State PSC to weigh requests for higher subsidies for wind farm developers

ALBANY — A Thursday meeting of a state regulatory board might prove to be a major development in how wind power plays out in New York.

The Public Service Commission, which regulates utilities, is scheduled to consider a request to give wind farm developers more favorable contracts for supplying the state’s electric grid with power. This includes requests from two companies looking to build projects off Long Island’s shores.

It’s a financial boost companies and advocates say is needed to counter inflation, supply-chain bottlenecks and delays caused by the pandemic, and is necessary to get a burgeoning renewable energy industry off the ground.

But it also comes as other Northeast states are rejecting such requests to reopen contracts — as critics decry the rising costs of state subsidies for wind power.

Connecticut, for example, refused to reopen a wind contract, sparking Avangrid, the wind-power developer, to announce last week that it would back out of what was supposed to be the state’s largest offshore wind project. Massachusetts allowed two companies to cancel power-supply contracts rather than rewrite them, with the companies saying they will rebid for power contracts at some later date.

Environmental advocates, wind companies and labor unions fear New York will take the same stance as Connecticut and refuse to budge on contracts — which they claim will backfire because power costs will only grow higher in the future and will delay a plan to reduce reliance on oil and gas. It could lead developers to do what Avangrid did and cancel projects.

“Our climate goals are bold and if we are serious about them, we need to be bold in a unique situation here,” said Anne Reynolds, executive director of the Alliance for Clean Energy NY. “The [state] has the power to save these projects, help reach our climate goals and put people to work … instead of saying more delay is OK.”

The stakes include major Long Island offshore projects.

Orsted, the Danish wind-energy giant, wants a rate increase for its Sunrise Wind development, which would connect on shore in Brookhaven. It wants to receive $139.99 per megawatt hour of energy instead of $110.37. On the one hand, that’s a 27% hike; looked at another way, it’s a 40-cents-a-month increase for the average residential customer, according to New York’s energy authority.

Equinor, a Norwegian wind company, wants rate increases for three projects slated to be built generally south of Long Beach.

For its “Empire 1” project, Equinor is asking for $159.64 per megawatt hour instead of $118.38. For “Empire 2,” $177.84 instead of $107.50. For “Beacon Wind,” which would deliver energy to Queens, $190.82 instead of $118.

The state energy authority has estimated if Equinor’s requests are granted, it would translate to a $3.10 monthly increase for residential customers over a previous estimate of $2.

When the estimates became public, Michelle Leo, a member of Protect Our Coast Long Island, an opposition group in Long Beach, told Newsday: “The economic input is far too great. Offshore wind is clearly too expensive because of the return to the investors.”

In contrast, a coalition of 17 environmental and labor groups sent PSC a letter urging it to grant rate increases. Among other issues, they note the original rates in the contracts awarded to Equinor and Orsted were set in 2019 — before the COVID-19 pandemic, which triggered shutdowns and supply-chain issues. Delaying could lead to higher rates in the future, they said.

“Project cancellation for an offshore wind project means rebidding and restarting a yearslong permitting process that may result in different transmission footprints, economic commitments, and even contracts with other states, causing New York to lose strategic positions it strove to secure through bold, early action,” the groups said.

The PSC could approve or reject the requests, approve a modified increase or postpone action altogether.