped.
Lawmakers and environmental groups supporting the bill, including Food and Water Watch and Third Act, say they want to protect family farms and the environment.
'These farms, known as CAFOs, prioritize profit over the well-being of animals and the health of our environment, cramming thousands of animals into confined spaces,' said Democratic Assemblymember Linda Rosenthal, who's sponsoring the bill.
CAFO stands for concentrated animal feeding operation.
Assemblymember Chris Tague, a Republican from Schoharie, called it the 'most ridiculous bill' he's ever seen. Expanding dairy operations is often the only way for families to keep their operations financially viable, he said.
The measure is also a non-starter for key upstate Democratic lawmakers.
'I am disappointed that a bill like this was introduced without consulting anyone involved in the dairy industry,' said Democratic Assemblymember Donna Lupardo, chair of the agriculture committee. 'These hard-working men and women are some of the best stewards of the land I know.' — Marie J. French
ALL ELECTRIC EXEMPTION DEBATED: The 'reasonableness' of potential exemptions to New York's requirements barring fossil fuels in most new buildings is still being defined. The compromise on all-electric buildings, passed in 2023, required the Public Service Commission to decide how a utility could determine a building is exempt when 'electric service cannot be reasonably provided by the grid.' This caveat was key to getting utility buy-in and Assembly Democrats to sign off on the measure, but environmental advocates worried whether it would gut the effectiveness of the bill aimed at limiting the expansion of the gas system.
Those worries are coming into sharper relief as advocates, utilities and others respond to the Department of Public Service's proposed exemption guidelines, which recommends an exemption if necessary grid upgrades are estimated to take more than 18 months longer than providing traditional gas and electric service. The law's mandate for buildings under seven stories is set to take effect at the beginning of next year.
Environmental groups in comments filed Tuesday argue this 18-month exemption is too broad and not fully justified. The Environmental Defense Fund said the commission should instead consider the actual additional time beyond a customer's requested date of interconnection and require developers to use technology to reduce electricity demand that might drive longer timelines. 'Though it is important to allow utilities to maintain grid reliability, the Commission can adopt a reasonableness standard that is narrow in scope while ensuring stable grid capacity,' the group wrote in its comments.
Gas-only utilities National Fuel, Corning and Liberty Utilities joined with the New York State Builders Association to say the state should also provide exemptions based on costs. If the cost of electric-only exceeds traditional gas and electric costs, then an exemption should be permitted, they argue. The utilities and builders cite concerns about the affordability and demand for housing. An 18-month delay is also too long, they argue. 'If timeline, cost and uncertainty of building in New York become too great, developers and builders may turn to other states where these issues are not present,' they warn. 'To help avoid these unintended but very real consequences, when determining reasonableness for purposes of the Grid Exemption the Commission should consider all relevant factors where full electrification could render a project infeasible, including cost burdens that would price homes out of the reach of New York households and timing concerns associated with the availability and installation of electric infrastructure and equipment.'
The state's joint utilities — Con Edison, National Grid, Central Hudson and NYSEG/RG&E — support the 18-month criteria. They also ask that developers seeking an exemption bear all the costs of required studies. The joint utilities indicate a cost-based exemption would be difficult to implement given variation in costs across different utilities. It would also require evaluating costs of both types of hookups. 'Requiring new service requests to evaluate costs based on both all-electric connections and electric/fossil fuel connections would require more resources, extend project timelines, and increase costs,' the utilities wrote in their comments.
There's no timeline for the commission to make a decision, although clarity will be needed before the end of the year. The state's building codes council has also not finalized the new requirements for the coming year. — Marie J. French
PSE&G MOVES AHEAD — New Jersey's largest utility is rolling out billing changes aimed at protecting electric customers from worst-case scenarios caused by rising rates. PSE&G now won't shut off service to low-income and other qualified customers by extending existing winter shut-off protections to include summer months (now through the end of September). The company is also suspending reconnection fees. Both ideas were floated last month by Gov. Phil Murphy's office and don't require Board of Public Utilities approval.
'There is now widespread recognition that New Jersey needs more power generation to address the forecasted energy supply-demand imbalance,' PSE&G President Kim Hanemann said in a statement. 'PSE&G is not the cause of the 17 percent rise in electric rates, but we can support our customers by advancing critical solutions. These actions should help relieve a burden to families and communities just as the weather is getting warmer and electricity usage hits its peak. We encourage our customers to reach out to us if they are struggling to pay their bill so we can help them access the solutions available.'
PSE&G and other utilities are still waiting for the BPU to take up a broader change that would cushion summer bill spikes by deferring parts of those bills and having customers pay them back throughout the year. The plan resembles existing 'level' billing options that customers can choose to get. All these measures are designed to help take the edge off the new rates that took effect Sunday and are expected to increase the average residential power bill by $25 per month — but more in the summer months for many customers. Republicans have blasted the deferred payment concept, first proposed by the BPU, as a political stunt to help Democrats when they face voters this fall. — Ry Rivard
NYISO PUSHES GAS FOR RELIABILITY — POLITICO's Marie J. French: The state's grid operator has escalated its warnings that new renewables aren't coming online fast enough to meet growing energy demand, explicitly backing additional fossil fuel plants to keep the lights on.
The New York Independent System Operator has for years warned about shrinking reliability margins — the cushion of available generation to keep ACs humming and factories running. With new economic development projects, data centers and other large loads hooking up to the grid, those warnings have taken on new urgency.
'We must consider all options for investing in the grid to provide for reliability and certainty at the most efficient cost,' wrote NYISO President and CEO Rich Dewey in the annual Power Trends report released Monday.