Hochul’s Budget, Amid Surging Energy Prices, So Far Looks Unlikely To Offer Relief to New Yorkers

Anyone who had hoped Governor Kathy Hochul would use the state budget to do something about high prices and New York’s unreasonable climate deadlines looks to be in for a disappointment. After all, Mrs. Hochul had been warning that the state’s green energy regime, a product of the Climate Leadership Climate Protection Act, needs changes to spare New Yorkers from a self-inflicted surge in energy costs.Unfortunately, Mrs. Hochul’s 2027 Budget plan, as described in its current publicly available form, barely mentions the flawed climate law. Only at the end does it promise to “enact common-sense changes” to the law to meet “clean energy and climate goals while at the same time prioritizing affordability.”That’s it. How is this different from what New Yorkers have endured for the past seven years?Instead, the plan wastes time scapegoating energy companies, fiddling with rate-setting formulas, and pushing a Mamdani-esque theory that electricity is expensive because energy-company executives travel too much.The plan is vague, and one can’t discount the possibility that improvements might emerge in the governor’s closed-door negotiations with Albany lawmakers. Yet we at the Empire Center have analyzed Hochul’s original 2027 budget, and it appears that many of those proposals are incorporated into the fiscal 2027 budget.It seems that the budget would adjust regulated electricity rates — what consumers actually pay — based on the ratio of executive compensation to average employees’ pay. Is Mrs. Hochul saying that New York’s energy prices are high, because energy executives make too much? New York’s electricity prices are the sixth-highest in America and 70 percent above the national average. Do energy executives in the other forty-four states make less?If the goal of this provision is to force energy companies to pay their workers more, how does this reduce energy prices? Wages are built into the energy rates you pay, and any wage increases are passed directly on to ratepayers. If utilities doubled employees’ pay tomorrow, your electric bill would rise next month. The budget proposes removing executive travel expenses from regulated rates, another red herring. Are electricity prices high because New York energy company executives travel too much? Do energy executives in other states travel less?This whole “bash-the-CEOs” approach is meant to distract from the real issue — how the state’s climate law is driving energy prices higher today and will continue to do so in the future. It throws cheap bait focused on chief executives and travel.On that head, will the New York Power Authority — the energy entity controlled by the governor — sell its $7.5 million airplane used to fly board members and trustees around the state?The budget, too, orders utilities to keep operational and capital costs increases below inflation. If this provision means that the state will keep the growth of energy prices below inflation, this is a tall order. Since the climate law passed in 2019, New York’s electricity prices have risen by about 7.5 percent per year on average while the annual inflation was 3.7 percent — double the rate of inflation. Over the past 12 months alone, they jumped 14.4 percent, while inflation was at just 3.3 percent.If, on the other hand, this means that New York will only limit the expenses on capital and operations but not touch the fuel and energy costs, then this provision is essentially useless. If Pennsylvania sells electricity to New York at high prices, these high prices will go straight into the rates consumers pay. The real solution is to build power plants and produce a lot of cheap energy, but that is not on the agenda.The budget also proclaims it will force data centers to pay their “fair share” of energy prices. What does that even mean? Data centers and factories usually buy energy at lower rates than households because large energy users buy a lot of energy. If the state forces data centers to buy electricity at New York’s residential rates, i.e. 29.99 cents per kilowatt-hour, there will be no data centers in the Empire State.The state budget was an opportunity for the governor to show she is serious about energy affordability, but so far it offers more of the same.

Hochul’s Budget, Amid Surging Energy Prices, So Far Looks Unlikely To Offer Relief to New Yorkers

Hochul’s Budget, Amid Surging Energy Prices, So Far Looks Unlikely To Offer Relief to New Yorkers

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