BEVERAGE BOTTLERS TAKE ON THE BOTTLE DEPOSIT SYSTEM: Beverage bottlers are allying with a few community groups to push a complete revamp of the state’s bottle deposit law. The new group is not supporting an increase to the 5-cent deposit, as some environmental groups and redemption centers have pushed with increasing urgency over the last few years. Instead, the newly formed New Yorkers for Better Recycling coalition wants to “reform” the system so industry plays a greater role. They want a system “in which the producers of recyclable materials are responsible for funding and operating the collection system with appropriate government oversight,” the coalition’s announcement states. “Producers pay into the system and run it so that they can get more materials back to be remade into new products.” The coalition’s membership list is primarily from the industry that packages and distributes both Pepsi and Coca-Cola beverages: Coca-Cola Beverages Northeast, Liberty Coca-Cola Beverages, Pepsi-Cola Bottling Co. of New York and the New York State Pepsi Bottlers Association. The Korean American Grocers Organization and the Korean American Alliance of Greater New York, which share leadership, and several clergy organizations are also members, according to a list provided by the coalition. “We have an obligation to ensure we’re doing everything possible to improve the way we recycle in our state, and we can only do that by re-working the system,” said Kwang Min Park, president of the Korean American Grocers Association, in a statement. A spokesperson for the organization said the coalition has not taken a position on any specific bill. The proposal to revamp the bottle deposit law and give the industry more of a role is likely to meet strong opposition from environmental groups and Democratic lawmakers who are pushing for a higher deposit and an expansion of the law to more types of beverage containers. “Leaving the packaging industry to control the recycling system in New York is like leaving Dracula in charge of the blood bank,” said NYPIRG’s Blair Horner. He said the system needs to be modernized and expanded, not “defanged.” The redemption rate for bottles with a deposit was 70 percent in 2021, far higher than recycling rates for other materials, according to state data. — Marie J. French Q&A: FORMER PUBLIC SERVICE COMMISSIONER JOHN HOWARD — POLITICO’s Marie J. French: John Howard is no longer on the state Public Service Commission. But that doesn’t mean he’s going to stop talking about the state’s rocky road toward meeting its climate goals. Howard, whose term expired in February, has been an outspoken member of the powerful, seven-member board since being appointed in July 2019. He left the commission in April after his seat was filled by one of Gov. Kathy Hochul’s first nominees to the influential utility regulator. He leaves feeling that the work is unfinished, in large part because of the challenges facing New York’s efforts to move to 70 percent renewable electricity by 2030 and its other climate goals. Howard has been a pragmatic and moderate voice on the commission after being a top aide to former Gov. Andrew Cuomo. He regularly stressed support for cutting emissions but in the same breath noted that the move to fund clean energy can’t continue to fall solely on the back of utility customers. “We never have tried to build this much this quickly in the world’s history,” he told POLITICO in an interview. “I think we’re finding out we don’t have unlimited resources.” Howard, 67, who lives in the Albany area, served as chair starting in February 2021 until Hochul selected a new head in September of that year. PFAS PRIVATIZATION — POLITICO's Annie Snider: The Biden administration has cast its strict new drinking water rules for toxic forever chemicals as a win for public health. But they could also spur more sales of public water systems to private companies, a controversial move that often raises costs and takes control of a vital service out of the community’s hands. The new limits — the first ever for the group of chemicals known as PFAS that are linked with cancer, immune problems and hypertension — are incredibly low, extremely expensive and mind-bendingly complicated. The majority of the nation’s public water utilities don’t have the technical capacity and financial capital that complying with the rules will require, water sector experts say. But the private water industry does. “We’ve already had several municipalities talk to us and say, ‘Look, this is one more thing on top of all the other things that we’re trying to deal with, this is a regulation that’s going to be a real challenge for us. We know we need to privatize,’” said Cheryl Norton, chief operating officer for American Water, the nation’s largest private water company. At least one community — Salem, New Jersey — has already opted to do so. Its beleaguered water system was bleeding more than $1 million annually after years of deferring rate increases