Cuomo’s Energy Boondoggle Triggers Bipartisan Rejection
Anyone mourning the death of bipartisanship in the wake of a most divisive election need only cast their gaze toward Albany to be disabused of that notion.
Citizens and activists from across the political spectrum have been coalescing against the disastrous energy mandate, an egregious example of crony capitalism concocted by Governor Andrew Cuomo and his well-placed allies.
Ultimately, New York taxpayers stand likely to suffer the consequences, so it’s critical that residents recognize the peril, register their objection and join the growing bipartisan opposition movement.
The New York Public Service Commission (whose board Cuomo appointed in its entirety) voted earlier this year to impose a new Clean Energy Standard (CES) for the entire state. The new CES requires that 50% of New York’s energy must come from carbon-neutral sources by the year 2030.
Unfortunately, that draconian and arbitrary mandate isn’t even the worst aspect of the scheme.
The CES plan openly subsidizes financially struggling nuclear power plants in upstate New York through something called Zero Emission Credits (ZECs). In essence, New York’s other utilities would be compelled to purchase the ZECs from a government bureaucracy, which the bureaucracy first obtains from the company operating the struggling upstate nuclear plants. It all amounts to a wealth redistribution from healthy power plants to financially faulty plants to satisfy carbon-free green energy regulations. Anyone familiar with renewable energy subsidy debacles for wind and solar operators such as the Solyndra example will realize the obvious pitfalls.
Exacerbating matters, the steep cost will be paid by New York consumers and businesses, even those that live nowhere near, and receive no electricity from, the subsidized struggling plants.
Specifically, the scheme guarantees $1 billion to the struggling plants in the first two years alone, with an estimated total cost of $8 billion over the entire duration of the CES scheme. The final cost to consumers through 2030 will depend upon ever-fluctuating wholesale electricity costs, how many of the non-self-sufficient reactors continue to operate, and other unknowns. Moody’s went so far as to warn investors that the ZEC cost over the duration of the program are “quite substantial,” which it estimates at $17.48 for each megawatt hour of production. For the nuclear utilities, even with their subsidies, it estimates a disturbing 45% price increase.
Even the Cuomo Administration acknowledges that individuals and businesses in the state should expect their power bills to rise.
Adding insult to considerable injury, those defects and costs of the plan aren’t even the worst part. The CES scheme constitutes a crony capitalist boondoggle of the sort opposed by all portions of the political spectrum.
That’s because the subsidy scheme will benefit a single company named Exelon, which controls the struggling plants that qualify for the subsidy (the Ginna nuclear power plant in Wayne County and the Nine Mile Point plant in Oswego County). Exelon also stands poised to acquire another plant whose current owner had planned to close in upcoming months.
Conspicuous procedural problems also bedevil the CES plan. Not only was the approval process rushed through with only two weeks for public comment, but the ZEC subsidy rates will be determined in part by an obscure “social cost” of carbon.
These myriad defects help explain the broad opposition to Cuomo’s plan.
As just one prominent example, the environmental organization New York Public Interest Research Group rightly notes that New York ratepayers who weren’t consulted about the scheme will be hit with higher utility fees. As the group’s executive director Blair Horner stated, “These charges are essentially a tax to keep aging nuclear plants online.”
Conspicuously, Cuomo Administration officials remain unable to defend the plan against burgeoning public opposition. In a recent local television appearance, Cuomo’s Public Service Commission Chair Audrey Zibelman couldn’t justify the decision to provide billions of dollars in subsidies to upstate plants while simultaneously closing downstate plants, and she stubbornly refused to acknowledge the plan’s high costs.
Nuclear power remains a reliable domestic energy source that the United States can cleanly and safely utilize to a far greater extent.
Governor Cuomo’s crony capitalist CES scheme isn’t the way to go about it. The growing bipartisan opposition movement is an encouraging sign, one that should confirm for New Yorkers of all political leanings that the plan should be rejected.