Legislative Roundup: State-Level Battles for Clean Energy Progress

Acadia Center prides itself on advocating for the clean energy future, including within state legislature across the region. While our work spans further across the Northeast, we wanted to highlight a few states to which we dedicated a significant amount of our advocacy efforts in this past year of legislative sessions – including Connecticut, Maine, Massachusetts, and Rhode Island. Not only is it worth examining the progress made in these states, but we also identify the areas we will push our advocacy toward for the following legislative sessions to come. Overall, despite some modest victories and points of progress, it was a difficult and disappointing year for legislative action on climate and clean energy across the board. Acadia Center will be offering more reactions on and responses to this lack of progress in the weeks ahead.

Connecticut

In the 2024 Connecticut Legislative Session, Acadia Center was a strong proponent and advocate for climate and clean energy policies that supported emissions reductions targets and advanced energy equity goals. One victory aligned with our mission was an update to the Home Environmental Improvement Revolving Loan Fund program, passed in 2023, that now allocates funding for grants to support retrofit projects in multifamily residences in environmental justice communities. Throughout the session, momentum for increased heat pumps deployment resulted in the passage of a deployment study and an outlined heat pump rebate program. Looking ahead, following the failure of the prominent “green monster” climate package, much is left to be desired on key Acadia Center priorities such as increased energy efficiency funding, reforms and proceedings at the Public Utilities Regulatory Authority, and grid modernization measures to support our clean energy transition. Acadia Center is ready to lead efforts and ensure the 2025 Legislative Session moves Connecticut closer to being a climate and clean energy leader once again.

Maine

Acadia Center advocated for Maine bills that promoted several important climate and clean energy goals and defended against other measures that would have threatened progress. Acadia Center has coordinated with other nonprofits in Maine where appropriate, with some notable successes. Earlier in the two-year session, Acadia Center helped advocate successfully for a bill entitled “An Act Regarding the Procurement of Energy from Offshore Wind resources.” This bill established a robust system for offshore wind (OSW) development and required that the State procure 3,000 megawatts of OSW energy by 2040, a major leap forward. More recently, in the second year of the two-year session, Acadia Center was instrumental in authoring and supporting eventual passage of a bill that requires the Maine Department of Environmental Protection to study and report on opportunities and barriers to electric vehicle adoption in Maine, helping salvage some progress in the wake of the unfortunate demise of advanced clean cars regulations.

Acadia Center also successfully lobbied against bills that would have ended net energy billing, a Maine program that has successfully established a burgeoning solar and other clean energy resources in Maine, and also lobbied strongly against bills that would have unreasonably impeded the necessary development of electric transmission lines in Maine, while supporting improvements to developer-community engagement efforts.

Unfortunately, the Maine Legislature failed to pass a bill that would require the Public Utilities Commission to open a proceeding on Performance-Based Regulation (PBR). Acadia Center will continue to build support for PBR as a powerful tool for delivering better utility performance for Maine’s ratepayers.

Massachusetts

This legislative session, the Massachusetts House and Senate both passed legislation to reform the siting and permitting of clean energy projects in the Commonwealth in line with recommendations from the Commission on Energy Infrastructure Siting and Permitting. Both branches also included additional important climate measures in their packages.

For example, the Massachusetts Senate focused on reforms to the natural gas system which Acadia Center has championed and included measures that would reform the Gas System Enhancement Program (GSEP), a $40 billion gas replacement program, end the uniform right to gas service in the Commonwealth and require the Department of Public Utilities (DPU) to consider whether the expansion of gas service territory is reasonable and in the public interest. The Senate also banned competitive electric supply contracts for residential customers.

The House took a different approach and included provisions to specifically procure additional offshore wind resources and long-duration energy storage, ensure more widespread proliferation of EV chargers, and support fusion power.

Regrettably, negotiations between the two branches fell apart as the end of the formal legislative calendar approached, and they were unable to come to consensus – with disagreements reportedly centered on Competitive Electric Suppliers and the gas system reforms.

Rhode Island

Rhode Island’s 2024 legislative session yielded little action to tackle emissions in the building sector. Acadia Center’s top legislative priority, the Building Decarbonization Act (H7617/S2952), saw partial passage in the Senate and negotiations in the House resulted in the passage of a resolution to study benchmarking and building performance standards (BPS).

