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Paterson's goal is sure to drive prices even higher

January 16, 2009

By Max Schulz

In his first annual address to legislators last week, Gov. David A. Paterson said, "The state of our state is perilous." Yet his energy platform promises to visit more peril upon the Empire State.

The centerpiece is Paterson's "45 by 15" plan for New York "to meet 45 percent of its electricity needs through improved energy efficiency and clean renewable energy" by 2015. The idea is to decrease overall electricity usage 15 percent in six years through efficiency measures.

Meanwhile, policymakers would increase the state's "renewable portfolio standard'—the amount of the state's power that would come from renewable energy sources—to 30 percent from the previous target of 25 percent.

Neither is likely to happen, but we are guaranteed to spend a lot of money learning some hard lessons. The state economy is already fairly energy efficient, partly because high prices have driven heavy manufacturing out of state. So the likelihood of finding substantial gains there is slim. The only realistic hope for reducing energy consumption is not efficiency, but a lengthy economic downturn, which nobody wants.

Meeting the renewable portfolio standard goal is another stretch. Renewables account for roughly 20 percent of New Yorkers' electricity, but that figure is deceptive; large-scale hydropower accounts for most of it. Wind, solar and biomass are just 3 percent.

With no other large hydro resources left to exploit, New York was going to have trouble meeting the 25 percent standard as it was. To get to 30 percent will force Albany to further increase the subsidies it doles out.

In October, for instance, the charge for the renewable portfolio standard on New Yorkers' bills jumped almost 30 percent. And as more renewables contribute to the state�s power mix, the higher costs of generating power from those inefficient sources will be passed along to ratepayers, boosting prices higher still.

That means even steeper bills are on the horizon.

Steep bills are what the Empire State is known for. New Yorkers' electricity bills have climbed 12 percent from a year ago. New Yorkers pay the highest energy prices in the continental United States. The average retail price for electricity across all sectors of the economy in New York is close to 18 cents per kilowatt hour—70 percent higher than the national average.

The only state in the union with higher costs is Hawaii. But Hawaii is a series of tiny islands in the middle of the Pacific Ocean unhooked from the national electricity grid. No wonder its prices are high. What's New York's excuse?

In his speech, Paterson also stressed economic development. Few things in recent years have been as inimical to economic growth as high energy costs. Why on earth, then, is he trying to drive them higher?

Original Source:



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