Key Takeaways
NY Governor Hochul has championed “clean energy” policies as a means to lower costs for New Yorkers, but in recent months, she has used the affordability message as a justification to slow their implementation just in time for next year’s gubernatorial election.
Governor Hochul has delayed implementation of the state’s “cap-and-invest” mandate and the All-Electric Buildings Act.
Her critics believe she will implement these provisions once the election is over, despite rising prices and a current message of affordability, similarly to her delay of congestion pricing in June 2024, which she implemented after the 2024 election was over.
New York state climate policies are driving a surge in electricity demand, placing further strain on an already tight electricity supply.
Via the New York Post, a new analysis from the Democratic-leaning Progressive Policy Institute warns that New York’s climate targets are veering out of reach. The state’s landmark climate law requires utilities to deliver 70% renewable power by 2030 and achieve a zero-carbon grid by 2040, while statewide greenhouse gas emissions must fall 40% from 1990 levels by 2030 and 85% by 2050. But the report finds the state is far off pace: offshore wind capacity is just 1% of what’s needed for 2030, and energy storage stands at only 8%. Fossil fuels still produce nearly half of New York’s electricity, and the closure of the Indian Point nuclear plant in Westchester has further hindered progress toward the state’s clean-energy goals.
The Post reports that New Yorkers are paying for the transition to hydrocarbon-free energy with electricity prices 44% higher than the national average. Residential electricity rates have risen 36% since 2019, nearly three times faster than in the rest of the country. New York homeowners pay 24.4 cents per kilowatt hour — 48% higher than the national average at 16.5 cents per kilowatt hour. Furthermore, NY utilities are pursuing additional rate hikes of around 20%, as investments in renewables have taken funds away from operating costs, routine maintenance in infrastructure, and storm repairs.
Because of rising prices and an election year forthcoming, New York Governor Kathy Hochul’s administration is delaying the implementation of the All-Electric Buildings Act, which includes a ban on installing gas stoves and requires electric heat and appliances in newly built homes, creating a greater demand for electricity that would make prices rise. The law was supposed to start in January for new buildings smaller than seven stories, and for commercial buildings with 100,000 square feet or more and then expand to larger buildings in 2029. It excluded restaurants, hospitals, and existing structures.
Hochul signed the bill in 2023. But in July, Hochul said, “I had to take a closer look and realize we cannot reach those objectives there were, back before I became governor, in a time frame that’s going to not hurt ratepayers, so we’re slowing things down. I want to make sure people know that.”
In 2023, Governor Hochul also directed state agencies to draft a “cap-and-invest” plan under the 2019 Climate Act that would require large carbon emitters such as natural gas plants and manufacturing facilities to pay to emit greenhouse gases. She called for a delay in implementing this tax in her 2025 State of the State budget proposal due to concerns about affordability.
As reported by the Albany Times Union, last month, the New York Independent System Operator issued a warning for New York City, because it could face power deficits starting next summer unless natural gas plants currently planned for closure are kept online and renewable energy projects under construction are completed. By undertaking those actions, the deficits would be delayed to the end of the decade.
The grid operator also warns that the rapid electrification of home heating could flip New York’s traditional demand pattern, making winter — not summer — the peak season for electricity use within the next decade. Historically, air conditioning has driven higher summer demand. As more buildings shift to electric heat, the state could face much higher winter loads, even as solar output drops. Meeting those peaks would require significantly more wind generation and battery storage, as well as natural gas, which is harder to access in the winter. New electric construction alone accounts for about 7% of projected winter demand growth.
Analysis
Governor Hochul is clearly trying to play both sides of the affordability debate. She has claimed that striving toward a net-zero mandate will lower electricity prices, even when electricity prices in the state are rising faster than the national average, before correctly recognizing that implementing these policies will raise prices further. This seesawing proves that, despite catastrophic rhetoric, when politicians are faced with either reducing emissions or supporting the economy, they will choose the latter. As American Enterprise Institute senior fellow Roger Pielke Jr. argues, “If there is an iron law of climate policy, it is that when policies focused on economic growth confront policies focused on emissions reductions, it is economic growth that will win out every time.”
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