We were glad to celebrate the passage of S2952A in the Senate, an important statement on the value of benchmarking energy usage in our buildings. This amended version of the bill includes benchmarking and BPS for large public and private buildings but removes any requirements for all-electric new construction. What was retained was the requirement for electric ready construction of public buildings; this section also includes provisions for registered apprenticeship programs and project labor agreements.

Unfortunately, negotiations in the House and with other state leaders not only rejected all-electric new construction, but also pushed back on the concept of benchmarking and BPS. Acadia Center contributed to the development of H7617A, a joint resolution directing the Executive Climate Change Coordinating Council (EC4) to study the implementation of benchmarking and BPS. The resolution successfully passed both the House and the Senate on the last night of session, thereby becoming law. Ensuring that the EC4 produces a timely and valuable report by the deadline of February 15, 2025, will require accountability over the coming months.

One victory worth celebrating was the passage of S2499, the Energy Storage Systems Act, which sets a deployment target of 600 MW of energy storage capacity by 2033 – which will help Rhode Island save costs and emissions during peak periods.

Climate Plans and Equity and Environmental Justice Advisory Boards

Following years of research on the global impact of climate change, states in the Northeast and the nation at large have begun to pass laws aiming both to curb greenhouse emissions and to instill equity and environmental justice into emission reduction efforts. Being less than three decades from 2050, many states have codified their mandate to reduce greenhouse gas emissions (GHG) to 80-85% from 1990 levels and achieve net zero by that timeframe. To help keep states on track to achieve those goals, states have charged climate leadership governing bodies and/or state agencies to carefully guide the decision-making process and lead states to achieve their GHG reduction targets in the various sectors of the economy. Each state designates its climate leadership body slightly differently: for example, the Commonwealth of Massachusetts assembled the Global Warming Solutions Act (GWSA) Implementation Advisory Committee (IAC); Rhode Island refers to its governing body as the Executive Climate Change Coordinating Council (EC4); the state of Connecticut’s climate governing body is the Governor’s Council on Climate Change (GC3); and the Maine Climate Council (MCC) spearheads the climate plans for the state of Maine. Other variations exist in different states in the region.

Though these climate leadership councils are critical for comprehensive climate planning, they have been focused first and foremost on emissions reductions, and some of their members may have limited understanding or direct experience of underlying issues of inequity and environmental injustice in the context of climate action. This poses a challenge in properly crafting climate solutions for many communities that are in a disadvantaged or underserved position in the transition to a clean energy future. Many states, recognizing this limitation, began putting together a second similar council to provide equity and environmental justice guidance for climate solutions and work alongside the climate leadership councils/bodies. These equity and environmental justice forums were created by a mix of legislative and executive actions and were tasked with the responsibility of providing an equity and justice lens and guidance to the climate plans.^1,2,3 However, many states in the Northeast have formed these equity forums as either working groups or advisory bodies for input and consultation, which in turn has presented some limitations in the scope and effectiveness of their roles to influence and shape climate policy decision-making.

For the protection of low-income and environmental justice communities, equity-related barriers in the transition must be considered at the beginning of the formulation of the climate plans. Researching states’ climate plans showed that most of the input from the equity advisory councils and working groups were considered comments or recommendations in response to already-drafted climate plans, written separately by their states’ climate councils. While better than lacking recommendations, soliciting equity-focused feedback to already-crafted climate plans hinders innovative and well-thought-out solutions that could work better for environmental justice and low-income communities.

Another major limitation of the equity and environmental justice advisory council model in the Northeast is their role as advisory forums with limited capacity to spearhead the inclusion of equity causes in climate plans. States in the Northeast must find ways to establish both legal direction and agency resourcing/backing for environmental justice initiatives if there is to be a consistent, effective championing of equity and environmental justice as a concept with consequences throughout the development and implementation of each state’s climate plan. Creating agencies or offices and hiring full-time public servants dedicated to environmental justice is a first step. Massachusetts recently took this leap in 2023 with the creation of the Office of Environmental Justice and Equity within the Executive Office of Energy and Environmental Affairs (EEA). Another promising model was California’s Bureau of Environmental Justice within its state Department of Justice to provide state entities with a means to maintain accountability when equity standards are not upheld.  The Northeast can do even better; however, it begins by empowering equity and environmental justice councils as more than just advisory bodies but as partners in co-designing equitable climate solutions.