and instead plugging budget holes with tax revenue. The utility was just beginning upgrades to deal with state-level PFAS regulations when Salem voters approved a referendum last fall to sell their system to American Water. ASSEMBLY’S LATE GAS TRANSITION PROPOSAL DOOMED BUDGET TALKS: What really happened with NY HEAT and Hochul’s gas transition measure during budget talks? Individual lawmakers have diminished power during the budget process, relying on leadership and central staff negotiating at the table to hammer out deals. The process can be frustrating and opaque for the public and even members. The Assembly Democrats’ budget negotiators did make a late-in-the-game proposal on the gas transition and NY HEAT measure. The proposal, obtained by POLITICO, was shared by the Assembly’s team with the Senate and governor’s office on April 14, according to a person familiar with the negotiations who requested anonymity to describe the sensitive discussions. That’s two weeks after the fiscal budget deadline and a day before Hochul announced an overarching deal on the budget. The proposal was apparently not acceptable to the Senate or the governor’s office, as the issue was declared “dead” in budget talks shortly afterwards by multiple people familiar with the discussions. “Nothing is ‘killed,’ and conversations are always ongoing on any issue,” said Assembly spokesperson Mike Whyland. Assembly Speaker Carl Heastie said the issue would continue to be negotiated after session. Environmental advocates who reviewed the Assembly proposal said it would not achieve the goals of either the governor’s or Senate’s proposal. This “demonstrates bad faith from the Assembly,” said Liz Moran, policy director for Environmental Advocates of New York. “We're trying to move away from gas and fossil fuels entirely in the state and to say otherwise is, frankly, newly branded climate denialism.” The proposal would eliminate the “100-foot rule” for gas — one key component of the governor’s and Senate’s plan — but would not have ended the obligation to serve for gas. That would mean the Public Service Commission and utilities would not be able to decommission sections of the gas system without every single household agreeing. Instead, the Assembly proposal directs the PSC to encourage electrification and neighborhood scale transitions. The Assembly negotiators also wanted to codify an obligation to provide gas to buildings that are exempt from the zero-emission new buildings requirements, those that are hard to electrify and those “in regions that experience frequent cold weather hazards,” among others. Those same carve-outs are included in the Assembly’s proposal to end the expansion of gas service territory to new areas after 2027, limiting the PSC’s authority. NY HEAT and Hochul’s proposal blocked expansions of gas service territory after 2026 and 2025, respectively, with different exemptions. National Fuel’s opposition and spending on advertising may have also played a role in the concerns from some assembly members. The utility’s officials have often argued that the cold weather the Buffalo region experiences makes heat pumps less effective and more costly in their territory. The measure poses an existential threat to the gas company, since it does not have an electric business like most other large New York utilities. Con Ed supports components of the proposal, and National Grid backed a modified version, first reported by POLITICO, after discussions with environmental advocates. Some observers said the circulation of that Grid-backed version, also supported by the New York League of Conservation Voters, Building Decarbonization Coalition and the Alliance for a Green Economy, muddied the waters and made it more difficult for the three parties at the table to move forward. Assemblymember Ken Zebrowski, who chairs the committee overseeing the PSC, said he’s not concerned about utility companies’ positions on the bill, but about the impact on average households. Environmental groups supporting the bill have argued that any transition off gas would be accompanied by incentives to pay for more costly equipment and potential upgrades. Zebrowski said there needs to be specifics if that is the case. Assembly members are engaged in discussions about potential changes to the bill to move it forward, Zebrowski said. Reflecting a desire for more details and anxiety about the impact on their constituents, the Assembly proposal also calls for a report from the Public Service Commission to “establish a predictable and just plan for transitioning away from gas.” That includes a timeline for when any discontinuance of service might happen; the process and metrics to decide on a repair versus removal of a section of pipe; how customers would be notified and provided with alternatives and coordination with the electricity system. The report would identify any changes to state law needed. Environmental advocates say this is an unnecessary delay of the