Earth Matters - October 2012: Updated Siting Process for Power Plants in New York

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New York has once again changed the regulatory landscape for major electric generating facilities, with a goal of streamlining review and ensuring the availability of reliable energy sources. Article X of the Public Service Law, which had expired eight years earlier, was reauthorized and amended on August 4, 2011. The revised Article X continues to be a one-stop licensing process for the siting of new power plants, by consolidating power plant licensing under the Public Service Commission and exempting such plants from State Environmental Quality Review Act (SEQRA) requirements and most local laws.

The new Article X siting law applies to all proposed power plants with a nameplate capacity of at least 25 megawatts (MW), including renewable energy projects, as well as to the expansion of existing facilities by more than 25 MW. Exemptions from Article X are limited to those facilities under federal jurisdiction, normal repairs and maintenance of a facility, and facilities constructed on industrial land with an output dedicated solely to on-site industrial purposes. Notably, the new law lowers the threshold of applicability to any electricity generating facility with a nameplate rating of 25 MW, down from 80 MW in the original law. This may benefit renewable energy development in particular, as it will facilitate the installation of solar panel grids and wind farms that tend to be smaller in size and fall within this 25 MW to 80 MW range.

The process for obtaining a “certificate of environmental compatiblity and public need” authorizing the construction of a major electric generating facility is similar to the SEQRA process, by requiring extensive analysis of environmental impacts and reasonable alternatives and providing opportunities for public and agency involvement. A certificate will be granted if the applicant demonstrates that the facility will beneficially add or substitute capacity in the State, minimize or avoid adverse environmental or disproportionate impacts, and comply with all state and local laws and regulations (unless such laws and regulations are unduly burdensome).

Regulations recently adopted by the New York State Department of Environmental Conservation (NYSDEC) implement provisions of Article X requiring evaluation of environmental justice concerns and air quality impacts. First, NYSDEC adopted carbon dioxide emission limits for power plants that are subject to Article X. 6 NYCRR Part 251. According to NYSDEC, those limits should be met by new combined cycle combustion turbines, fossil fuel-fired boilers, certain stationary internal combustion engines, and simple cycle combustion turbines. Other facilities not listed in the regulations will have to propose and meet a case-specific emission limit for carbon dioxide. NYSDEC also adopted requirements for analyzing environmental justice issues associated with the siting of a power plant. 6 NYCRR Part 487. The applicant must analyze the area surrounding the proposed project to determine whether it includes an “environmental justice area” containing a minority or low-income community that may already bear a disproportionate share of environmental impacts. If so, the application must include an analysis of environmental impacts to that area resulting from the plant’s construction and operation (including impacts to air quality), and measures to avoid, offset or mitigate such impacts.

The Act reauthorizing Article X also included a provision requiring the New York State Energy Research and Development Authority to conduct a study on how to increase energy generation from photovoltaic devices in New York. The goal is to generate 2500 MW of solar energy by 2020 and 5000 MW by 2025.

The new carbon dioxide regulations pile on to the mounting realities that discourage new coal-fired power plant development, and even continued coal-based electricity generation, in New York. NYSDEC has designed the carbon dioxide limits to prevent the construction of new coal-fired facilities unless they utilize carbon capture and sequestration, which continues to remain cost prohibitive on a commercial scale and likely would face considerable public opposition. Moreover, the continued decline in natural gas prices and rise in coal prices have compromised continued operations of existing coal-fired facilities. For instance, the coal-fired power plant in Dunkirk, New York has already begun the mothballing process, with only a portion of the plant to remain available to maintain system reliability. In addition, the AES Somerset coal-fired plant and five other AES plants across New York have gone into bankruptcy protection. Thus, the phase out of electricity generated from coal is likely to facilitate development of additional renewable energy facilities and further support for Marcellus Shale gas extraction in New York.

If you would like to learn more about Article X, contact Susan M. Marriott, Associate in the Phillips Lytle Energy and Environment Practices, at (716) 504-5778 or smarriott@phillipslytle.com.