For more information:

Joy Yakie, Environmental Justice and Outreach Manager  jyakie@acadiacenter.org, 617–742-0054 x110

_{____________________________________}

1. _{About the Environmental Justice Council, MA: https://www.mass.gov/info-details/about-the-environmental-justice-council-ejc}
2. _{Maine Climate Council Equity Subcommittee: https://www.maine.gov/future/initiatives/climate/climate-council/equity-subcommittee}
3. _{New York State Climate Justice Working Group: https://climate.ny.gov/Resources/Climate-Justice-Working-Group}

Observations and Takeaways from the Vineyard Wind Blade Incident: An Unfortunate Episode for an Indispensable Energy Resource in the Northeast

Acadia Center has been monitoring the Vineyard Wind blade damage incident as it has unfolded off the coast of Nantucket over the last several weeks. We recognize and appreciate the impact that the incident has had on Nantucket residents and business owners, and wish to express the organization’s support to the response crews – both formal and informal – who continue to aid in the safe collection and removal of the resulting debris that came ashore.

The blade’s initial damage and subsequent breakdown in the ocean was an extremely unfortunate accident, and it comes at a challenging time for the nascent offshore wind industry in the United States. The underlying cause that led to the incident must be determined and remedied swiftly, and a full public accounting must be provided – recognizing that a complete diagnosis of the situation may take some time. Matters of health and safety are of paramount importance, and it is vital that the ongoing response efforts protect local communities, project workers, wildlife, ocean navigators, and others who stand to be directly affected. Measures must also be taken to avoid any chance of recurrence in the future, so offshore wind can continue forward in a sustainable and safe manner – and so that coastal communities can be reassured that this source of clean energy will not pose any safety or environmental threat.

More details continue to emerge about the underlying cause of the blade incident, with signs pointing to a manufacturing defect (e.g., inadequate fiberglass bonding) rather than damage sustained during installation. But even as the facts are still being gathered and an investigation remains underway, misinformation is already spreading online, with the images of a broken blade and fiberglass shards being manipulated via viral means, including by some that cheer the accident as a setback to offshore wind. This incident is a regrettable and newsworthy event, and we all must learn from it to strengthen the region’s offshore wind industry – with the many energy, environmental, and economic benefits it provides – while ensuring the safety and security of local communities. Nevertheless, a deliberative and purposeful approach must be taken as experts collectively diagnose, understand, and remedy this unfortunate episode.

Offshore wind is and will remain indispensable to meeting the Northeast’s energy needs and to the nation’s future. Offshore wind fills a crucial role in fighting to prevent the worst human and environmental impacts of a warming climate. It is also among the most cost-effective options the Northeast has at its disposal to deliver energy reliably during the winter, reducing the use of fossil fuels for power generation and providing clean electrons needed to keep families and businesses warm. Virtually all major studies examining the region’s changing energy mix forecast a major reliance on offshore wind, with 20 to 40+ gigawatts (GW) of offshore wind installed by 2050. By way of comparison, the power production capacity of all 400 of the region’s electric generating facilities is currently 29.7 GW. While offshore wind is relatively new in the United States, the industry is well established internationally, and incidents like this are very rare (although not unheard of). Actors across industry, government, and civil society have a role to play in ensuring this remains the case here in the U.S. as the industry continues to make inroads.

Everyone with a stake in the growth of offshore wind should learn from this incident. Acadia Center offers some observations and recommendations on steps that can be taken in the near future:

