New York regulators approve $5 billion for electrification, efficiency programs

New York state regulators authorized investor-owned utilities and the New York State Energy Research and Development Authority to invest approximately $5 billion in energy efficiency programs over the next five years.

The funds are designed to accelerate weatherization, energy efficiency and electrification through the adoption of heat pumps, Chris Coll, project director for the New York Department of Public Service, said May 15 during a state Public Service Commission meeting.

"Energy efficiency is a go-to resource, is the first step to decarbonizing the buildings sector and will drive longer-term energy burden reductions for lower-income New Yorkers," PSC Chair Rory Christian said in a statement. "For these reasons, we need to continue to aggressively pursue this solution."

The order allocates $1.57 billion in energy efficiency funds to electrify and weatherize low- to moderate-income customers and $3.29 billion for non-low- to moderate-income customers. The state expects the programs to save enough energy to power up to 400,000 homes.

"By reducing the amount of energy needed to heat and cool a home, and run appliances, weatherization and energy efficiency can lower total system costs for all ratepayers and serve as important resources to the electric grid and natural gas system," the order said.

The utilities administering the electrification funds include subsidiaries of Consolidated Edison and National Grid. Alongside the utilities, the PSC approved a $500 million budget for the New York State Energy Research and Development Authority to provide services such as workforce development and community engagement associated with the energy efficiency efforts.

"Energy efficiency either directly enables or enhances many other efforts underway, particularly those related to electrification," Christian said. Collectively, the electric utilities proposed to spend an average of 67% of their non-low-income budgets on building electrification efforts, according to the order (14-M-0094). Gas utilities proposed to spend a collective average of 61% of their non-low-income budgets on weatherization projects.

The regulators directed the utilities to file a preliminary building electrification and energy efficiency plan for non-low-income customers within 60 days of the order. The program budgets will be effective Jan. 1, 2026.

In the order, the PSC rejected a proposal from Con Edison to launch a $115 million steam energy efficiency program, arguing that the use of ratepayer funds on the steam efficiency program is not warranted.

The regulators repurposed $360 million from the NY-Sun solar incentive program to cover nearly 24% of NYSERDA's energy efficiency and building electrification portfolio during the program's timeframe. In April, the New York PSC announced it would be reinvesting the surplus funds from the solar installation initiative after the program hit its 10-GW goal under budget.

The PSC also reduced the cost of the electrification program for ratepayers by $340 million through the use of existing cash balances for 2025 and 2026.

The order comes after the commission directed the state's major utilities and NYSERDA to begin crafting energy efficiency and electrification proposals in July 2023, as part of the state's climate goals. The state has already advanced its electrification push through a statewide gas ban in new construction that Gov. Kathy Hochul signed into law in May 2023.

New York aims to produce 70% of its electricity from renewable sources by 2030, produce 100% carbon-free electricity by 2040 and achieve net-zero greenhouse gas emissions economywide by 2050.