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Commentary & Opinion

Blair Horner: A $7.6 Billion “Tax” That’s Not Part Of The Budget

It’s not only winter in Albany, it’s budget season—arguably the biggest and most important job for the Legislature each year.  Once the governor proposes his budget, it’s up to the Legislature to decide how to react.  Every year, both houses of the Legislature hold joint hearings to look into what the governor has proposed.  This year is no different.

Virtually every working day since the last week of January up until President’s Day, hearings on various budgetary topics are taken up.  Usually the heads of the relevant state agencies testify first followed by various business and nonprofit interest groups and any members of the public.

The hearings are supposed to cover all aspects of the governor’s proposed state budget.

But some topics fall outside of the hearings.  One such case is the decision by the Cuomo Administration to jack up electricity rates by an estimated $7.6 billion.  You heard that right, $7.6 billion.

Under the Cuomo proposal, everyone has to pay.  It is being imposed by the government, so it is essentially a “tax.”  But since it was imposed by a state agency – in this case the Public Service Commission – the Legislature has no direct say.

And, despite it being a hike on everyone, the public has had little say in the decision.

What makes this different than a traditional tax is that the benefits are not going to the government, or to individuals in need, or to broadly enhance the public’s interest.  Instead, the money is being directed into the coffers of an Illinois-based company, Exelon, which is one of the most profitable companies in America.

Some have called this is the biggest transfer of wealth in New York State history.

While not part of the budget, the issue of the Administration’s bailout of aging, inefficient nuclear power plants located on Lake Ontario will have a huge financial impact on every resident, local government, non-profit group and business in the state, and divert funds from transitioning to clean, green renewable energy. 

The impact will be real: if you’re a National Grid residential customer, $465 million will be added to electricity rates over the next twelve years.  For New York State Electric and Gas energy consumers, nearly $350 million.  For ConEd residential ratepayers (who already pay one of the highest rates in the nation) another $700 million will be tacked on.

And while many of us may be able to absorb the additional increases, many cannot.  There are roughly 6.5 million residential ratepayers, but more than 800,000 – or one in eight – are currently more than 60 days behind their due dates on their electric bill.

Hiking those rates even more will not help.

And what are New Yorkers getting for their billions in rate hikes?  The state is propping up nuclear power plants that were built in the 1960s, Vietnam War Era.  Power plants that have already exceeded their expected life span.  And ones in which the terms of the bailout say will close in 12 years.

The state could have plowed that money into energy investments that support clean, renewable power, and rely on 21st Century technologies.

New York’s energy future lies with energy efficiency, smarter grids, solar and wind.  These approaches cost less, create more jobs, and result in healthier communities.  A recent analysis shows that phasing out nuclear power immediately and investing in renewables would ultimately save New Yorkers billions on their electricity bills and reduce more emissions than keeping these old rickety nuclear plants running. 

Nuclear power is a 20th Century technology that cannot compete in a 21st Century energy world.  The technology, always unsafe, is too expensive, unreliable, and simply not needed in an era that will increasingly rely on alternative energy sources, a modern grid and efficiency.  The clearest evidence that this is true in New York is that these plants would otherwise be soon phased out if it were not for public subsidies.

Investing billions of ratepayers’ dollars into an unsafe, 20th Century technology is simply the wrong approach.  As lawmakers contemplate the governor’s proposed budget, they should use that process to block the implementation of this plan, and use the opportunity to hit the “reset” button to allow the public the chance for a meaningful participation into the process.

Blair Horner is executive director of the New York Public Interest Research Group.

The views expressed by commentators are solely those of the authors.  They do not necessarily reflect the views of this station or its management.

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