State PSC rejects offshore wind farm developers' requests for more subsidies

ALBANY — Continuing a trend among Northeast states, New York said “no” Thursday to requests from offshore wind farm developers to rewrite contracts to allow them to charge more money for supplying power to the state’s grid.

In doing so, the state followed Connecticut and Massachusetts in rebuffing attempts by wind power companies to renegotiate in the wake of inflation, supply-chain bottlenecks and other economic turbulence hitting the industry.

Equinor and Orsted, two Scandinavian wind giants, had asked the state Public Service Commission to increase how much they could charge utilities for power generated by several projects in development but not yet built off Long Island’s shores.

The companies argued that rates were set in contracts awarded before the COVID-19 pandemic and now should be adjusted to account for inflation, rising interest rates and other related costs.

The requests varied for each would-be wind farm but ranged from 27% to 66% for the per-megawatt-hour wind companies could charge.

The PSC, in a unanimous 7-0 vote, rejected the requests, citing the cost to consumers and the impact of possibly “corrupting” the integrity of the state’s bidding process.

The commission said the companies combined were asking for a $12 billion economic boost, an amount Commissioner Diane Burman called “jaw dropping” and Commissioner Tracey Edwards termed “just not doable.”

"By rejecting this, we signal that our contracts are worth the paper they are written on," Rory Christian, PSC chairman, said.

In Connecticut, a similar rejection led to the cancellation — for now — of what was to be the state’s largest offshore wind development. On Thursday, New York commissioners, apparently girding against possible blame, made repeated efforts to stress they weren’t canceling any contracts and any such decision would be up to developers.

A spokeswoman for Equinor, which has three wind projects in the works, said the company was disappointed and still is assessing the impact of the PSC decision.

An Orsted spokeswoman said the viability of Sunrise Wind, the company’s project planned off Brookhaven, would be “extremely challenged” without the rate hike adjustment.

“We will evaluate our next steps and communicate the status of the project as soon as possible,” Meaghan Wims said.

Orsted had asked the state to bump the rate it can charge from $110.37 per megawatt hour of energy to $139.99, a 27% hike. Equinor, which has three projects, all south of Long Beach, sought $159.64 for its Empire 1 project instead of $118.38. For Empire 2, $177.84 instead of $107.50. For Beacon Wind, which would deliver energy to Queens, $190.82 instead of $118.

Prior to the board vote, staff of the Department of Public Service made a presentation recommending rejection of the rate hikes. The department is an executive branch agency under the direction of Gov. Kathy Hochul, though the majority of commission members are holdovers appointed by former Gov. Andrew M. Cuomo.

After the vote, Hochul issued a statement, saying: "Today's decision by the Public Service Commission was necessary to maintain affordability in the wake of global economic pressures and to preserve the competitive process that ensures New York consumers are getting the best deal."

Later Thursday afternoon, Hochul, in a news release, said she still was very committed to advancing the development of renewable energy and would commit an "action plan" for ramping up projects.

A coalition of 17 environmental and labor groups had supported the rate hike because they said wind projects could be canceled and or delayed without it. And they said future energy proposals would include even higher power costs.

"The decision is shortsighted," said Anne Reynolds, executive director of the Alliance for Clean Energy New York, of the PSC vote. “We were hoping the commission would act strategically on behalf of ratepayers and the environment; instead, their decision will result in increased costs and greenhouse gas emissions.”

By Yancey Roy

yancey.roy@newsday.com@yanceyroy