New York's proposed acid deposition initiative (ADI) would drive the state's above-average energy costs higher without forecasting any significant improvement in the acidification of Adirondack lakes, said Ken Pokalsky, director of environmental and regulatory affairs.
Pokalsky will outline The Council's concerns at a public hearing on the proposal April 5 in Albany. The public comment period on the proposal ends April 10. The Pataki administration first announced new rules governing emissions of nitrous oxides (NOx) and sulfur oxides (SOx) in October 1999.
The state Department of Environmental Conservation is sponsoring public hearings on the proposed rules April 2 (Long Island City), April 4 (Buffalo), and April 5 (Albany).
"The DEC's own projections predict an increase in average statewide wholesale electricity prices of $370 million, or 5.4 percent," Pokalsky said. "This would hurt any state's business climate, and it would be especially harmful here because our business energy costs are already more than 40 percent above the national average.
"There are strong economic and environmental arguments for addressing acid rain nationally, but this proposal will hurt New York's economy without addressing the significant upwind emissions sources," he added.
According to DEC's regulatory impact statement, wholesale price increases would be especially sharp in Rochester, where the manufacturing-based economy is especially sensitive to energy costs, and on Long Island, where ratepayers already pay the highest energy costs in the nation.
In its statement, DEC does not predict to what extent, if any, ADI would improve the acidification of lakes in the Adirondacks. The impact statement does not address that question at all.
The proposed regulations: The two separate regulations included in the ADI would:
- Make existing summer-time NOx controls (designed for ozone control) effective year-round. This would take effect in October 2004.
- Reduce sulfur dioxide (SO2) emissions to a level 50 percent below levels mandated by the federal acid rain program. This would take effect in 2005.
Both rules would employ an emissions-trading system to help facilitate compliance
Key findings of the regulatory impact statement that the state Department of Environmental Conservation (DEC) produced in connection with the proposal include:
- The
initiative would drive up wholesale energy costs by $370
million per year.
Pokalsky said that these cost increases would exceed the benefits of repeal of the gross receipts tax (GRT) on energy and the natural gas import privilege tax. Those tax cuts, when fully effective, will save ratepayers $330 million. Pokalsky pointed out that in 2001, the state also acted to increased energy costs by imposing a $150 million "systems benefit charge," a tax on all energy bills. - Complying
with this regulation would produce $430 million in new capital
expenditures, which would drive up wholesale energy costs.
Pokalsky noted that the DEC regulatory impact statement did not estimate the likely increases in annual operating costs, or the effect on energy supplies if plants that could not economically comply were forced to close. The Public Policy Institute, the research affiliate of The Business Council, has warned that New York already has too little electricity capacity, and should add about a dozen plants with at least 9,200 megawatts generating capacity within five years. - Cost the state 4,070 to 5,920 jobs. That DEC estimate reflects an estimate that every $100 million increase in power costs eliminates between 1,100 and 1,600 jobs. This job loss would be only partially offset jobs created as a result of new capital expenditures required to comply with the initiative.
Pokalsky said the ADI also will impede progress towards fuel diversity, since the proposal will make it harder to site new or proposed plants using coal or oil. All proposed power plants already being considered for New York call for natural gas-powered generation.