ML11348A168
| ML11348A168 | |
| Person / Time | |
|---|---|
| Site: | Indian Point  |
| Issue date: | 12/14/2011 |
| From: | Atomic Safety and Licensing Board Panel |
| To: | |
| SECY RAS | |
| Shared Package | |
| ML11348A126 | List:
|
| References | |
| RAS 21536, 50-247-LR, 50-286-LR, ASLBP 07-858-03-LR-BD01 | |
| Download: ML11348A168 (8) | |
Text
"15 by 15" A Clean Energy Strategy for New York Good morning and thank you for having me here to discuss our clean energy strategy for New York. In our first 100 days, we have tried to get at the root of some of the chronic problems that have plagued Albany and New York State for years. Sometimes this means bringing people together to address immediate problems.
Workers' compensation in New York is a perfect example. For years, businesses rightly complained about high premiums, and workers rightly complained about low benefits.
The system was broken, but gridlock stood in the way of reform. So on day one, we brought business and labor together and hammered out a solution to finally reform the system -which will reduce premiums by 15 percent while increasing benefits for injured workers for the first time in more than a decade. Sometimes this means tackling budget problems that are politically uncomfortable for much of Albany. In this year's budget, we were able to cut $1 billion from Medicaid, reducing the Medicaid growth rate from an average of 8 percent over the past five years to less than 1 percent. And sometimes this means addressing long-term problems that have been ignored for years. The lack of a long-term strategy to address global climate change is a perfect example of this. Here in New York, we face three seemingly intractable challenges:
rising energy bills, rising global temperatures, and a rising tide of young people leaving New York for opportunity elsewhere
-each of which can be addressed by a long-term clean energy strategy.
New York's rising energy prices have put us in the wrong kind of company. We have the second-highest electricity prices in the nation, ranking us just behind Hawaii -the effect of which has stunted economic growth and burdened hard-working families.
New York's rising temperatures have forced us to confront what 2,000 of the world's leading scientists and a mountain of irrefutable evidence have made crystal clear -that climate change is real and has become this generation's greatest environmental challenge.
And a rising tide of young people leaving New York for opportunity particularly from Upstate and on Long Island -has signaled a wake-up call that New York must take aggressive steps to meet. Today, I want to discuss ways that we can address all three of these challenges.
1 OAG 10000258_
00000 1 First, by 2015, we will decrease the demand for power by 15 percent from forecasted levels through efforts to increase energy efficiency.
Second, we will increase the supply of power in an environmentally sustainable way by implementing a clean power plant siting law and investing in clean energy production.
The result will be lower energy bills, a cleaner environment that addresses climate change and thousands of new jobs fueled by a new industry born from clean power. I want to be clear that this clean energy strategy, as critical as it is, represents only part of our broader energy policy. There are several additional actions we must take to increase investment in our energy infrastructure
-including a focus on investment in transmission and gas supply -that will help drive down New Yorkers' energy bills. But today, I want to focus on our clean energy strategy, which addresses both the supply side and the demand side of the energy equation.
Let me start by explaining some of the things we will do on the demand side. Decreasing Demand: "15 by 15" In early 2001, the Bush Administration released its energy plan, which largely dismissed the importance of energy efficiency.
When questioned about this, Vice President Cheney replied: "Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy." Look around at our nation's energy market and you will see where this logic has led us: an ever-increasing demand for energy that has caused high energy prices, brownouts and blackouts, an increasing dependence on foreign oil, and global climate change. I will admit that the Vice President's skepticism about the benefits of efficiency may have made sense in 1970, when most people believed energy efficiency meant nothing more than wearing more sweaters in the winter. But technology has marched on and, in the intervening years, the marginal cost of energy efficiency has plummeted while the marginal cost of energy generation has shot up. In terms of dollars and cents, it now costs one-third as much to save a given amount of energy through efficiency programs as it does to produce the same amount of energy by building a new power plant. The fact is that energy efficiency now makes economic sense. This is the logic that the Vice President misses -the simple idea that the cheapest and cleanest power plant in the world is the one you never have to build. But New York has a problem. Experts predict that, at our current pace of consumption, our state will require at least another 10 to 15 percent of additional power generating capacity over the next 10 years just to meet growing demand, and even more will be needed to drive down our energy bills. 2 OAG 10000258_
000002 Therefore, we are faced with a choice. We can spend billions of dollars to build every single one of the power plants needed to meet this demand. Or we can invest far less money to cut the demand for energy by 15 percent -and, on top of that, increase our power-generating capacity to lower energy bills. Common sense says we should take the second approach -that we should both build and conserve.
