Gov. Cuomo doesn’t like nuclear energy.
Last month, he finalized a deal that will prematurely shutter the Indian Point Energy Center, the twin-reactor facility that supplies about 25 percent of New York City’s electricity.
Cuomo doesn’t like natural gas, either. In 2014, after a years-long moratorium, he banned fracking, the process used to get oil or gas from underground rock formations.
But there’s one thing the governor just loves: wind energy. Indeed, three days after the Indian Point closure was announced, Cuomo’s appointees at the New York State Energy Research and Development Authority provided details on $360 million in subsidies for a handful of renewable-energy projects.
Roughly 80 percent of that money will be doled out to two wind companies: Florida-based NextEra Energy Inc. and Illinois-based Invenergy.
Plus, when the new subsidies are combined with existing federal cash, the amount in subsidies NextEra and Invenergy will be collecting will exceed the prevailing wholesale price of electricity in the state by nearly $13 per megawatt-hour.
Even more remarkable: those same subsidies, on an energy-equivalent basis — comparing the amount of energy we get from different sources — come to four times the current market price of natural gas.
Here’s the math. In 2016, according to the New York Independent System Operator, the average wholesale price of electricity in the state was $34.28 per megawatt-hour. NYSERDA, which gets most of its funding from surcharges added to New Yorkers’ electric bills, will pay $24.24 per megawatt-hour for the electricity produced by two new wind projects being built by NextEra and Invenergy.
The federal production tax credit is worth $23 per megawatt-hour. The total of those two subsidies: $47.24 per megawatt-hour.
That means the wind subsidies will exceed the 2016 average wholesale price of power in New York by $12.96.
Now let’s look at those same subsidies on an energy-equivalent basis. One megawatt-hour of electricity is equal to 3.4 million BTU. Therefore, the combined state and federal wind subsidies total $13.89 per million BTU. The NYMEX spot price for natural gas is currently about $3.04 per million BTU. Hence, on an energy-equivalent basis, wind-energy subsidies in New York are more than four times the spot price of natural gas.
What makes NYSERDA’s largesse even more remarkable is that much of it will go to NextEra, the biggest wind-energy producer in North America. Sure, NextEra generates electricity, but its real business appears to be subsidy mining. According to Good Jobs First, a Washington, DC-based group that tracks corporate welfare, NextEra has collected some $2.3 billion in federal subsidies since 2007. (Invenergy has collected about $532 million in federal cash.)
The companies will receive the NYSERDA subsidies over a period of 20 years. Given the size of their wind projects, which are about 101 megawatts and 106 megawatts, respectively, the two companies will likely collect about $286 million from the state over the next two decades. And remember, NextEra and Invenergy will collect those subsidies in addition to the cash they get for actually selling their product.
I’ve heard of sweetheart deals, but this one deserves a medal.
Robert Bryce is a Manhattan Institute senior fellow.
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