planning process that the PSC should be empowered to take. The state’s climate plan advises the Legislature to address the 100-foot rule and the obligation to serve. Right now, the PSC is overseeing an iterative, multi-year process to have gas utilities propose plans to reduce emissions. But the commission’s options are limited, making it difficult to push less costly alternatives to repairing the gas system and blocking efforts to limit new hookups. The governor’s proposal would have allowed the Department of Public Service and the “PSC to expand upon its efforts through the Commission’s gas-planning proceeding to direct utility companies to manage the transition to clean energy sources responsibly and affordably,” said spokesman Jim Denn. “Otherwise, there are no such provisions in existing law that give the Commission power to curtail portions of the gas system.” — Marie J. French NYC EYES WAREHOUSE EMISSIONS: New York City Mayor Eric Adams’ administration is mulling more ways to tackle warehouse emissions. The C40 Cities Climate Leadership Group, Inc., a network of mayors working on tackling climate challenges, is commissioning a study of the potential impact of an “indirect source rule” on health-harming pollution from trucks traveling to and from warehouses in New York City, which are disproportionately likely to occur near Black, Hispanic and low-income families. "This is early days — we are just beginning to explore what the Indirect Source Rule could do for our city. But one thing is certain-- climate change is this generation's most urgent fight which requires all of us,” said Deputy Mayor for Operations Meera Joshi in a statement. “This study will help us understand the potential impacts on communities that have historically borne the brunt of pollution, as well as the private sector." Sen. Mike Giarnis has pushed state legislation to institute indirect source rules that force warehouse operators, including e-commerce giants like Amazon, to take responsibility for the emissions from delivery vehicles. The concept has backing from groups including the New York City Environmental Justice Alliance. — Marie J. French PSEG TO MARKET NUCLEAR POWER: PSEG could sell power from its three New Jersey nuclear plants to private companies, utility CEO Ralph LaRossa said Tuesday during an earnings call. The company is interested in signing power purchase agreements with power-hungry data centers, like the ones Gov. Phil Murphy is hoping to attract to the state as part of his artificial intelligence industry push. LaRossa said there have already been discussions with new businesses looking at mid-sized data centers that would use 50 to 100 megawatts of power. “This data center opportunity has the potential to create a nexus between economic development and energy policy, and we stand ready to support New Jersey in its recent efforts to create an in-state artificial intelligence hub,” he said. “Our New Jersey nuclear units could provide access to a highly reliable carbon-free source of baseload power and infrastructure consideration that is increasingly mission critical for the large data center developers and hyperscalers.” The hopes come as the company plans to stop accepting $300 million in annual state subsidies and rely instead on tax credits from the federal Inflation Reduction Act. Those subsidies come without the strings attached to the state subsidies and would allow the company to sell power it can get a better price for, starting a year or so from now. But there are also possible implications for the state lawmakers and the Board of Public Utilities. LaRossa indicated that every bit of power from the nuclear plants would be available for buyers. Right now, the nuclear energy from PSEG’s three plants is, by far, the largest source of carbon-free energy in New Jersey. If PSEG entered into contracts with companies near its South Jersey nuclear plants but across the border in Delaware or Pennsylvania, the state could see an exit of clean energy at the same time Murphy is looking to boost the state’s clean energy mix. The state will also need to plan for load growth from data centers more broadly. — Ry Rivard NJ 4: The New Jersey Board of Public Utilities opened a new round of bidding for offshore wind farms Tuesday. The application period, through July 10, could result in the state approving wind farms large enough to power over three million homes. Winning bidders get ratepayer-backing for their projects and the state gets clean energy to help meet Gov. Phil Murphy’s goal of having 100 percent clean power by 2035. “This latest solicitation is further proof of our commitment to building a strong and thriving offshore wind industry that will deliver undeniable economic and environmental benefits to our state, for both this generation and the next,” the governor said in a statement. Utility board President Christine Guhl-Sadovy said, “We are committed to seeing the economic development that offshore wind is bringing