Mon, Jun 17 2024 17 June, 2024

Advocates pressure legislators to adopt NY HEAT Act

Despite broad support for the NY HEAT Act, which would reform utility law to accelerate electrification, the fate of the bill in the New York Assembly remains unclear, with just a few days left in the legislative session.

View of the New York City Manhattan skyline overlooking the Queens neighbourhood of Astoria (Photo: Paul Pellegrino)

With just days to go before the end of the legislative session, a broad coalition of environmental organisations and legislators in New York are working overtime to ensure passage of a landmark bill, the NY HEAT Act, that would help shift the state’s buildings sector away from gas and towards electrification.

In 2019, New York passed a major climate law, requiring a 40 percent cut in statewide greenhouse gas emissions by 2030, and an 85 percent reduction by 2050, from 1990 levels.

But in a state where more than half of the greenhouse gas emissions come from its buildings, there is no way to achieve those targets without fundamentally reforming how buildings are heated.

The so-called New York Home Energy Affordable Transition, or NY HEAT Act — the top priority of statewide and local climate groups in New York this year — would make changes to utility law that currently favours and incentivises the burning of gas in buildings for heat.

“There are a lot of steps that will have to be taken if we are going to gradually downscale and replace the fossil fuel energy system,” Stephan Edel, executive director of NY Renews, a statewide coalition of labour unions, community groups, environmental organisations, and faith communities, told Gas Outlook.

“New York HEAT comes in as one of the key pieces of legislation to actually allow the rules to shift.”

The bill consists of three main pillars. First, it would eliminate what is known as the “100-foot rule,” which allows any building, existing or newly built, to connect to the gas system for free if it is located within 100 feet of the gas pipeline system. The customer gets the free connection, the costs of which are covered by the utility and then passed on to all the other existing customers in their monthly bills. In essence, critics describe it as a subsidy for growth of the gas system, paid for by ordinary people. 

As Gas Outlook previously reported, such incentives are under scrutiny in a growing number of states around the country.

The average cost to hook up a new customer to gas in New York ranges from $5,000 to more than $14,000. Those expenditures could cover much of the cost of connecting the new customer to an electric heat pump, for example, but current regulations keep growth of the gas system on autopilot, making it routine for buildings to connect new gas lines.

They “are essentially public funds going to fossil fuels,” Edel said. “It doesn’t make sense to make all of New York’s utility customers pay for something that is fundamentally contradictory to the long-term vision of our energy system.”

One study from RMI found that the 100-foot rule resulted in $1 billion in costs for New York customers over a five-year period.

The second thing that NY HEAT would do is eliminate what is colloquially known as the “obligation to serve.” In essence, utilities are required to guarantee gas service to anyone who wants it, even if there are better alternatives.

In a state where ageing gas lines need maintenance or repair, current regulations incentivise wholesale replacement of gas lines — costs that are ultimately borne by customers — instead of forcing utilities to find alternatives, such as energy efficiency or electrification.

There are plenty of clean alternatives for heating buildings, but “the problem right now is that those projects in most cases cannot move forward because right now utilities have an obligation to keep the gas line in place,” Jessica Azulay, executive director of the Alliance for a Green Economy (AGREE), a New York coalition that advocates for green and affordable utility policy, told Gas Outlook.

By eliminating the “obligation to serve,” NY HEAT would allow the Public Service Commission (PSC), the utility regulator, to work with utilities to identify “strategically where it makes sense from a cost perspective, from a safety perspective, and reliability perspective, to downsize the gas system and help people electrify,” Azulay said.

Finally, the third part of the bill would reduce the cost burden on customers, by ensuring that no customer pays more than 6 percent of their income on energy. It would direct the PSC to use a suite of tools — energy efficiency, renewable energy credits, new pricing structures for customers — to minimise costs, especially for low-income households.

Taken altogether, NY HEAT could cut the energy bills of low-income New York residents by as much as 44 percent, or $136 per month, according to NY Renews.

