My office receives a lot of inquiries from constituents who wonder why their energy bills are so high. These inquiries are well founded, as New Yorkers pay some of the highest residential energy costs in the nation. In fact, New York’s energy costs rank in the top five highest in the country. We pay on average 19.56 cents per kilowatt hour - significantly higher than what customers pay in other states.
Strict regulations on the kinds of power produced contribute to these costs but so do onerous taxes. Not surprisingly for New York, state taxes make up a significant part of our energy bills. These taxes are used to pay for various energy programs and also are used to help fund the state’s general expenditure fund. For example, state ratepayers are charged $217.3 million annually to fund what is known as the System Benefits Charge. This is a fund administered through New York State’s Energy Research and Development Authority that is supposed to support, among other things, energy efficiency and low-income energy assistance programs. We also pay $178.5 million annually to support New York’s Renewable Portfolio Standard and $65.7 million annually for the Regional Greenhouse Gas Initiative. While one can argue there are good public policy reasons for these programs, no one can claim that “going green” is cheap.
One of the most troublesome taxes that ratepayers are paying is the 18-a Assessment. This tax was originally implemented in 1934 to pay for regulating the energy industry. Unfortunately, like many taxes, it took on a life of its own and the 2009-10 state budget increased this assessment in order to help fund the state’s general expenditure fund. That year the assessment brought $520 million into the state coffers. The good news is that in this year’s budget, we implemented a phase-out of this part of the 18-a Assessment so that by 2018 it will be completely gone. While I would have preferred that this part of the 18-a Assessment be immediately repealed, I am happy there is a recognition that this is a burdensome tax that had to go.