1. Establish and execute better, clearer communication protocols and lines of accountability during emergency response conditions: To keep communities, local officials, and the broader public better informed during unexpected incidents, project proponents must improve the timeliness, frequency, and level of detail of their communications. Establishing these protocols in advance and equipping local communities with designated emergency liaisons from the get-go are vital given the many different entities involved in situations such as this – from the project sponsor and the original equipment manufacturer (OEM) to the companies responsible for installation and continuous monitoring. Building trust requires bringing officials and the public into the circle of awareness as events unfold.
2. Strengthen and deepen low probability event planning in the federal permitting process for offshore energy resources (both clean and fossil): Currently, project proponents in offshore energy lease areas must follow an extensive application process governed by the Bureau of Ocean Energy Management (BOEM), housed within the Department of the Interior (DOI). Although these ‘construction and operations plan’ (COP) filings do contain some language on response activities for so-called ‘low probability events,’ those application materials must be strengthened considerably in light of the nature of this incident – which differs fundamentally from the existing focus on rare events like vessel collisions and allisions, fuel spills, and other accidental releases of liquids from construction equipment.
3. Consider a centralized regional monitoring and response infrastructure, right-sized for the need: For offshore wind, a centralized apparatus for the region as a whole, or at least coastal states, might be better suited to monitor conditions and coordinate response activities during rare events such as this. The Vineyard Wind incident happened to be a Massachusetts project (in federal waters) that primarily affected Massachusetts communities, but this may not always be the case. While a blade break of this nature will hopefully remain extremely rare or may never occur again in the region, some degree of multi-state or regional coordination on basic monitoring and emergency management activities would seem prudent, given the multi-gigawatt build-out that the region will need to see. Perhaps, there may already be readily available infrastructure to better make use of – for instance, via existing U.S. Coast Guard installations or NOAA offices in the region.
4. Leverage the region’s R&D/engineering prowess to drive safety with innovation: The Commonwealth of Massachusetts was an early pioneer in turbine blade testing and safety through the investments made at MassCEC’s Charlestown Wind Technology Testing Center (WTTC). As the root cause analysis is completed and lessons are learned, those learnings should be directly incorporated into the ongoing testing activities at the WTTC and other similar facilities. Other centers of applied offshore wind R&D around the region – including the National Offshore Wind R&D Consortium (NOWRDC), operated out of New York State – can and should also double down on their focus on safety and accident-prevention for the technologies the region will install in the decades ahead (see, e.g., an NOWRDC investment for a project verifying blade integrity during manufacture). Across the board, more of this work must be done, and the region should put its collective institutions and brain power to work to bring forward new engineering solutions that improve safety, reduce risk, and bolster resilience.

Maine PUC Establishes Integrated Grid Planning Process

On July 12, 2024, the Maine Public Utilities Commission (PUC) released the final Order in its Integrated Grid Planning (IGP) proceeding. The Order is the culmination of several years’ worth of effort from the PUC, the Legislature, Maine’s investor-owned utilities, nonprofit advocacy groups (including Acadia Center), the Governor’s Energy Office, the Office of the Public Advocate, Efficiency Maine Trust, and numerous other entities.

With its recent Order, the PUC lays the foundation for a formal 18–month grid planning process, which will occur every five years. As part of their planning efforts, Central Maine Power and Versant Power must develop a 10-year vision for Maine’s electric grid, as well as an investment roadmap for improving reliability and resiliency while keeping costs affordable and enabling the cost-effective achievement of Maine’s climate policies and greenhouse gas emissions reductions requirements. 

Integrated Grid Plans Offer a More Holistic View of Future Utility Investments

The required grid plans are intended to ensure that Maine’s investor-owned utilities are well prepared to meet the challenges of climate change and the needs of a rapid transition to clean energy. In developing their grid plans, the utilities are directed to place equity and environmental justice impacts more centrally within their planning efforts and to ensure greater transparency and stakeholder input compared to previous utility planning processes. 

The PUC directs the utilities to prioritize load flexibility through measures such as demand response that can shift energy demand to times of day when electricity is less expensive and less polluting. These kinds of load flexibility programs can enable more dynamic grid operations and reductions in peak demand. The plans must also identify strategies to accelerate the deployment of non-wires alternatives (NWA) like energy storage, which are often cleaner and cheaper than traditional infrastructure investments. And the utilities must develop a roadmap for more advanced modeling of the distribution system, which will allow for detailed analysis of the impact of electric vehicles, heat pumps, and other distributed energy resources on the grid.  

After the completion of an extensive modeling and forecasting process, the utilities will conduct a broad assessment of possible solutions to meet anticipated grid needs, including both traditional investments and a wide range of clean and distributed energy alternatives. The solutions identified in the grid plans will inform the utilities’ subsequent investment proposals, which they will put forth in rate cases before the PUC.  

Next Steps

Despite the PUC’s Order, there are still key questions left to be answered, such as the exact process for stakeholder input and review throughout the 18-month planning period, as well as concretely defining the equity and environmental justice metrics to be used in the solution evaluation scorecard. While advocates pushed for clear definitions throughout the PUC proceeding, the Order leaves it up to the utilities and other stakeholders to determine which definitions will be included and how the equity and environmental justice assessment will be conducted.

