A Review of New York Administration’s Proposal to Overhaul Renewable Energy Siting Process

New York’s Governor Cuomo has formally proposed the Accelerated Renewable Energy Growth and Community Benefit Act (“Siting Act”) in his 30-day amendments to the executive budget (see Part JJJ), released February 21, 2020. The proposal includes several significant revisions to the process for siting renewable energy projects and transmission buildout in NYS.

The Siting Act would establish a new program to replace the existing Article 10 permitting process, as well as other key revisions across various areas of state law designed to help New York achieve its recently enacted 70% by 2030 renewable energy target enshrined by the 2019 Climate Leadership and Community Protection Act (CLCPA).

Overall, this proposal has the potential to restructure the siting and permitting process for renewable energy projects over 10 megawatts (MW), carrying with it the potential for market uncertainty until ultimately either adopted in some form or rejected, and could prove a key component to New York State achieving its clean energy goals.

Overview of Key Provisions in the Siting Act

The Siting Act includes the proposal of a new Article 23 “Major Renewable Energy Development Program” to serve as a consolidated permitting process for renewable energy facilities. This would require all new renewable energy projects at or above 25 MW capacity to go through a new permitting scheme and allow certain projects to “opt-in” to the new Article 23 process, including renewable energy projects with applications under Article 10 review. The proposed Article 23 includes a consolidated review timeline (6-12 months), lessened fees, the establishment of uniform standards and conditions, and the ability to pay into a mitigation fund rather than implement project-by-project mitigation.

In addition, the Siting Act would establish a “Green Energy Siting Office” and a “Clean Energy Resources Development and Incentives Program” to identify “build-ready sites” to be secured by NYSERDA for competitive transfer to developers, with priority given to existing or abandoned commercial uses. It would also establish a program under which owners of renewable energy projects would fund a bill crediting or benefit program for host communities, and would amend the process for negotiating PILOT agreements with host municipalities.

The Siting Act also includes various mechanisms for the state to expedite transmission upgrades, including a “State Power Grid Study and Program.” This section is intended to identify and expedite transmission upgrades in New York, including submarine transmission. The Siting Act would also make recommendations to LIPA for transmission upgrades and grant NYPA the authority to undertake transmission buildout.

A detailed summary of each provision in the proposal can be found here, and key sections are highlighted below.

Procedural Next Steps for the Siting Act as Part of the FY2021 Budget Proposal

The next step of the NYS FY2021 budget process is for each legislative chamber to submit their respective “one-house bill” in consideration of the Governor’s budget proposal and 30-day amendments. Once we have three separate versions of the budget bill (Governor’s amended, Senate’s, Assembly’s) a series of three-way budget negotiations will follow, including members and/or staff of the NYS Executive and both chambers of the NYS Legislature, with a target date of April 1, 2020 for compromises to be established and the final budget to be released.

Other Potential Next Steps and Legislative Considerations

There are many possible paths forward for this proposal as lawmakers debate its merit. Considerations expressed this week by New York State lawmakers include whether or not the budget is the appropriate vessel for this proposal in light of the lack of traditional budget implications contained within, or if the proposal should be pulled out of budget negotiations (scheduled to conclude April 1) and taken up as a separate Act to be debated during the 2020 Legislative Session (scheduled to conclude on June 2).

Another topic for ongoing discussion and debate will likely be the proposed establishment of a new Article 23 permitting process housed within the Department of Economic Development. Governor Cuomo’s stated rationale for this agency shift is that it will lead to “building and delivering renewable energy projects faster.” This has the potential to create tension between the desire to permit projects expediently and the desire expressed by many lawmakers for the appropriate consideration of environmental review and other local factors that may be more suitable in the purview of the Public Service Commission (PSC) and other state/local agencies involved in the existing Article 10 process.

Furthermore, with this being an election year in New York State, while some downstate lawmakers have privately and publicly espoused the political will for an overhaul of the siting process for renewable energy projects, upstate lawmakers have not shown similar political will. In fact, many have argued against a further consolidation of the siting process within state agencies, which may be perceived as a removal of “Home Rule” and a further step away from local input and participation of the host communities in their legislative districts. However, Democrats currently controlling both chambers of the New York State Legislature have shown a tendency towards prioritizing societal objectives over the local interests of upstate lawmakers.

This proposal also raises questions about how developers and associated firms with projects currently under review in Article 10, or approaching the Article 10 review process, will proceed. What assumptions will they operate under? Will developers stall Article 10 applications or procedures until clarity is gained regarding access to a potentially more favorable Article 23 alternative?

As developments around this proposal unfold, Sustainable Energy Advantage will monitor, analyze, and report on this key piece of legislation throughout the 2020 Legislative Session. To stay up-to-date on this issue, and many more issues regarding renewable energy development in New York State, readers are encouraged to subscribe to SEA’s Eyes & Ears renewable energy regulatory, policy and legislative tracking and analysis service for continuing coverage. Contact us to receive a quote.

Brief History of NYS Permitting Process

New York’s Article 10 siting process was designed to provide a “unified approach” for developers of new electricity generation facilities to get projects approved. Article 10 applies to all power plants with a nameplate capacity of 25 MW or greater, including both renewable generators and traditional fossil fuel generators. The Article 10 law was enacted on August 4, 2011. A previous version of the law had been in effect from 1992-2002 but expired on January 1, 2003. Between 2003 and 2011, all generation projects were permitted under New York’s State Environmental Quality Review Act (SEQRA) and other applicable local and state laws.