We will start with a framework called "15 by 15," which will reduce electricity consumption by 15 percent below the forecasted level in 2015. This will be the most aggressive target in the nation. Now let me describe our roadmap for getting us there. Request PSC Proceeding to Engage the Utilities Ultimately, the PSC -through a public process that will include all stakeholders
-will determine the complete menu of efficiency programs that will allow us to reach 15 by 15. But let me describe a few of the actions that will help us get there. Revenue Decoupling First, we must eliminate a perverse incentive in the marketplace that discourages utilities from conserving energy. The problem is that we want utilities to encourage their customers to conserve -but right now, when their customers conserve energy, the utility loses money. Obviously, this incentive structure is upside down if our goal is to increase energy efficiency.
Yesterday, we successfully began the process of removing this perverse incentive when the PSC announced a plan to decouple a utility's profits from the amount of energy being consumed.
It does this by requiring annual adjustments to rates to make utilities whole for lost revenues caused by energy efficiency programs.
This action means that the stage has been set for future rate cases, where it will be possible to consider further action to actually reward utilities for achieving verified energy savmgs. Other states have done this. It works. Now, let's implement it. Strengthening Efficiency Standards Second, we will do more to cut plain-old-fashion waste. How do we do this? As Willie Sutton famously said when asked why he robbed banks: "That's where the money is." In energy, much of the "money" -that is, much of the waste -comes from inefficient appliances and buildings.
3 OAG 10000258_
000003 This point hit home for me when I was Attorney General. We won a lawsuit against the Bush Administration forcing them to promulgate efficiency standards for central air conditioners.
By 2020, the standard that resulted from this litigation will reduce peak electricity demand in the United States by 14,500 megawatts
-equivalent to the output of one moderate-sized power plant in all 50 states. While we were successful in implementing standards for central air conditioners, there are still many energy-intensive appliances still lacking standards.
In the coming weeks, we will introduce legislation to set standards for the most inefficient of them -including residential furnaces and boilers and walk-in refrigerators and freezers.
There will, of course, be reasonable phase-in time to allow manufacturers to comply. Another way we can cut waste is to make buildings more efficient.
We will explore adopting the most current version of the International Energy Construction Code, which is regularly updated to reflect best technology and building practices in the world. Addressing New York's # 1 Energy Consumer:
State Government The third way we will achieve our 15 by 15 target is by making New York's number-one energy consumer more efficient.
By addressing state government's sky-high energy bill -$700 million in last year alone -we will not only save tax dollars, but we will use state government's market share to help drive a new clean power industry.
If government buys fighter planes, we drive the military industrial complex. Likewise, if government buys wind power, we drive the technology market for wind generators.
By embracing ambitious energy efficiency standards and renewable energy goals throughout state government, we will catalyze the growth of the clean power industry.
Increasing Supply Each of these efforts will have a significant effect on the demand side of our energy strategy.
Taken together, these efforts will completely eliminate the expected increase in our energy demand by 2015 and then some. However, as I mentioned earlier, energy experts estimate that we already will require at least another 10 to 15 percent of additional power generating capacity over the next 10 years to meet growing demand and drive down energy bills. Therefore, to meet this demand -and to lower energy bills for consumers
-we must also address the supply side of the equation.
New Power Plant Siting Law: Replacing Article X The fact is, we're going to have to build more power plants. But we want to build clean plants, and we want to build them fast. 4 OAG 10000258_
000004 As taxpayers, businesses and energy experts alike have said for years, the state has lacked an expedited power plant siting process ever since the Article X law expired in June 2003. Since then, just 250 additional megawatts of energy capacity net have been created by traditional power plants, with only one new power plant scheduled to be built before 2010. To give you a sense for how little generating capacity has been created, these 250 megawatts represent just three-quarters of one percent of New York State's average peak power demand. To address this problem, we will propose a new power plant siting law that will replace the long-expired Article X. But this law will have a clean twist. Our proposed legislation will establish an expedited process that fast-tracks only clean power plant proposals, those with low or no emissions.
This process will apply both to the repowering of older, less efficient plants and the siting of new clean ones. The legislation effectively provides developers with a one-stop shop -the new Clean Power Supply Board -to coordinate all relevant state agency reviews in order to speed up the process. With this new law, we will finally have the process in place to accelerate the transformation of New York's power supply into one that is cleaner and more efficient.
Long-Term Contracts But a new process to construct power plants will be useless without financing.
And in today's market, financing depends on long-term contracts between power plant owners and utilities or state authorities.
Long-term contracts have become so necessary because, with energy prices so unstable, long-term contracts provide power plant developers, including existing owners, with predictable and stable revenue -essential to limit risk and gain the confidence of investors.
Unfortunately, the prior Administration believed that utilities and state authorities should intervene as little as possible to provide long-term contracts.
This led to very few power plants being built. So we're left with a backlog of approved power plant projects that are sitting on the shelf because they cannot get financed.
Yesterday, we successfully began the process of encouraging long-term contracts.
The PSC has started a process to consider how to encourage these types of contracts between utilities and power plant developers and existing power plant owners -a critically important step toward our goal of bringing additional clean supply online as soon as possible.
Investing in Renewables 5 OAG 10000258_
000005 Streamlined siting is vital. Harnessing the full potential of the market by permitting term contracts is also critical.
