By Alex Regan, NYSAC Legislative and Policy Coordinator
Federal Developments
The federal landscape has shifted dramatically under President Trump, creating significant uncertainty for New York’s energy and climate initiatives. The administration’s broad tariffs pose significant challenges for New York’s energy sector, potentially impacting both utility rates and infrastructure costs. With a potential 25% tariff on Canadian imports, the state’s electricity supply could be affected, as approximately 5% currently comes from Canada. The tariffs would increase costs for equipment and materials needed for utility system upgrades, while construction costs for energy projects are expected to rise due to steel tariffs.
New York’s congestion pricing program, which launched on January 5, 2025, faces an existential threat from the federal government. While early data showed promising results–including an 8% decrease in vehicles entering Manhattan’s central business district and 20-40% decrease in bridge/tunnel travel times–the Trump administration announced that it plans to revoke federal approval for the program. The MTA has already filed a lawsuit challenging the federal order, and Governor Hochul has vowed to fight the decision in court. The program’s potential termination would create a $15 billion funding gap for planned transit improvements.
Other major infrastructure projects face similar federal headwinds. The $3 billion Propel NY transmission project, crucial for supporting New York’s offshore wind goals, is at risk due to federal permitting scrutiny. In January, Trump issued an executive order pausing approvals for wind projects pending a review of permitting practices. The U.S. Army Corps of Engineers temporarily halted reviews of 168 renewable energy projects but lifted that pause earlier this month.
Adding to these challenges, 22 Republican attorneys general, along with fossil fuel industry groups, have filed a lawsuit challenging New York’s Climate Change Superfund Act. This landmark legislation, which aims to charge oil and gas companies $75 billion over 25 years for historic pollution, is being challenged on grounds that it is preempted by federal clean air regulations and violates various constitutional provisions. The outcome of this legal battle could have significant implications for New York’s climate funding strategy.
State Energy Landscape
After receiving a mandate to build new renewables as part of the SFY 2023-24 State Budget, the New York Power Authority has finalized its first strategic renewables plan, which lays out a blueprint to build more than 3,200 megawatts of new solar and battery storage capacity. The draft plan indicates that renewable energy development will take longer than NYPA initially expected, with only a single project expected to come online in 2025.
Despite the broader push toward clean energy, the Hochul administration recently approved permits for the Iroquois Enhancement by Compression (ExC) project to increase natural gas flow through existing pipeline infrastructure. The Department of Environmental Conservation approved upgrades to compressor stations in Dover and Athens, acknowledging this would increase emissions but citing reliability needs. As a condition of the permits, Iroquois will invest $5 million in mitigation efforts, including programs for disadvantaged communities.
These challenges highlight the growing gap between the state’s ambitious climate law requirements and implementation realities.
Utility Rate Actions and Affordability
Governor Hochul has taken aggressive action on utility rates in recent weeks, blocking multiple proposed increases in an effort to address affordability concerns. On February 12, she called Con Edison’s proposed rate increase “unconscionable” and urged the state’s top utility regulator to reject it. The proposal would have increased electric bills by 11.4% and gas bills by 13.3% for Con Ed’s 3.4 million electric and 1.1 million gas customers.
The following day, the Governor intervened to halt NYPA’s planned hydropower rate increases that would have affected 51 municipal and cooperative electric utilities. The current electric rate of just under $13 per megawatt hour would have increased by about 30% each year for four years, then dropped by 30% to about $24 in 2029. Market rates are forecast to be above $40 per megawatt hour through 2028, according to NYPA. The increases were driven by investments in the St. Lawrence and Niagara hydroelectric dams, including a $1.6 billion modernization of the Niagara plant.
Executive Budget Energy & Climate Proposals
Governor Hochul’s Executive Budget makes substantial investments in climate and energy initiatives, including a new $1 billion Sustainable Future Program. This program will fund a wide range of climate mitigation and adaptation projects, including efforts to reduce greenhouse gas emissions and pollution, decarbonize and retrofit buildings, expand renewable energy development, and advance clean transportation initiatives. The funding would be disbursed evenly over five years.
