Discover more from Public Power Review
New York Slated to Expand Public Power
Though it's no Green New Deal, new budget legislation should provide the impetus for the New York Power Authority to rekindle its past institutional capacity.
As New York State’s long-delayed budget negotiations wind down, the compromise legislation over the future of the New York Power Authority (NYPA) was finally submitted last night.1 Overall it resembles the Hochul Administration’s version on virtually all the key points I wrote about a few months ago: empowering without prohibiting (edit: see appendix at the end of this post for clarification); pragmatism for NYPA’s peaker plants; locking green NGOs out of publicly-funded decision-making power; and a more sensible albeit still means-tested material benefit to residential consumers. But it also includes clearer, more explicit labor provisions pushed by the left.
This compromise legislation seems like a positive step for public power. In its absence, there’d likely be no political momentum for NYPA to take advantage of the Inflation Reduction Act (IRA) by rebuilding its capacity to engage in the power system.
As I stated in my last analysis, the very existence of this legislation is a victory for the coalition of the Democratic Socialists of America and climate justice groups, despite some of their provisions (thankfully, in my opinion) not making the cut. But even if passed, major questions remain around the executive and institutional capacities of NYPA.
Institutional challenges beyond legislation
Already the Public Power NY coalition and allied legislators are calling for the removal of interim NYPA CEO Justin Driscoll, repeating a past accusation that he’s a Republican2 opponent of BPRA. This strikes me as an extremely risky demand: Who would replace him? Does the coalition have suggestions? Is there a David Lilienthal ready to drop in and aggressively build in opposition to the private energy companies as in the early Tennessee Valley Authority? Or perhaps a Robert Moses, the former NYPA chairman and “master builder” who left the biggest mark on the agency?
Even the basis of the left coalition’s chief complaint about Driscoll — that he’d previously opposed BPRA — was legitimate in many ways, as my collaborator and I laid out in The Intercept last year. (As fellow socialists, we can’t simply be called Republican opponents.) At last year’s State Assembly hearing on the legislation, Driscoll spoke against BPRA in part by asserting, correctly, that since NYPA was ineligible for federal tax credits (pre-IRA), they couldn’t compete with private developers in the market that’s been developed for more than a generation just for them.3 He also cited other concerns about finances and cost recovery — concerns that should not simply be dismissed as political hostility, or because he twice donated to Republicans.
NYPA CEO Driscoll already has institutional and operational knowledge of the organization. And given the existence of Hochul’s earlier version of the bill and this new compromise one, the agency leadership seems on board with at least the central tenet: breaking from decades of atrophied institutional capacity by once more building key generation resources in the power system of New York. That being said, there’s certainly a need for Driscoll to reverse years of awful labor relations with the authority’s unions.
What the coalition and the agency now need to navigate is implementation. In particular, because this compromise legislation drops BPRA’s requirement that the state’s many public entities buy power only from NYPA, the agency will have to confront the possibility that existing public customers — from the Metropolitan Transportation Authority to the New York City Housing Authority to municipalities across the state — will be scared off by higher (or at least uncertain) rates and buy their power privately instead. And that’s to say nothing of NYPA’s many private customers, from small businesses to big industrial customers, who’ve always balked at the prospect of NYPA collecting fees from them to support the state’s renewable energy incentives.
In short, if NYPA is to raise money in order to build (“or burn”), then it’ll need to find a market for all that newly built power, so that the capital costs can be smoothed out across more, and future, customers. Thankfully this new legislation, like Hochul’s earlier version and unlike BPRA, explicitly enables NYPA to sell power and services directly into the state’s wholesale power markets and straight to people’s utilities. In both avenues NYPA will hopefully get to the point where it can undercut private competition by eschewing shareholder profits and the tax equity middleman.
Is this a climate bill?
For years, proponents have called BPRA — and presumably this compromise legislation — a climate bill. That’s wrongheaded in two important ways: the legislation falls fundamentally short in its outlook on decarbonization, and advocates would be remiss to overlook the significance of rebuilding state capacity in and of itself.
First, decarbonization. Like BPRA before it, the new legislation remains narrowly focused only on the state’s short-term renewable electricity generation target (70% renewable by 2030) rather than the state’s longer-term carbon-free target (100% carbon-free by 2040). Instead of conceiving of NYPA’s role as kickstarting public development of advanced clean energy technologies that the private sector has so far eschewed and that the state’s grid operator warns will be desperately needed, the socialist and climate coalition behind BPRA only ever aspired to catch up to the private sector in the field of renewable energy. The new compromise legislation keeps that focus on renewables — but, as I outline in the miscellaneous thoughts at the end, that doesn’t quite preclude the development of other resources.
Moreover, it remains unclear how NYPA will rocket past the obstacles of project siting (a political contest over land use) and of generator interconnection queues (a technical challenge mixed with a political contest between resource owners). If the premise that this is a climate effort rests on the ability of NYPA to build renewable resources faster than the private sector has been, then it remains unproven.