While the Integrated Grid Planning process will not address every challenge relevant to Maine’s energy and utility sectors, the PUC’s recent Order is an important milestone and marks a pivotal moment in the state’s clean energy transition. Acadia Center looks forward to continuing to work with the PUC, utilities, and other stakeholders as we finalize the details of the planning process and set the course for the years to come.  

Mass. Legislature Faces Looming Deadline to Pass Permitting Reform

With Massachusetts’ legislative session ending July 31, lawmakers are on the clock to reach an agreement on a major climate bill centered around clean energy permitting and siting reform.

Culminating over a year-and-a-half of work on a wide range of proposed climate legislation, the Senate passed an omnibus bill in late June (S.2838), and the House of Representatives followed with its own legislation on July 17 (H.4884).

The bills contain closely aligned changes to how the state permits clean energy infrastructure but vary significantly beyond the permitting provisions and have elicited mixed responses from clean energy advocates in the state.

“The Senate’s provisions on the gas system are really important,” said Kyle Murray of Acadia Center, adding that they would “give the DPU the tools necessary to pursue an ordered transition off of natural gas.”

To read the full article from RTO Insider, click here.

A new bill in the House aims to ramp up clean energy, but advocates say it falls short

After decades (and decades) of trying to reform the way that energy projects are approved and sited in Massachusetts, legislators are poised to notch a win after a House energy bill passed Wednesday night.

The reforms — which are expected to cut approval times to less than half the current speed — may seem in the weeds, but they are crucial for expeditiously building out all of the substations and transformers needed to support a transition from fossil fuels to electricity.

“We need to get a handle on the orderly decommissioning of the gas system,” said Kyle Murray, Massachusetts program director at the clean energy advocacy group the Acadia Center. “This isn’t saying we’re going to turn it off overnight, because you can’t do that. But we need a plan in place.”

The Senate bill also leans on decommissioning leaky gas pipes when possible, rather than just replacing or repairing them.

To read the full article from the Boston Globe, click here.

The Rocky Road to Performance-based Regulation in Connecticut

In the sometimes sleepy world of utility ratemaking, Connecticut is frequently making headlines over public disputes between the state’s utilities and their regulators.

PBR encompasses a wide range of regulatory approaches including financial incentives and penalties, performance metrics and scorecards, multi-year rate plans, and revenue decoupling, all aimed at achieving goals and outcomes not explicitly considered in traditional ratemaking.

“Under cost-of-service regulation, we see a real tension between the kinds of investments that earn utilities an allowed rate of return and those they pass on to customers as operating expenses,” Oliver Tully, director of utility innovation at the Acadia Center, told RTO Insider. “We see a situation where the high capital-cost investments may not be the ones that are actually best for ratepayers and the grid overall.”

Traditional regulation, Tully said, can lead to “a clear misalignment between the incentives that the utilities face when making investment decisions and the policy priorities that the states have, especially around clean energy, equity, greenhouse gas emissions and affordability.”

Some advocates have expressed concern that the pushback to Connecticut’s proceeding could discourage other states from considering the pursuit of comprehensive PBR.

Acadia’s Tully said that, while he views the Connecticut proceeding as “a model for other states to follow,” he has been disappointed by the utilities’ response and is “a little bit fearful of what this could mean for other states.”

To read the full article from RTO Insider, click here.

Utility Rate Design Is a Key Piece of the Energy Transition Puzzle

What is Rate Design?

In order to deliver energy in the form of electricity and gas, utilities oversee and operate the wires, substations, pipelines, and other equipment that together make up the energy distribution systems. Utilities make regular investments in that infrastructure to help meet demand and maintain reliability. Utilities then recover the cost of those investments through customers’ monthly bills. Rate design is the process of determining how exactly to allocate those costs to ratepayers across the many residential, commercial, and industrial customers that make up a utility’s service territory.

As states consider how to accelerate the clean energy transition, utility rate design is a vital piece of the puzzle. Rate design is one of the fundamental tools that regulators have to ensure that utilities have sufficient revenues to bring power to our homes and businesses. But rate design is also a powerful lever for achieving policy goals related to clean energy, equity, affordability, and greenhouse gas emissions.

