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Parts 222 and 200 Revised Job Impact Statement

Distributed generation (DG) sources are engines used by host sites to supply electricity outside that supplied by distribution utilities. This on-site generation of electricity by DG sources is used by a wide-range of commercial, institutional and industrial facilities either in non-emergency situations when electricity costs are high or to reduce demand on the electric grid, or in emergency situations when the usual supply of power from central station power plants becomes unavailable.

The Department of Environmental Conservation (Department or DEC) adopted 6 NYCRR Part 222, Distributed Generation Sources, along with attendant revisions to 6 NYCRR Part 200, General Provisions, on November 1, 2016. The new rule took effect on December 1, 2016. On March 1, 2017, an Article 78 petition was filed challenging various aspects of Part 222. On July 26, 2017, a Stipulation and Order was issued whereby the Department agreed to propose a new rule to replace the adopted rule pursuant to the State Administrative Procedure Act. The purpose of this rule making is to promulgate a new Part 222 along with the attendant changes to Part 200. The new rule will apply to economic dispatch sources located in the New York City metropolitan area (NYMA)1 which are not currently regulated under Subpart 227-2. In addition, the Department may initiate a new rule making to develop a minor source new source review regulation in accordance with Section 110(a)(2)(C) of the Clean Air Act to address NOx emitting sources not covered under Subpart 227-2 or the new Part 222.

I. Nature of Impact

The proposed rule is limited to economic dispatch sources located in the NYMA. Economic dispatch includes DG sources enrolled in demand response (DR) programs sponsored by the New York Independent System Operator (NYISO) or distribution utilities and that receive capacity or energy payments or both. In addition, price-responsive generation sources, defined in Part 222 as DG sources used to provide electricity when the cost of electricity supplied by the distribution utility is high, are also covered under the definition of economic dispatch sources.

DR programs are sponsored by the NYISO and distribution utilities. Sources enrolled in these programs receive capacity or energy payments or both. Part 222 may impact jobs and employment opportunities at a wide range of businesses in the NYMA. Based upon responses received pursuant to the notification provision in Section 222.3 of the rule adopted on November 1, 2016, more than 160 facilities may be affected by the new proposed rule. Facilities participating in DR programs include industrial, commercial and institutional facilities. Energy production is not a primary function at these facilities. Therefore, Part 222 may have minimal impacts, if any, on employment opportunities at affected facilities.

Energy services companies (ESCOs) enroll facilities into DR programs sponsored by the NYISO and distribution utilities. ESCOs' DR portfolios include curtailment, load shifting, energy efficiency and DG resources. Most DG resources in these portfolios are uncontrolled, diesel-fired engines that will be subject to control requirements that will take effect on May 1, 2021. In 2025, very few DR sources will be able to meet the Part 222 limits. However, the emission limits in Part 222 that would take effect on May 1, 2025 are based, in large part, on provisions in Section 24-149.6 of the New York City Air Pollution Code. Therefore, it is expected that the provisions of Part 222 will minimally impact employment opportunities with ESCOs.

Stack testing will be required to demonstrate compliance with Part 222 emission standards for economic dispatch sources that will operate May 1, 2025 and beyond. Therefore, employment opportunities with consultants and vendors specializing in stack testing are expected to increase as a result of the adoption of Part 222.

There will be an additional work load for the Department to implement Part 222, including preparing new and modified air permits, reviewing stack test reports and creating compliance reports in the Air Facility System database. It is estimated that it will take one staff-year to initiate the program to implement Part 222 and two staff-years annually to implement Part 222. The Department does not anticipate hiring additional staff to implement Part 222.

II. Categories and Numbers of Jobs or Employment Opportunities Affected

Distributed generation can be used at a wide range of industrial, commercial and institutional facilities. More than 160 facilities in the NYMA are enrolled in demand response programs. DR activities are not the primary source of income for affected facilities. Therefore, the Department expects that impacts to employment opportunities would be minimal.

The adoption of Part 222 may lead to increased employment opportunities with professional services companies that provide environmental monitoring and compliance services (such as stack testing) as well as for vendors who sell and install pollution control systems.

III. Regions of Adverse Impact

The rule only impacts facilities located in the NYMA that utilize economic dispatch sources and that are not subject to Subpart 227-2.

IV. Minimizing Adverse Impact

The Department has taken the following steps to minimize the adverse impacts of Part 222:

  1. The provisions that take effect on May 1, 2021 mirror the tariff provisions that govern the demand response programs sponsored by Con Edison and Orange & Rockland Utilities. Sources enrolled in those programs will not be affected by this rulemaking until 2025, at which time most affected sources will also be impacted by Section 24-149.6 of the New York City Air Pollution Code. This rule is anticipated to impact approximately 35 MW of DR sources enrolled in the NYISO's DR programs beginning May 1, 2021. This amounts to approximately 7.7 percent of the capacity enrolled in the Special Case Resources program in NYISO Zones I, J and K.2 Therefore, the impact to ESCO's will be small in 2021.
  2. The provisions limiting DR enrollment and price-responsive generation sources to model year 2000 or newer do not take effect until May 1, 2021 in order to provide DR sponsors, ESCOs and source owners sufficient time to adjust to the new rule.
  3. The emissions testing requirements have been reduced significantly compared to the rule adopted in November 2016. PM testing will not be required. Only one emissions test per source is required - and this only applies to sources that will operate as economic dispatch sources on or after May 1, 2025.

V. Self-Employment Opportunities

The adoption of Part 222 is not expected to result in negative impacts to self-employment opportunities.

VI. Initial Review

The initial review of this rule shall occur within the third year after this rule is adopted

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1 The term 'New York City metropolitan area' is defined in Part 200.1(au) as all of New York City and Nassau, Suffolk, Westchester and Rockland Counties.
2 "Semi-Annual Reports on New Generation Projects and Demand Response Programs," Attachment II, New York Independent System Operator, June 1, 2017


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