Pursuant to the Climate Leadership and Community Protection Act (CLCPA), Section 66-p(2)(b) of the Public Service Law (PSL) directs the Public Service Commission (PSC) to establish a program requiring that the statewide electrical demand system be zero emissions by the year 2040. Because the terms “statewide electrical demand system” and “zero emissions” are not defined by the CLCPA or PSL, Department of Public Service staff (DPS) filed a document on November 4, 2024, proposing definitions for these key terms. DPS’s analysis with respect to these definitions also clarifies the outer bounds of the PSC’s jurisdiction under the CLCPA.
DPS views the term “statewide electrical demand system” as circumscribing the PSC’s jurisdiction under the CLCPA to certain covered electricity-generating resources. In particular, DPS reads the use of the word “system” as reflective of the legislature’s intent to not cover every power-generating resource in New York State, but only those resources that participate in the operation of the statewide electric grid and do so in a routinized or systematic way.
With respect to imports of electricity, DPS recommends that imports be considered part of the statewide electrical demand system, to the extent that the electricity is actually delivered within New York’s borders and affects the reliability and resilience of New York’s electricity system. Regarding behind the meter (BTM) resources, DPS recommends that the statewide electrical demand system cover any BTM resource that is subject to an interconnection agreement and potentially participates directly in grid operations. In addition, they recommend the demand system also cover resources whose generation of electricity is compensated through a PSC-authorized program, such as net energy metering, VDER or utility-operated demand response programs. Generation that is not interconnected and not directly involved in metered transactions that rely on the grid as a conduit for the delivery of electricity would not be covered.
DPS recommends that the PSC interpret “zero emissions” as referring to only greenhouse gases (GHG) and not emissions of other air pollutants. Co-pollutants (i.e., hazardous air pollutants produced by GHG emissions sources) may be treated as a secondary consideration when choosing among regulatory measures, but should not be viewed as the source of an independent legal requirement for the PSC or a determining factor under the CLCPA.
DPS recommends that the PSC treat as cognizable GHG emissions from both a resource’s operations and its fuel production process. However, DPS recommends that the PSC not regulate emissions arising from transportation, manufacturing or construction activities.
Whereas the New York State Department of Environmental Conservation does not count emissions arising from the out-of-state fuel production process for non-fossil fuels (e.g., biofuels or hydrogen) used to generate electricity, DPS proposes that the PSC classify these fuels as “energy carriers,” rather than primary energy sources, and consider out-of-state emissions from production and combustion when evaluating the zero emissions characteristics of such energy carriers. Under this approach, the PSC would distinguish between hydrogen derived from fossil fuels versus hydrogen derived from clean energy.
DPS recommends interpreting “zero emissions” as distinct from “net zero emissions,” reasoning that the CLCPA does not give the PSC discretion to adopt a net emissions accounting methodology. With respect to imported electricity, however, DPS recommends a netting approach, under which the exports of zero-emission electricity must equal or exceed imports (adjusted to exclude, when possible, imports of zero-emission energy — such as electricity from Quebec). For administrative and constitutional reasons, DPS recommends that the application of zero emissions to electricity imports be treated as an important indicator for planning purposes, but not as a hard restriction to be used to impose limits on GHG-emitting imports or zero-emission exports.
Because fuel cells that consume biofuels can qualify as a “renewable energy system” under PSL Section 66-p(1)(b) even if they emit GHG, DPS recommends that the PSC allow fuel cells fed by biofuels to operate in compliance with the zero emissions standard, so long as production of those fuels does not involve fossil fuels.
The CLCPA’s target of a zero-emission statewide electrical demand system by 2040 will have profound effects on energy generation in New York. DPS’s proposed definitions are a welcome step in clarifying how the PSC may interpret its mandate under PSL Section 66-p. As DPS acknowledges, however, further clarification must be made with respect to the PSC’s additional obligation under Section 66-p to consider and address the impacts of zero emissions on safe and adequate electric service in the state. We will continue to monitor developments on this issue and related state efforts to implement the CLCPA.
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For more information, please contact a member of our Energy and Renewables Industry Team, Environmental Law Practice Team, or the Phillips Lytle attorney with whom you have a relationship.
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