Letter in Opposition - A.6366/S.2382

Letter in Opposition to Mylan Denerstein, Counsel to the Governor

This letter is submitted by Energy Coalition New York in opposition to A.6366 (Paulin)/S.2382 (Maziarz), which is currently awaiting executive action. This bill would extend remote net metering to fuel cell electric generating equipment operated on a farm or by a non-residential customer-generator.

Energy Coalition New York consists of New York State's major gas and electric utility companies: Central Hudson Gas & Electric Corporation, Consolidated Edison, Inc., National Fuel Gas Distribution Corporation, National Grid, New York State Electric & Gas Corporation and Rochester Gas and Electric Corporation. Coalition companies collectively employ more than 32,000 people, service more than 8.5 million customers and pay more than $3 billion in state and local taxes, assessments and fees. The member companies annually invest billions of dollars to make capital improvements to the electric and natural gas infrastructure located in New York State.

Fuel cell electric generating equipment may be operated by fossil fuel – either natural gas or propane. The proponents of this legislation have argued that remote net metering is already available to solar, wind, farm waste and micro-hydroelectric generating equipment and should be extended to fuel cells. Remote net metering is currently limited to renewable technologies. This bill does not require the use of renewable energy to operate the fuel cell electric generating equipment.

Remote net metering is applied to intermittent renewable resources to ensure that they receive the full retail credit to encourage their use. With respect to fuel cells, there is no parallel public policy objective. Fuel cells are able to operate at any location on a 24-hour basis using fossil fuels. There is no public policy reason to subsidize fuel cells using fossil fuels like renewables.

The expansion of the utilization of renewable technologies is a positive development. The adoption of net metering, together with other economic inducements, has encouraged development of renewables. As the economics of competitive renewables and fuel cells continue to improve, it will increasingly result in the cross-subsidization of customers pursuing new technologies. The cost of the electric distribution system operated by the utilities is socialized among all their customers. As more customers elect to pursue net metering options, the customers that are wholly dependent on the grid bear an increasing share of the cost to operate and maintain the grid. A net metered customer has more financial wherewithal as demonstrated by their investment in new technology. This situation ultimately leaves less financially capable customers, including low income customers, with an increased burden of financing the electric distribution grid. These costs include taxes and subsidy payments for support of energy efficiency and renewables, which are not paid at the same level or at all by net metering customers. Remote net metering further exacerbates these costs and cost shifting.

This bill expands remote net metering with the resultant impact on customers consigned to the grid. The extent of the cost shifting at this point is arguably negligible; however, the expansion to renewables will significantly change the current situation. This current situation should not be the basis for expanded legislative mandates for remote net metering, particularly to non-renewables, and also when the proposed change is permanent. There needs to be an examination of the future impacts of this bill on customers prior to enactment. Remote net metering needs to be evaluated to determine future consequences for the utility business model. A significant expansion of remote net metering policy as embodied in this legislation should not be implemented without an understanding of future economic impacts on the viability of the electric distribution grid. To continue to expand subsidies, particularly at the expense of customers without a clear plan to ensure balance within the electric distribution system, would be irresponsible.

This legislation should not proceed in the current knowledge vacuum. There needs to be an assessment of the impact of remote net metering and an evaluation of public policy goals, utility business plans and the cost shifting consequences of remote net metering.

Based on the foregoing, it is respectfully requested that this legislation be vetoed by the Governor.