Document Type

Article

Abstract

New York State is undergoing a rapid and unprecedented energy transformation, particularly in the electricity sector. As new resources and technologies emerge to meet the demands of 21st century life, regulators must balance the need for cost effective and equitable participation in wholesale power markets while maintaining reliability on the grid. Furthermore, it is critical that all New Yorkers participate fully in the promise of a revitalized and equitable energy future. Such a transformation requires that the needs of all communities are factored into the polices and regulations that move New York toward the bold goals set forth under its Reforming the Energy Vision (REV) initiative.

The precipitous drop in natural gas prices, the decreased costs of wind and solar energy, and the rise in the cost of coal, have contributed to the mothballing or retiring of coal-fired and nuclear energy generators across the country, including in New York. Communities that have been home to the electric generation units of the past, particularly struggling coal-fired power plants, are especially vulnerable during this transformation, because these communities often rely on the generators for tax revenues, such as through Payments in Lieu of Tax agreements. New York has the opportunity to ensure a just transition for these communities by adopting new, clean energy resources, technologies, and markets while fostering a trained and skilled workforce to support its ambitious goals. For all New Yorkers to enjoy the new energy future, leadership must address the impact of lost jobs, declining economic activity and lost tax revenue, and must support essential services in impacted communities with the same level of urgency and expansive vision needed to balance the integration of new technologies in the most cost effective manner to maintain grid reliability. At the same time, state and federal funding must be allocated to communities in transition for the remediation and redevelopment of shuttered power plant sites, and to provide the necessary support, training and tools for impacted communities to actively participate in the transition and implementation of clean energy resources.

The first section of this report examines the lessons learned from other jurisdictions in when and how to address the fiscal challenges of retiring electric generation units (EGU’s). The challenges New York faces are not unlike the challenges faced by communities, legislators, and plant owners during periods of deindustrialization of the late 1960’s through 1980’s, described in Section One below, which additionally provides:

1. An evaluation of case studies that address the process of retirement, decommissioning, remediation and preparation for redevelopment for future use, along with the state and federal policies and funding sources that made revitalization possible.

2. An overview of case studies that illustrate local government fiscal and workforce support to communities during periods of plant transformation. These periods encompass three historical phases:

a. Deindustrialization of the 1960’s to1980’s;

b. Federally Mandated Social Programs to Support Enforcement of Federal Regulations 1990’s to 2000; and

c. Coal Plant Closures and Community Transition in the Age of Carbon Emissions Reductions: Federal and State Initiatives between 2000 to 2015; and

Section Two examines four New York coal-fired generators, some of which are currently mothballed, retired, or struggling financially. In addition to providing profiles of each generator, Section Two also describes the Payment in Lieu of Taxes (PILOT) agreements that these generators have entered into with the towns, school boards, and counties in whose jurisdictions they are located. Due to the plants’ finances, several of the generators have made reduced PILOT payments in recent years, creating “budget gaps” for some of the communities.

Finally, Section Three describes state and federal funding and support mechanisms that may be available to the New York communities described in Section Two. Because each community faces unique challenges and opportunities, this report does not attempt to provide specific recommendations for any of the communities. Rather, Section Three lists a number of support mechanisms that each community could consider in developing its own transition plan. New York State leadership can capitalize on the legislative legacy of prior eras and develop comprehensive approaches to reinvest in communities with obsolete industrial facilities that were once the primary source of jobs and economic activity, and revenue to local budgets.