NYS saw some great early success under previous permitting schemes with several wind projects constructed. However, under Article 10, not one large scale wind or solar project has been constructed in New York. Cassadaga Wind was the first project to be permitted under Article 10 (in January 2018) but has yet to clear the Article 10 conditions processes and has yet to start construction in earnest.

Due to this situation, many renewable energy developers have been clamoring for changes to the NYS siting process, and the Cuomo Administration has sought ways to facilitate the successful renewable energy development necessary to meet its, and now the legislature’s, aggressive renewable energy and greenhouse gas goals. However, among developers there has not been consensus, since some experiencing high levels of local opposition have been relying on the override provision in Article 10 to issue waivers of local laws that would impede their projects. Prior to this bill, there had been a growing consensus of late among the development community around an Article 10 “opt-out” that would allow those with community buy-in to move ahead with the SEQRA processes.

Proposal Summary and Highlights of Key Sections

 [§ 3 – § 6] Amends Public Service Law; and Economic Development Law

Establishes the Major Renewable Energy Development Program (Article 23) under the new Office of Renewable Energy Siting within the Department of Economic Development.

Administers permits for any renewable energy system as defined by the Climate Leadership and Community Protection Act (CLCPA) that is ≥ 25 MW, and any co-located storage, including associated transmission facilities providing access to load.

  • Facilities with pending Article 10 applications as of the effective date of this bill, and any renewable energy system that is ≥ 10 MW and < 25 MW may elect into Article 23. Article 10 applicants electing into Article 23 shall have intervenor funds reimbursed and go through an expedited Article 23 process.
  • The Article 23 process differs from Article 10 in several ways, notably:
    • Technology specific standard conditions would be established in regulation;
    • Payments to an Endangered and Threatened Species Mitigation Bank Fund may be made in lieu of physical mitigation; and
    • Each Article 23 application shall be decided within 12 months of being deemed complete, or 6 months for sites on existing or abandoned commercial use, or it is “automatically permitted.”

 [§ 7 – § 15] Amends Real Property Tax Law; and General Municipal Law

Allows tax assessment exemptions for solar and wind energy systems, and requires the assessed value of solar or wind energy systems shall be determined by an income capitalization or discounted flow approach that includes: 1) a NYSERDA appraisal model, and 2) a discount rate published annually by NYSERDA.

  • Requires municipalities and Industrial Development Agencies (IDAs) to consult with NYSERDA in determining the annual PILOT payments for solar and wind energy systems prior to executing any such contract.

[§ 16 – § 18] Amends Public Authorities Law

Establishes a Clean Energy Resources Development and Incentives Program under the new Green Energy Siting Office within the NYS Urban Development Corporation.

“Build-Ready Sites” will be identified by the NYS Urban Development Corporation in coordination with NYSERDA, New York State Department of Environmental Conservation (DEC), and the Department of Public Service (DPS), with priority to sites with existing or abandoned commercial uses.

  • NYSERDA would be granted the authority to:
    • Locate, identify and assess suitable sites for renewable energy including “build-ready sites.”
    • Enter into agreements to secure rights and interests for favorable sites.
    • Establish procedures and protocols for “build-ready sites.”
    • Secure permits to establish “build-ready sites” for transfer to developers.
    • Establish a competitive process to transfer development rights for “build-ready sites,” including host community benefits negotiated by NYSERDA.
    • Establish program(s) for host community incentives, which may include negotiation of PILOT agreements by NYSERDA.
    • Procure services of consultants, engineers and attorneys.
    • Establish job training programs in the local area of “build-ready sites” with special attention to disadvantaged communities.

[§ 19, 21-22] Unconsolidated Law; and Amends Public Service Law

Establishes the ‘State Power Grid Study and Program’ undertaken by DPS in consultation with NYSERDA, NYPA, LIPA, the NYISO, and utilities.

Requires DPS to undertake a comprehensive “State Power Grid Study” for the purpose of identifying distribution upgrades, local transmission upgrades and bulk transmission investments that are necessary or appropriate to facilitate the timely achievement of the CLCPA targets and provide an initial report of findings and recommendations within 270 days of the effective date of this proposal.

  • Requires DPS to commence a proceeding to establish a “State Distribution and Local Transmission Upgrade Program” (capital plan) for each utility with a prioritized schedule, and requires LIPA to establish a concurrent capital program.
  • Requires DPS to commence a proceeding to establish a “State Bulk Transmission Investment Plan” that would identify projects, including submarine transmission, to be completed expeditiously and submitted for incorporation into the NYISO’s studies and plans.
  • Grants DPS the authority for expeditious determination of NYPA bulk transmission investments and grants NYPA the authority to develop, subject to trustee approval, by itself or in collaboration with other parties, bulk transmission improvements identified by study.
  • Changes the PSC’s determination for an Article 7 certificate that requires a transmission facility “represents the minimum” to instead require a facility “minimizes to the extent practicable any significant” adverse environmental impacts or adverse impacts on active farming opera.

[§ 19, 21-22] Unconsolidated Law

  • Requires the PSC to commence a proceeding within 60 days of the effective date of this section to establish a “Host Community Benefits” program funded by owners of renewable energy facilities to provide a discount or credit on utility bills of customers in host communities, or a compensatory or environmental benefit to such customer. LIPA shall establish a similar program.

As developments around this proposal unfold, Sustainable Energy Advantage will monitor, analyze, and report on this key piece of legislation throughout the 2020 Legislative Session. To stay up-to-date on this issue, and many more issues regarding renewable energy development in New York State, readers are encouraged to subscribe to SEA’s Eyes & Ears renewable energy regulatory, policy and legislative tracking and analysis service for continuing coverage. Contact us to receive a quote.