The Executive Budget maintains strong support for environmental infrastructure with $500 million allocated for clean water infrastructure projects and $400 million for the Environmental Protection Fund. These investments will support climate mitigation projects, improve agricultural resources, protect water sources, advance conservation efforts, and provide recreational opportunities throughout the state.
The Executive Budget also extends several important tax credits to support clean energy adoption. The clean heating fuel credit and the alternative fuels and electric vehicle recharging property credit are extended for three years, through January 1, 2029.
Electric Bus Implementation Challenges
School districts and transit agencies across the state face mounting challenges in meeting New York’s ambitious electric bus mandates. For school districts, the 2027 deadline to stop purchasing diesel buses and 2035 target for full fleet electrification has prompted significant concerns about funding and implementation. Governor Hochul recently indicated she is open to delaying these mandates, acknowledging that circumstances have changed since the law was enacted.
While $500 million from the Environmental Bond Act was allocated to help school districts with the transition, many districts report that infrastructure challenges and costs remain significant barriers. The Empire Center estimates that the state’s mandate will cost at least $8.9 billion for the buses alone, and four in ten school districts report their electricity systems need updates to charge the buses.
On the transit side, Governor Hochul announced $100 million in new funding to help public transit fleets outside New York City transition to zero-emission vehicles. Transit systems in the Albany area, Central New York, Buffalo area and Rochester are eligible for up to $17.5 million each, with other eligible entities able to apply for up to $5 million. The funds can support fleet transition planning, vehicle acquisition, facility upgrades, and charging infrastructure. The New York Public Transit Association estimates that non-MTA systems need more than $1 billion over the next five years to meet their communities’ transit needs, including the transition to zero-emission buses.
Both school and transit agencies face similar challenges with the electric bus transition, including the need for expensive charging equipment, related infrastructure upgrades, and trained maintenance personnel. NYSERDA is working to increase engagement and technical support, but the scale of investment needed for this transformation remains a significant hurdle for local governments and school districts across the state.
Renewable Energy and Transmission Siting Regulations
The Department of Public Service has proposed new regulations to implement the Renewable Action through Project Interconnection and Deployment (RAPID) Act, which was enacted as part of the 2024-25 State Budget. The proposed regulations would establish uniform standards for the siting and design of major renewable generation facilities, along with requirements for the construction and operation of electric transmission facilities.
The Department has scheduled six in-person public hearings and two virtual sessions to gather community input, with pre-registration required by March 10, 2025 for virtual participation. Written comments will also be accepted through March 18, 2025. NYSAC will adopt a resolution at its upcoming Legislative Conference urging the state to strengthen local control and participation in the clean energy siting process, enhance agricultural and environmental protections, and support end-of-life recycling of renewable energy equipment through extended producer responsibility. The resolution calls for requiring early and meaningful engagement with local communities, limiting the state’s ability to override local laws without strong justification, ensuring adequate resources for municipalities to assess project impacts, integrating smart siting practices and detailed decommissioning plans, and enacting legislation to make manufacturers responsible for end-of-life management of solar and wind equipment.
Looking Ahead
The coming months will bring important developments for New York’s energy and climate landscape. The SFY 2025-26 State Budget, expected to be finalized in April, will set the stage for key investments and policy initiatives. The finalization of renewable energy and transmission siting regulations will also mark an important milestone, shaping the framework for accelerating clean energy development. At the federal level, ongoing uncertainty around tariffs, infrastructure permitting, and legal challenges to state policies will continue to impact New York’s clean energy transition.
As the state works to align implementation with the ambitious goals of the Climate Leadership and Community Protection Act, it will be critical to address challenges around affordability, grid modernization, workforce development, and community engagement. NYSAC will continue to monitor these critical issues, advocate for local needs and priorities, and serve as a resource to our members navigating this complex and rapidly evolving landscape.