Why does Rate Design Matter?

Today, as customers face increasingly high utility bills, it is vital for regulators to get rate design right. In Massachusetts, for example, average energy burden (the percentage of household income spent on energy expenses) for low-income households is around 10 percent, and—remarkably—energy burden for some low-income households can reach as high as 31 percent.¹ Experts generally agree that customers are energy burdened if they spend 6% of their incomes or more on energy. It is important to note that recent increases in utility bills in the Northeast have been a direct result of an overreliance on gas in the region. Gas and other fossil fuels used to generate electricity are susceptible to price spikes, which we have seen especially during recent winters, and these costs are passed on directly to customers.²

Decisions over how to allocate energy system costs through rates have enormous implications not only for the energy burdens that customers face, but also for the success of building and transportation electrification, deployment of distributed energy resources like rooftop solar and battery storage, and many other programs and policies.

Utility bills are made up of the 1) costs for the generating resources that provide power (e.g. a wind farm or a gas plant); 2) costs that cover building and operating the transmission and distribution systems; and 3) funding for range of important policies and programs, such as energy efficiency programs and bill assistance. These costs are recovered through a combination of fixed charges, which stay the same every month, and volumetric charges, which vary depending on the amount of electricity or gas a customer uses. The majority of a residential customer’s bill comes from volumetric charges (i.e. the volumetric rate times the amount of electricity or gas consumed), so energy efficiency improvements that reduce consumption are a primary way of lowering bills.

Smart Rate Design Can Accelerate the Clean Energy Transition

As states work to reduce greenhouse gas emissions, utility rates must enable affordable and efficient electrification of our buildings and transportation sectors. In an effort to incentivize customers to electrify their homes, some jurisdictions are considering higher fixed charges and lower average volumetric rates. This would mean that customers who install electric heat pumps, for example, would not be penalized for using more electricity. This may be a promising solution to enable broad electrification, but regulators must prioritize efficient electrification by ensuring that incentives for energy efficiency are preserved and that customers and installers right-size electrification measures and avoid unnecessary or overly expensive system upgrades.

Regulators must also be careful to consider potential knock-on effects for other customers. In the past, stakeholders, including Acadia Center, have rightly (and successfully) pushed back against higher fixed charges, which are unresponsive to changes in customers’ behavior and therefore stay the same no matter what a customer does to reduce their demand, such as installing more efficient lighting or appliances. Higher fixed charges can disproportionately burden lower income customers and create a disincentive for energy efficiency investments, which may become less financially attractive as volumetric charges are replaced by fixed charges.

At the same time, customers with rooftop solar may face different incentives, and rate designs that work in favor of electrification may have unintended negative consequences for those net metering customers. As fixed charges grow, the value of rooftop solar and the payments received for exporting excess power to the grid may decrease. As regulators consider the allocation of costs between fixed and volumetric charges, they must be sure to prioritize equity and affordability, while preserving sufficient price signals for energy efficiency and other distributed energy resources like rooftop solar and battery storage.

Although the rates paid over time for the electricity a heat pump or electric vehicle uses (i.e. the operational costs) are an important piece of the decision to electrify, the upfront costs of installation are perhaps an even greater barrier to customer adoption. States should pursue both rate design solutions and efforts to improve the upfront economics of electrification.

In designing rates to enable affordable electrification, regulators should explore all possible methods to help customers manage utility bills and reduce their energy burdens. This includes a broad set of solutions, such as low-income discount rates, as well as more comprehensive approaches, such as Percentage-of-Income Payment Plans, which cap energy costs as a percentage of household income (e.g. so that customers pay no more than 6% for energy, for example). Increased access to programs such as community solar can also help to reduce bills.

States in Northeast also have lots of room for growth in implementing rates that more closely track the changes in energy prices throughout the day. By creating an incentive for customers to adjust their demand throughout the day in response to clear price signals, time-varying rates can help customers lower their electricity bills while delivering benefits to the grid overall. Time-varying rates can help reduce peak demand, which in turn reduces the reliance on the dirtiest, most expensive sources of power used to meet periods of highest demand. The many consumer and system-wide benefits of electric vehicles, heat pumps, and other distributed energy resources cannot be fully realized without the use of time-varying rates.