The cost savings are a core part of the selling point, coming at a time when utility rates continue to rise sharply around the country. Moreover, growing the gas system today simply builds up financial risk and costs that will ultimately be shouldered by a shrinking base of customers in the long run.

Azulay pointed to the peculiar existence of federal and state subsidies for efficiency and electric heat pumps sitting alongside state utility law that subsidises gas infrastructure.

“On the one hand, we are paying to help people get off of the gas system, and on the other hand, we’re paying for people to get on to the system,” she said. “And it makes no sense.”

The bill’s supporters thought that they were on the verge of securing passage in the state budget process earlier this year. The New York Senate had already passed the bill, and Governor Kathy Hochul supported a version of NY HEAT as well. The New York Assembly also has a majority of Democrats in support.

But when a budget deal was unveiled in April, the bill was left out. “We were pretty surprised and dismayed,” Azulay said.

Nevertheless, the bill’s supporters have a second crack at it. The full state legislative session runs until June 6, and NY HEAT can still be passed by the Assembly and be signed into law.

“It is still live. We are really hopeful that a version of the bill will pass,” Edel said.

Gas utility lobbying

This is the third year in a row that a coalition of climate and community groups are trying to convince the legislature to pass some version of NY HEAT. For a bill with such broad support, it is curious that it has been held up once again. Not only has it already passed the Senate, but it has a majority of Democrats in the Assembly as cosponsors, so if it is brought up for a vote, it is highly likely to pass, advocates say.

“I wish I knew what the what the actual roadblock is,” Azulay said.

The Speaker of the Assembly, Carl Heastie, has wide discretion over which bills receive a vote by the legislative body. He has not said publicly whether or not he will help the bill move forward, but he appeared to be involved in efforts to thwart passage earlier this year, according to reporting from New York Focus.

Speaker Heastie’s office did not respond to emails or phone calls from Gas Outlook.

Advocates say that the conspicuous lobbying campaigns by a handful of gas utilities may explain the obstruction in the Assembly. In recent months, gas industry and labour groups spent at least $100,000 in advertising opposing NY HEAT, while supporters spent similar amounts.

In particular, National Fuel, a gas utility in western New York, has aggressively fought NY HEAT. State ethics disclosures show that National Fuel has hired several lobbying firms, employing an army of lobbyists, to oppose NY HEAT. Those lobbyists working for National Fuel have tried to influence a long list of lawmakers in the last few months, targeting members of the state senate, the state assembly, and the Department of Public Service, the staff arm of the PSC. 

National Fuel did not respond to questions from Gas Outlook.

In the southeastern part of the state, in the New York City area, the utility National Grid has also lobbied very heavily this session, which began in January, although its opposition to the bill is less full-throated. Unlike National Fuel, which is a gas-only utility, National Grid is a more diversified company with an electricity portfolio.

As New York Focus reported, National Grid has expressed an openness to scrapping the obligation to serve and the six percent affordability provision. But an analysis from New York Focus also found that opposition to the bill is strongest amongst lawmakers representing districts that are served by National Fuel and National Grid.

In a statement to Gas Outlook, Wendy Frigeria, a spokesperson for National Grid said: “National Grid is pleased to have had collaborative conversations on the proposed bill to reach our mutual goal of decarbonization. We see a path forward for many of the issues the legislation seeks to address and at the same time take into account environmental, customer, workforce and business concerns. Our position continues to be that any legislation to advance the transition needs to be implemented in an orderly way that prioritizes and protects affordability, safety and reliability. We look forward to a solution that works for all concerned.”

The fate of the bill is unclear — negotiations typically continue until the very end of the session. Advocates remain hopeful.

“If we’re really going to decarbonise, then the gas system is going to at some point in the next 30 to 40 years be a stranded asset,” Edel said, pointing to the mandate that the state cut emissions by 85 percent in the coming decades.

“We cannot meet that goal with the current gas system intact,” he added. “There’s no way that we can envision the current industrial scale methane delivery system existing with an 85 percent reduction in emissions.”

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