CLIMATE CHANGE AND ITS CAUSES

According to the Environmental Protection Agency (“EPA”), climate change is defined as a “significant change in the measures of climate, such as temperature, rainfall, or wind, lasting for an extended period—decades or longer.”1 “Climate change can result from natural processes and factors (e.g., volcanic eruptions, sun’s intensity, ocean current circulation, etc.) as well as human activities through emissions of greenhouse gases.”2 Greenhouse gas (“GHG”) emissions tend to be associated with the burning of fossil fuels, methane emissions from agriculture, landfills, and land use changes with respect to deforestation and urbanization, among others.

GOALS AND PROGRAMS IN PLACE THAT WILL IMPACT CLIMATE CHANGE

In New York’s 2015 Energy Plan, the State set 2030 clean energy goals that include a 40% reduction in GHG emissions from 1990 levels (as well as an 80% reduction by 2050), 50% of electric generation from renewable energy sources (e.g., solar, wind, hydro and biomass) and a 23% decrease in energy consumption in buildings from 2012 levels. Also, the regional Greenhouse Gas Initiative (of which, New York is a member) commits members to even more significant reductions. In support of these goals, the State’s guiding initiatives include

the Public Service Commission’s (“PSC”) Reforming the Energy Vision (“REV”) proceeding, New York State Energy Research and Development Association’s (“NYSERDA”) Clean Energy Fund and the New York Power Authority’s investment in innovative solutions. Goals and initiatives in New York signal to the market that New York has embraced the challenge of climate change and will utilize State initiatives to encourage market engagement.

Along with the overarching REV proceeding, a number of programs have been put in place to support the market in achieving New York’s clean energy goals. Initiatives encompass renewable energy, building and energy efficiency, clean energy financing, energy infrastructure modernization, and transportation. Examples of available programs can be found on the New York Energy Plan website at energyplan.ny.gov. In order to capitalize on these available programs and enhance sustainability of results, it is essential that market participants (e.g., consumers, suppliers, energy service companies, etc.) have a plan: What are your needs? What do you bring to the table? What are your metrics? What are you able to leverage? These are just a few of the questions that should be addressed. Having answers to these questions, along with a clear understanding of the changes in the regulatory environment, will enhance the market’s efficiency in understanding what programs align with individual objectives.

SMART GROWTH’S CONTRIBUTION TO CLIMATE CHANGE AND SUSTAINABILITY

Sustainability, both environmentally and economically, is essential to a long-term solution to climate change. Legislation and regulation need to be in lockstep for sound energy policy as legislative programs rely on funding from the taxpayer, while regulatory initiatives rely on the ratepayer. In truth, however, they are one and the same. In New York, there is progressive Smart Growth legislation that is intended to review public infrastructure projects. Criteria include maintenance and use of infrastructure, infill development, natural resource protection, mobility and transportation choices, community-based planning, and sustainability development, among others. In traditional rust belt communities, this equates to land use capabilities, redevelopment, mixed use, walkable communities, investing in aged infrastructure to promote the new economy, and the potential to coordinate and leverage budgets across local, state and federal programs with respect to roads, bridges, water, sewer and other municipal infrastructure.

In the regulatory arena, utility infrastructure investment and service is governed by an “obligation to serve” all who request service; hence, there is a sense that all requests for service are equal and are governed as such. Under the REV proceeding, there is an opportunity to develop new business models, decentralize supply, and form supply options that are modular, flexible and provide a savings against traditional utility solutions. REV is also a great avenue to align alternative clean energy solutions with Smart Growth as economically favorable options. Timing is ripe as today there is a pressing

need to invest in new infrastructure to align with shifting community needs to upgrade aged infrastructure, promote alternative transportation, and form pricing models that will engage innovation and clean energy investors. In May of 2014, at the outset of REV, former PSC Chair Audrey Zibelman stated that “New York’s current infrastructure will require $30 billion of investment to improve the grid over the next 10 years ….”3 Although a daunting figure, it presents opportunity for alternatives. To ensure that alternatives can be economically compared against traditional solutions, it is key to determine how they will be valued.

The Distributed System Implementation Plan (“DSIP”) and Value of Distributed Energy Resources (“VDER”) proceedings present the opportunity to value clean energy alternatives against traditional utility services with an eye on Smart Growth principles. The DSIP will require electric utilities to provide a portal to the market which will essentially display their work plans for location-based capacity needs and infrastructure upgrades to aged systems, as well as listing current hosting capacity. In total, the DSIP will help inform the market where infrastructure priorities are located. The VDER proceeding will develop what value will be placed on alternatives to traditional utility services with the intent of being more price granular. Referred to as “Value Stack,” price signals for alternative solutions will encompass location-based commodity price, a distribution cost offset and an environmental value. Together, DSIP and VDER form the foundation to align environmental sustainability with economic sustainability by viewing all projects from the perspective of supply, demand and distribution under a lowest cost assessment premise. Investors of clean energy solutions will be rewarded through market-based price signals and applicable renewable energy credits versus traditional subsidies. Combined with Smart Growth, these proceedings will allow for energy planning and municipal planning to coexist and leverage one another, ultimately benefiting the taxpayer and ratepayer.

GETTING INVOLVED WITH REGULATORY CHANGES THAT IMPACT CLIMATE CHANGE

It is becoming increasingly common to utilize the philosophy of stakeholder engagement as a mechanism to seek input from the market in setting policy. Too often these “stakeholder engagement initiatives” appear as compliance, part of a check-off list, rather than an interaction, a debate or a collaboration. With increased activity in the legislative and regulatory arenas, it is difficult to maintain a presence or have the ability to provide input in all of the conversations that are occurring. However, the market’s voice is more critical now than ever.

Understanding the challenges and opportunities that face our communities, businesses and local economies will result in Smart Growth initiatives, clean energy solutions and advanced infrastructure planning as a means for every one of us to contribute to limiting the effects of climate change. Good energy policy can support good business practices that will align with the goal of combating the long-term effects of climate change.