NY Unplugged? Building Energy Capacity and Curbing Energy Rates in the Empire State

Publication Date: March 2008

Publisher: Manhattan Institute for Policy Research. Empire Center for New York State Policy

Author(s): Max Schulz

Research Area: Energy; Government

Keywords: energy costs; energy regulations

Type: Report

Coverage: New York

Abstract:

Energy prices are a major factor in New York's high cost of living and doing business, contributing to what Governor Eliot Spitzer has called a "perfect storm of unaffordability" driving people and firms out of the state.1 The average retail price of electricity in New York is well above the national average. Only Hawaii and Connecticut have higher average rates.2

But high prices aren't the only problem. Within the next few years, New Yorkers will have serious reason to worry about whether their lights will even be staying on.

New York will need a lot more power -- the equivalent of more than five new 500-megawatt generating plants -- to avoid blackouts early in the next decade, according to the nonprofit corporation responsible for operating the state's bulk electricity grid. Yet only one new large-scale generating plant, representing barely one-eighth of the required additional capacity, has been proposed in the state since the expiration five years ago of Article X, the landmark state law designed to speed the building of such facilities.

Action by Albany is urgently needed to expand energy capacity and reduce energy costs. Yet state laws and regulations in recent years have actually done the opposite -- limiting capacity and raising costs. And the Spitzer administration's energy policies threaten to make the situation worse.

This report reviews the state policy missteps that have threatened to short-circuit New York's energy system and recommends a series of corrective measures.