The demand flexibility that time-varying rates enables—much of which can be automated—will become increasingly important as more renewable resources are deployed and more customers electrify. As regulators consider rate reforms to support affordable electrification, they must focus on making the transition as easy as possible for customers, providing actionable price signals that accurately capture the benefits of clean energy, and avoiding situations where customers are financially worse off if they choose to electrify.

As electrification becomes more common, regulators should explore innovative ways to pay for the transition away from gas and identify solutions to break down silos between gas and electric utilities, which can often frustrate electrification efforts. Regulators should pay close attention to the kinds of gas investments that are approved for cost recovery through customer rates. Gas infrastructure can last for decades, which means customers well into the future may still be paying for investment decisions made today, even if that equipment is no longer needed in light of states’ climate targets. Acadia Center is deeply involved in these complex issues in proceedings throughout the region and is focused on ensuring that regulators implement effective rate designs that help advance a clean and equitable energy system.

While rate design alone cannot ensure the success of the clean energy transition, it remains an essential tool that states should not neglect as they pursue a clean energy future.

1 Kimberly Clark, Metropolitan Area Planning Council, Reducing Energy Burden: Resources for Low-Income Residents (2022). https://www.mapc.org/planning101/reducing-energy-burden-resources-for-low-income-residents/

2 As an example of the relationship between gas and electricity prices, see: https://www.eia.gov/todayinenergy/detail.php?id=51158 and https://www.sciencedirect.com/science/article/pii/S2589004223028031#bib36

Myth Busting: Congestion Pricing

Congestion is a policy designed to reduce traffic in the most congested areas of cities by charging vehicles a fee to enter designated areas. Congestion pricing has been successfully used in London and other locations. New York City’s (NYC’s) created the first major congestion pricing plan in the United States. The plan imposes a charge on vehicles to enter the highly congested lower part of Manhattan below 60^th Street. The goal of this policy is to decrease traffic volume in the central business district (CBD) of Manhattan, improve air quality and generate revenue for public transportation improvements. Additionally, the plan is intended to improve walkability, capacity for bikes and increase funding for ADA accessibility to public transit, making multimodal transportation safer for everyone in NYC. The program was estimated to generate about $1 billion per year and finance $15 billion for infrastructure projects for the Metropolitan Transportation Authority (MTA), which is in urgent need of improvements to the city’s subway system.

Seemingly everything was in line to start the program, including a state law passed back in 2019 and the approval from the federal government in 2023. But in an unexpected step, New York City’s congestion pricing program has been indefinitely paused by Governor Hochul, just weeks before its planned start date on June 30, 2024. The governor’s office cited concerns over affordability and the cost of living. Additionally, articles like one from Politico suggest that the decision was driven by public polls showing strong opposition to the initiative, especially among voters in the greater metropolitan region and suburbs.

Congestion pricing in NYC presented an excellent opportunity for such a transit-dependent city to keep reducing its collective carbon footprint and improve the quality of life for residents, but opponents to the program seem to perpetuate several myths about congestion pricing that contributed to the program being paused. So, let’s clear up some common myths and get to the facts about what congestion pricing could mean for the city.

Myth: Congestion Pricing Will Hurt the Economy

Fact: Unfortunately, much of the tolling infrastructure needed to implement the program has already been installed in NYC, at a cost of $507 million. Unless the Governor reverses course, this significant infrastructure investment will now go to waste, effectively flushing away taxpayer money. As a direct result of the congestion pricing pause, there is now a $15 billion shortfall in the MTA’s 2020 – 2024 Capital Program. The funds to compensate for this shortfall will now have to be sourced from elsewhere. Some sources like CNN believe it will likely come from increase in taxation either on individuals or on businesses.

NYC’s economy largely relies on public transportation, with 70% of residents commuting by subway, bike or by foot. Most NYC commuters wouldn’t be directly impacted by congestion pricing. Instead, not implementing it deprives public transit of essential funding, hurting the majority who rely on it.

Reducing congestion would also bring significant economic benefits. It improves productivity by decreasing the time spent stuck in traffic. Efficiency in transportation translated to cost savings for businesses that depend on timely deliver and punctuality. Less congestion means lower operating costs for businesses and workers including lower fuel consumptions. Furthermore, cleaner air from fewer emissions can lead to lower healthcare costs, fostering a healthier workforce and community.