to New Jersey and will continue to bring, as well as the clean energy that is so important for the residents of the state.” This opportunity for energy companies in New Jersey comes as the industry wrestles with ongoing uncertainty following the cancellation of multiple projects in New York and New Jersey and worries that a second Trump administration would freeze the industry for at least four years. Five projects were approved during the three previous rounds of bidding in New Jersey, though Danish energy giant Orsted canceled two last year. The BPU application would penalize winning developers for backing out of projects by requiring them to post certain kinds of financial guarantees There are no offshore wind farms under construction in New Jersey or any wind turbines off the coast yet. — Ry Rivard — Other coverage: AP, NJ.com, NJ Monitor. POLITICAL RISKS AROUND NY HEAT RAMP UP — POLITICO’s Marie J. French: Efforts to further curb the use of natural gas in New York failed to win approval in the state budget. Environmentalists are steaming, and they plan to take it out on Assemblymembers. The Spring Street Climate Fund, a Brooklyn-based advocacy group that promotes climate legislation, is starting its own campaign arm to pump money into challengers to incumbent Assembly Democrats who aren’t aggressively backing the NY HEAT Act, organizers told POLITICO. The sweeping measure is seen as a major step in moving the state toward renewable energy by eliminating subsidies for new natural gas hookups and empowering the Public Service Commission to decommission parts of the gas system in the future. “The members of the state Assembly have racked up a significant failure in this year's budget cycle, which is the failure to act on a top priority piece of climate legislation that would also help protect utility customers — and that's failure that should have consequences,” said John Raskin, the group’s president who is also heading the recently formed Spring Street Climate Action that is launching the independent expenditure committee. Raskin said the group doesn’t yet have a target for how much they’ll raise, but that it will also be a vehicle for frustrated activists to contribute volunteer time and other resources to unseat Assemblymembers seen as barriers to climate action. Every state lawmaker is up for reelection in November, with some facing tough primaries in June from the left. And Democrats with viable Republican challengers could also face electoral trouble in November if their foes chide them for approving a measure that could ultimately allow utilities to deny or end gas service for some residential customers. “The political peril is in getting caught up in the Albany bubble,” said Assemblymember Ken Zebrowski, a Democrat from Rockland County who chairs the committee overseeing the Public Service Commission and is not seeking reelection this fall. RENEWABLE AWARDS: NYSERDA has made tentative awards for large-scale land-based solar and wind projects from last year’s accelerated solicitation. The authority announced provisional agreements with 24 projects totaling 2.4 gigawatts, some of which may be completed as early as 2025. While NYSERDA has previously released project details and estimated cost impacts at this stage, the authority declined to release that information today. Project details and costs will be released after final awards are negotiated, which is expected this fall, according to NYSERDA. “NYSERDA remains committed to its history of transparency and will continue to publish costs associated with contracts awarded in future offshore wind and Tier 1 solicitations,” said NYSERDA spokesperson Kate Muller in an email when asked about the change. That means New York residents won’t know the potential future bill impacts of the projects for months. The projects are largely ones that had previous agreements with NYSERDA, sought higher prices from the Public Service Commission and were rejected. The 2.4 GW figure is a little more than half of the 5 gigawatts that were bid from 57 projects. The projects will provide about 3 percent of New York’s forecast 2030 electricity demand, meaning the state is now at about 60 percent. The 2030 target under the climate law is for 70 percent renewable electricity. The authority is seeking developers and public input on another land-based renewable solicitation planned to begin in June. Comments on the request for information are due May 13. NYSERDA is also trying to backfill its offshore wind portfolio with another bidding process starting in June. “It is exciting to know [these projects] could be on the grid serving New Yorkers as soon as 2025,” said interim executive director of Alliance for Clean Energy New York Deb Peck Kelleher in a statement. “There is a lot of work left to do as our renewable generation 2030 goals rapidly approach, and NYSERDA's re-commitment to a new competitive solicitation in the next couple of months is heartening.” — Marie J. French | 