But we must do more. We must continue to make the investments needed to attract clean, renewable power plants to New York. In the coming weeks, Lieutenant Governor Paterson will tour the state promoting the use of clean, renewable energy technology.
He has done enormously important work on our energy strategy so far, and he will continue to playa major role going forward. David makes the point that New York presents an ideal environment for developers of clean, renewable power plants. We're not coal country, like West Virginia.
And we may not have the oil fields of Texas and Alaska. But we have an abundance of wind, water and solar, positioning us to develop clean renewables as a greater part of our domestic energy supply. Investing in a new generation of cleaner, more efficient power plants will also allow us to phase out the use of older, less secure, and less environmentally sound power plants, including Indian Point. To that end, today, NYSERDA and the PSC will announce the approval of21 contract awards for clean, renewable power plants in New York. These contract awards total approximately
$295 million and will attract private investment of approximately
$1.4 billion -all of it Upstate. Best of all, in terms of immediate returns on economic development and energy bills, construction of all these facilities is expected to be completed as soon as 2008. Benefits for New Yorkers Now, for those of you who are like me -who don't speak in megawatts, BTUs or barrels of oil-let me put this agenda in perspective to illustrate how the clean energy strategy I just outlined will address the three chronic problems I mentioned earlier: rising energy bills, rising global temperatures and a rising tide of young people leaving New York for opportunity elsewhere. Reducing Energy Bills First, 15 by 15 will address rising energy bills by completely eliminating the expected increase in our energy demand by 2015. The laws of economics follow that this dramatic reduction in demand, coupled with our investments to increase the supply of clean energy will translate into eventual reductions of our energy bills. History confirms this. Experts say that a 1 percent reduction in demand during peak periods can reduce electricity prices by 10 percent. Creating Jobs 6 OAG 10000258_
000006 Second, 15 by 15 will address the rising tide of young people leaving New York by fueling a job-rich clean power industry that is driven by the race to meet our target. Think of all the high-paying jobs that will be needed to retrofit power plants, homes and office buildings so they can be more efficient; the jobs that will be needed to develop innovative efficiency and clean energy technologies; or the jobs that will be needed to manufacture the products at the scale that will be necessary to reach our goals. Not to mention that lower energy bills will allow New York's businesses to spend less on energy and more on innovation
-helping us both to retain the jobs we've got and attract new ones. Experience confirms this. NYSERDA has determined that current efficiency programs create or retain an average of 1.5 jobs per year per gigawatt-hour saved. These figures correlate with findings in other states. Given that our 15 by 15 initiative will save 27,300 gigawatt-hours by 2015, NYSERDA estimates that our strategy could create or retain 41,000 jobs in New York State. To give you a sense of the potential impact, that's about the same number of unemployed people in Buffalo and Rochester combined.
Of course, clean energy does not represent a silver bullet for all of New York's economic challenges.
But these new jobs will undeniably playa significant role in turning our economy around. Addressing Climate Change Finally, let me return to the need to address global climate change. In terms of removing pollutants from the atmosphere, including C02, the impact of our proposals will be dramatic.
It is estimated that 15 by 15 alone would result in an annual carbon dioxide reduction of about 12.8 million tons. That's the equivalent to removing 2.5 million cars from the road. And if we are able to increase the amount of energy we get from clean, renewable sources, we will remove even more climate change-causing pollutants from the atmosphere.
We are also attacking the climate change threat on other fronts. The newly formed Climate Change Office in the Department of Environmental Conservation will oversee the implementation of the Regional Greenhouse Gas Initiative -a multi-state effort to reduce carbon dioxide emissions from power plants. Even still, I am sometimes asked, why should New York go to the trouble of reducing its carbon emissions?
It's an important question that deserves a thoughtful answer. First, compared with other states and even other nations, New York is a relatively major contributor to global climate change. Most people don't realize that New York's economy alone is the 11th largest in the world. Thus, while New York is only home to 0.3 percent of the world's population, it emits about 1 percent of the world's carbon 7 OAG 10000258_
000007 emissions
-comparable to that of entire industrialized nations such as Sweden and the Netherlands.
So just as we have contributed to climate change, we must now contribute to stopping it. Our core proposal-to completely eliminate growth in our forecasted electricity demand by 2015 -is the most aggressive in the nation, making us the only state to commit to actually lowering electricity consumption below current levels. Indeed, this strategy will make New York a national leader in addressing climate change -even a global leader, when you consider that New York is the 11th largest economy in the world. And in a time of federal inaction, states must take the lead. We plan to work with Governor Schwarzenegger and other governors across the country to lead a national movement on climate change. But at the end of the day, what I care about most is how this strategy will benefit New Yorkers. By implementing this clean, efficient energy strategy, we are not only changing the status quo and addressing a chronic issue that has plagued Albany for years; we are implementing a practical strategy that will lower energy bills, address climate change, and create jobs. Thank you. 8 OAG 10000258_
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