As a core component of Governor Cuomo’s Reforming the Energy Vision (REV), the Clean Energy Standard (CES) is a program designed to ensure that 50% of New York’s electricity is generated from renewable sources by 2030. As with many new programs, the implementation can create unavoidable and unknown cost increases to Load Serving Entities (LSE’s) such as energy suppliers, utilities, municipal electric systems and electric cooperatives. These LSE’s are mandated to comply with the new law, and therefore costs, which in this case are associated with the higher levels of renewable standards, can be passed through to an end user as a change in law.
There are currently two high-level obligations that LSE’s are required to meet.
- Renewable Energy Credits (RECs)
- Zero Emissions Credits (ZECs)
Effective January 1st 2017, the state of New York is requiring all LSE’s to purchase Renewable Energy Certificates (RECs). These REC purchases will ensure that all LSE’s have met their first obligation. If a supplier or other LSE cannot prove they have meet their obligation, they will be forced to make an alternative compliance payment, which is more expensive than a REC purchase.
Effective April 1, 2017, LSE’s will be required to purchase Zero Emissions Credits (ZECs). Zero Emissions Credits came from the recognition that nuclear power generation facilities are essential to the New York generation mix. Since nuclear is important to the stability of the New York electricity grid, and nuclear power produces zero carbon emissions, it was imperative that Fitzpatrick, Ginna and Nine Mile nuclear plants stayed on-line.
Depending upon the magnitude of the cost adjustment, some suppliers will elect to pass through the incremental costs to your organization, while other suppliers may determine the costs are not significant enough to pass through.
At this point, we have confirmed that Constellation New Energy has elected to pass through this cost. Again, each supplier may choose to handle this cost increase differently.