Workers walk by components of wind turbines being assembled at the State Pier in New London, Conn., on Wednesday, Oct. 4, 2023. The turbines will make up South Fork Wind Farm and eventually provide energy to New York. Orsted, the company working on the South Fork Wind Farm, is evaluating the future of another offshore wind farm in New York, the Sunrise farm, after the Public Service Commission denied an application to raise rates. AP file photo

New York’s clean energy goals may have taken a hit with the Public Service Commission’s denial of petitions seeking to raise rates for three large wind energy projects.

The group of offshore wind developers and a state renewable energy trade association sought billions of dollars in additional funding from consumers for four proposed offshore wind projects and 86 land-based renewable projects. On a monthly bill basis, granting the request to amend the executed contracts outside the competitive procurement process would have resulted in as high as 6.7% rate increases for residential customers and as high as 10.5% for commercial or industrial customers on monthly bills depending on service territory and the level of relief provided above what was already committed.

“The requested amendments to the contracts would have provided adjustments outside of the competitive procurement process; such relief is fundamentally inconsistent with long-standing commission policy,” said Rory M. Christian, state Public Service Commission chair. “The commission has repeatedly stated that competition in the procurement process is necessary to protect ratepayers and provides the soundest approach to mobilize the industry to achieve our critical state goals dependably and cost-effectively, and we do so again through today’s action.”

The petitions submitted by Empire Offshore Wind LLC and Beacon Wind LLC, Sunrise Wind LLC, and the Alliance for Clean Energy New York Inc. were seeking adjustment to Renewable Energy Credit (REC) and Offshore Wind REC (OREC) purchase and sales agreements entered with NYSERDA. Danish energy company Orsted is pursuing two offshore wind farms — one near Rhode Island and Massachusetts and a 924-megawatt project called Sunrise that falls near New York state. Orsted officials told Reuters last week the Public Service Commission’s decision puts the future of the Sunrise development at risk. Equinor is partnering with energy company BP on the Beacon Wind LLC and Empire Offshore Wind LLC projects which will combine to generate 1,230 megawatts of electricity if built. Equinor officials told Reuters the projects must be financially viable to proceed, adding the company is assessing the projects in light of the Public Service Commission’s decision.

It’s unclear what actions the state will take if the wind projects aren’t pursued by their developers. The state Legislature’s passage of the Climate Leadership and Community Protection Act in 2019 calls for having at least 70% of the state’s electric needs served by renewable energy by 2030, development of 9,000 megawatts of offshore wind by 2035 and meeting statewide electricity demand with zero emissions by 2040.

Gov. Kathy Hochul responded to the Public Service Commission’s decision with a new 10-point action plan that includes, among other steps, requiring NYSERDA to release new funding for offshore and onshore renewable energy projects, along with major supply chain investments as well as requiring NYSERDA to address the Public Service Commission’s issues raised last week while assessing the decision’s impacts on the state’s large-scale renewables contracted portfolio. NYSERDA will then launch an accelerated renewable energy procurement process for both offshore and onshore renewable energy projects aiming to backfill any contracted projects which are terminated.

Hochul also wants the state to engage with the federal government to bring forward market solutions by establishing a Memorandum of Understanding with the U.S. Department of Energy Loan Programs Office to access low-cost financing for large-scale renewable projects, to advocating for updated guidance on clean energy tax credits and a federal-state revenue-sharing program.

The state has also launched an Offshore Wind Master Plan 2.0 in 2022 to will provide a plan for the future of offshore wind development, including in deeper waters.

“Strong, continued support for expanding the renewable energy sector is critical to realizing the full potential of our green economy and protecting New Yorkers from the climate crisis,” Governor Hochul said. “This 10-point action plan underscores our commitment to addressing challenges that this sector is experiencing all across the country and hardens our resolve to ramp up our efforts in providing affordable and clean energy to all New Yorkers.”

Even before last week’s Public Service Commission decision, Hochul and other governors had been pushing President Joe Biden for more help for the offshore wind industry, including additional guidance on how offshore wind companies can qualify for federal clean energy tax credits, a revenue sharing arrangement in which money generated from offshore leases beyond state waters are shared with those states instead of being returned to the U.S. Treasury and for the federal government to make faster permitting decisions for offshore wind projects.

“Absent intervention, these near-term projects are increasingly at risk of failing,” the governors wrote. “Without federal action, offshore wind deployment in the U.S. is at serious risk of stalling because states’ ratepayers may be unable to absorb these significant new costs alone.”