Myth: Congestion Pricing Will Hurt Low-Income Drivers the Most.

Fact: According to MTA’s Environmental Assessment, over 91% of low-income commuters do not commute using a car.  The vast majority of the commuters who are low-income in NYC rely on public transportation. The data from that Assessment shows that among low-income commuters, 79% use public transit, 8% are vehicles from NY, 1% are vehicles from NJ and CT, and 12% use other means. Highlighting that low-income individuals in the tri-state area are unlikely to be impacted by congestion pricing and more likely to reap the benefits from improved public transit funded by the program.

F urthermore, exemptions and discounts were also planned by the MTA for Low-Income Drivers and for exemptions for Disability. A 50% discount would have been available for low-income vehicle owners enrolled in the Low-Income Discount Plan (LIDP) after the first 10 trips in a calendar month. With additional low-income tax credits for those whose earn a gross income under $60,000 would qualify for a tax credit equivalent to the amount of tolls paid. The Individual Disability Exemption Plan (IDEP) is available for individuals whose disabilities or health conditions prevent them from using transit. This exemption can apply to a vehicle registered to the applicant or a designated caregiver’s vehicle used to drive the applicant in the Congestion Relief Zone.

The suburb commuters who will benefit from halting congestion pricing are also the smallest percentage of commuters. By not implementing congestion pricing, the state is effectively prioritizing the needs of suburban residents over low-income commuters into NYC and the residents of NYC.

Myth: Congestion Pricing is Intentionally Punishing Commuters from Others States Like NJ and CT.

Fact: According to its Environmental Impact Assessment, the MTA found that from all the work trips entering the CBD only 3.2% of them where drivers from NJ and CT. The program also planned to have notable “crossing credits” which are reduced fees for tunnel users from NJ and Long Island. Congestion pricing could motivate CT and NJ to enhance their own transportation systems, directly benefiting their residents and addressing long-standing demands for better commuter options.

Myth: Suspending Congestion Pricing is Inconsequential

Fact: Congestion pricing is a proven and effective solution for reducing air pollution and improving urban living conditions. Congestion pricing tackles critical urban issues like enhancing public transportation, air quality, safety, walkability, or accessibility which are tangible benefits residents can appreciate.

Delaying congestion pricing indefinitely fosters distrust and delays the implementation of a program that is essential to achieving the State’s climate goals. For government to earn trust, it must be consistent. Changing course so suddenly has consequences for many, including state lawmakers who backed the law, government agencies who were counting on the funding and even the construction industry planning for the subway improvements funded by congestion pricing. The $507 million already spent on the tolling infrastructure risks appearing to be wasted, leaving many constituents feeling distrust of the decision-making process.

Recommendations

Acadia Center believes that the economic, climate, quality of life and equity benefits of the NYC Congestion Plan are clear and powerful. Gov. Hochul and other state and city leaders should work together now to implement a congestion pricing plan, avoid massive interruptions in funding needed for transportation infrastructure and send the right price signals around over reliance on cars in urban areas.

 

Join the Conversation

We encourage you to share your thoughts and questions about congestion pricing. Let’s work together to create a better, more sustainable tri-state area.

Paola Moncada Tamayo

Policy Analyst

ptamayo@acadiacenter.org

212-256-1535 ext.204

Green groups push Northeast states to update regional carbon market

A coalition of environmental groups is making the first move to apply organized pressure on 10 Eastern states to set new climate goals for a regional carbon market and provide a status update on a review of the program that is more than 18 months overdue.

Details: The groups will say in new letters, led by Acadia Center and set to be released on Wednesday, that they “have grown increasingly concerned with the lack of communication and engagement” from the Northeastern and mid-Atlantic states participating in the Regional Greenhouse Gas Initiative.

RGGI members are engaged in their third program review, with the first concluding in 2013 and the second in 2017. They have reduced power sector emissions by 50 percent and generated $7 billion since 2005, according to the program.

The review will weigh comments like a proposal from Acadia Center, an environmental nonprofit, calling for mandated spending on alleviating pollution and air quality monitoring in overburdened communities. The letter also urges states to lower the threshold for electric-generating units and set an emissions cap that lowers to zero by 2040.

What’s next: While there is no updated timeline for the program review, the groups wrote that they hope states will provide clarity “in the days ahead.”

To read the full article from Politico, click here.