New York’s Manufacturers Will Foot the Bill for Nuclear Subsidy

Governor Cuomo’s plan to have 50 percent of New York State’s electricity come from renewable sources by 2030 took center stage this week at an Assembly hearing.  At issue is the cost associated with executing this plan, specifically a bailout for Upstate nuclear plants that will hit manufacturers and other high demand users directly in the wallet.

The Cuomo administration’s Clean Energy Standard (CES) creates a subsidy to keep three financially struggling nuclear power plants on-line to help achieve the 50 percent renewable source goal.  Approved by the Public Service Commission (PSC) last summer, the CES classifies nuclear power as a renewable.   The nuclear plants are facing a down turn given the current abundance of natural gas which is increasingly being used to produce electricity in New York.

Under the CES, utilities will be forced to collect a tax that will be directed to the New York State Energy Research and Development Authority (NYSERDA) who will then provide the subsidy (estimated to be $7.6 billion over 12 years) to the owner of the three facilities.  The tax will impact all utility customers – residential, commercial, industrial and municipal, but high demand users will feel it the most.  That is because the tax is being assessed on kilowatt an hour consumption which means manufactures running multiple shifts or other users needing large amounts of electricity throughout the day will be hit the hardest.

While most can get behind the concept of promoting and incentivizing renewable energy, this new tax will unfortunately hurt a target industry essential to building our economy.  According to the Buffalo Niagara Labor Market Assessment 2017 , advanced manufacturing employs more than 72,000 people in our area and is showing signs of growth compared to national trends.  While the industry is declining across the country, local manufacturers added more than 2,700 jobs between 2009 and 2014, representing a 4 percent employment growth rate.

The nuclear subsidy is also a hard pill to swallow following a recent success on the energy front.  After years of advocacy from the Buffalo Niagara Partnership and others, the recently adopted New York State Budget included the overdue sunset of the 18-a Utility Tax (link) which also negatively impacted manufacturers.

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About Grant Loomis

Vice President, Government Affairs