Second, state capacity. If we believe that the political task of decarbonization fundamentally requires the state to directly engage in productive enterprise because it won’t always be profitable enough for the business class, then we need the state to be able to conduct such activity. In the power sector, that means public power authorities like NYPA, the Tennessee Valley Authority, and local municipal utilities. Then regardless of the carbon impacts, a political referendum to kickstart productive capacity inside a public power authority like NYPA is a critical part of the broader decarbonization agenda.
Is this a Green New Deal?
Elation after the years-long campaign for Building Public Renewables is understandable. But excited talk of this being "Green New Deal" legislation is overstated. For one, the only redistributive material benefit for New York’s residential consumers is means-tested: instead of securing a universal constituency across the board, it targets only the most deserving. Via the REACH program first introduced in Hochul’s earlier legislation, utility bill credits from NYPA renewables will only be awarded to New Yorkers in “disadvantaged communities” and only those with below median household income.4 The administration of this highly technocratic accounting will be performed by the state’s utilities, the overhead for which they will recover in fees collected from all bills. Is this the stuff a Green New Deal is made from?
Many on the left have rightly disputed lofty rhetoric about the IRA when it's compared to a Green New Deal program of mass public investment and universal material benefits. It's not that. But it nonetheless included the "direct pay" energy tax credit measure that has enabled NYPA to compete with private developers over renewables in the first place.
So Green New Deal or not, there's a lot of room in concrete policy around public investment in and public development of clean infrastructure that can (re-)enable state capacity to be built. Now, increasingly, come the questions around how progressive politics will adapt to the attendant need for competent public administration after decades of outsourcing, and how exactly that revived state capacity will take shape.
Appendix: Miscellaneous thoughts on the legislation
Ways in which the bill more closely resembles Hochul’s earlier proposal than it does BPRA, along points I highlighted in February:
The legislation does not require that NYPA only build/own/operate renewables. It empowers the agency to do so; it tasks them with biennial and very public strategic planning around renewables; and it requires that they eventually retire their New York City-area peaker fleet. But it does not seem to prohibit them from building/owning/operating other power resources, whether that be fossil-fueled (aside from the peakers), hydrogen-fueled, or, say, uranium-fueled.
EDIT: It’s NOT the case that NYPA could decide, without additional legislation, to build and operate any such resource. My point is perhaps an overly pedantic one: new legislation to authorize such activity would not contradict or require changes to the provisions added to public authorities statute by this bill. In particular, it drops BPRA’s technically unsatisfiable requirement that NYPA only build any infrastructure to carry renewable power (how you determine that one is a head-scratcher) and even the requirement to only sell renewable power going forward. Instead, the latter requirement to sell only renewable power and energy is now conditioned to only apply “[f]or any renewable energy generating project authorized by this [new] subdivision, identified in the [new, renewable] strategic plan and developed after its effective date.” That means NYPA can continue to operate and sell power from, say, its combined cycle natural gas plant in Queens.
The legislation empowers NYPA to sell renewable power to third parties for the purpose of those parties producing “green hydrogen,” but does not appear to enable NYPA to produce it themselves, or to combust it, as they’ve already been experimenting with.
It doesn’t appear to even prohibit NYPA from continuing to operate and contract for the combined cycle natural gas-powered generators it relies on today.
The new legislation thankfully eschews the decision-making power and even financing for green NGOs that BPRA had attempted to institute.
The NYPA peaker fleet has a 2030 deadline for retirement, but NYPA has (a) sole discretion to retain them for reliability purposes and (b) a requirement not to retire them if doing so would increase city emissions or pollutants.
Unlike the original Hochul version, the new legislation explicitly requires that NYPA and any contractors working with NYPA pay prevailing wages and work with unions while building these renewables. That and other labor-related measures surely result from campaigning by the left. But at this time it’s unclear whether the state’s labor unions representing power sector workers — who previously adamantly opposed BPRA actually — will actually back the legislation.
A new requirement on how NYPA can develop renewable projects on agricultural land has been added. I don't believe private developers face this requirement.
The Public Power NY coalition also claims Hochul and Driscoll “vehemently opposed provisions that would make NYPA more accountable to New Yorkers.” Presumably they mean BPRA’s expansion of NYPA’s Board of Trustees from 7 to 17 seats, which the legislation dropped. Though the coalition has said this would ensure representatives from labor would sit on NYPA’s Board, their legislation does not appear to actually require that. (See page 8 of the most recent Assembly version.)
Thanks for reading Public Power Review! Subscribe for free to receive new posts and support my work.
Though he’s being criticized for personally donating to a couple Republican political campaigns over the years, he also donated to progressive NYC mayor Bill de Blasio’s 2013 campaign.
Driscoll in the July 28th hearing on BPRA last year: “… NYPA [is] ineligible for tax credits that private sector companies could monetize. And that often make the difference between in whether a project gets built. On balance NYPA does not believe that we have a cost advantage in developing renewable generation.” (p. 161 in the transcript)
See my previous analysis for more on Hochul’s means-tested utility bill credit system vs. BPRA’s magic 50% price cut with the same means testing. Even the detailed financial report on BPRA that the coalition released last month left this measure unstudied, given the uncertainties it poses for NYPA accounting.