Assembly Spikes Biggest Climate Proposal in New York Budget

The Assembly rejected legislation that would have sped up New York’s transition away from gas.

Julia Rock and Colin Kinniburgh   ·   April 19, 2024
Carl Heastie in front of gas pipelines
Assembly Speaker Carl Heastie was unwilling to consider the NY Heat Act in budget negotiations. | Images: New York State Assembly, Canva | Illustration: Akash Mehta

State Assembly leadership this week rejected efforts to include a landmark gas transition proposal in the state budget — despite the fact that the chamber has a supermajority of Democrats sponsoring the legislation and few outspoken critics of it.

The plan, known as the NY HEAT Act, is a top priority of environmental advocates this year, who say it is essential for giving regulators the power to wean the state off fossil fuels so it can meet its climate targets. Both the Senate and Governor Kathy Hochul, who proposed a version of the legislation in January, wanted to include the measure in this year’s budget. Still, sources say the Assembly gave it little consideration during negotiations.

“The Assembly, by my understanding, basically refused to negotiate this in the budget,” said Patrick McClellan, policy director of the New York League of Conservation Voters, which has spent the last several months lobbying for the HEAT Act along with dozens of other climate and environmental groups. “My understanding is they never put a counteroffer on the table, they never got into the weeds on negotiating NY HEAT in budget negotiations.”

On Thursday, the legislature published its main environmental budget bill — and NY HEAT was left out. Given the notorious secrecy of budget negotiations, there has been little public debate on the measure, and Assembly leadership has not given a reason why the most substantial climate legislation on the table this year was killed. Advocates and lawmakers point to the lobbying efforts of National Fuel, an upstate gas utility, as a key culprit.

Assemblymember Patricia Fahy, who sponsors the HEAT Act, said she was surprised and disappointed by this year’s budget outcome. She said that opposition from unions and most utilities had waned, and that as recently as Sunday, she thought a deal on the HEAT Act could still be struck.

But those hopes quickly unraveled this week.

The gas transition proposal was the most consequential climate legislation at stake in this year’s budget. It sought to resolve a contradiction between the state’s 2019 climate law and the decades-old law that governs utilities.

The climate law requires New York to largely phase out fossil fuels by 2050. But the older law requires utilities to supply gas to any customer who wants it — and subsidizes the gas system’s expansion. The HEAT Act would have repealed that subsidy, known as the “100-foot rule,” and utilities’ wider obligation to serve gas. It would allow the state to eventually shift entire neighborhoods off fossil fuels, provided it could maintain a reliable supply of alternative energy. Both of those core provisions were also included in Hochul’s proposal.

The Senate’s version would also aim to cap New Yorkers’ energy bills at six percent of their incomes. (One in four households currently pay more than that amount, according to a recent report from the NY Renews coalition and Win Climate think tank.)

The Assembly did not include the HEAT Act in its budget proposal last month. Two Assembly sources told New York Focus that Democrats in the chamber did not discuss it in detail during the internal budget deliberations that followed, despite requests from some members.

This isn’t the first time the chamber has held up major climate legislation under Speaker Carl Heastie. Last year, a carveout sought by the Assembly nearly derailed the state’s plan to ban gas in new buildings — a policy the chamber eventually embraced. In 2022, Heastie declined to hold a vote on the Build Public Renewables Act, which supporters insisted had more than enough votes to pass. (A version of that bill ultimately passed in last year’s budget, too.)

“We do sweat the details here,” said Fahy, when asked about the chamber’s reticence on major climate proposals.

While the HEAT Act could still pass during the legislative session after the budget is finalized, the odds of passing major bills outside of the mammoth spending proposal tend to be slimmer, and advocates fear postponing the debate to regular session will kill the measure.

“The fact that the Assembly is willing to kill a deal on this really raises questions about how serious they are, how serious leadership is about addressing the relentlessly increasing energy bills New Yorkers are facing,” said Liz Moran, Northeast policy advocate at Earthjustice.

Many advocates and legislators, including Fahy, chalked up the HEAT Act’s defeat mostly to opposition from gas interests, especially National Fuel, the western New York-based gas utility that has lobbied hard against the state’s climate plans.

“We’re winning Democrats everywhere in the state, with the exception of National Fuel’s service territory,” said Alex Beauchamp, the Northeast regional director of Food and Water Watch, which has advocated for the bill.

Only one in six Assembly Democrats in National Fuel’s service territory sponsors the HEAT Act, compared to a majority of Democrats in every other part of the state, according to an analysis published last week by the climate policy group Spring Street Climate Fund.

National Fuel has spent tens of thousands of dollars so far this year on lobbyists in Albany, plus more on ads spanning a wide range of media. New Yorkers for Affordable Energy, an industry group co-led by National Fuel, spent another $100,000 on ads and other communications against the bill, Politico reported last week.

The group argues that the HEAT Act would cut off a critical source of energy during blizzards and other storms that regularly pummel the electric grid.

“Governor Hochul and her radical allies want to leave YOU out in the cold!” read one ad from New Yorkers for Affordable Energy last month.

National Fuel is now alone among New York’s major utilities in its steadfast opposition to a gas transition plan. There may be a business reason for that: It is the only utility in the state that drills for gas on top of distributing it, meaning a shift to electricity could deliver an especially large blow to its bottom line.

Con Edison, which mainly serves electricity, has publicly backed pro-electrification policies for the last couple of years. This year, ConEd voiced its broad support for Hochul’s clean energy plans and, more recently, issued a memo stressing the urgency of repealing the 100-foot rule.

Another major player has come around to the HEAT Act in recent weeks: National Grid. The UK-based utility, which serves mostly gas in New York, earlier this month circulated a joint memo with three climate groups, outlining a proposed deal on the bill. The memo, first reported by Politico and reviewed by New York Focus, maintained core provisions of the bill, notably the six percent affordability goal and a rollback of the obligation to serve gas.

The two other major gas utilities in New York — Avangrid and Central Hudson — did not respond to repeated inquiries about the HEAT Act. Neither has publicly weighed in on the legislation this year.

Unions, which have broadly opposed the HEAT Act, also softened their opposition during budget talks, Fahy told New York Focus. (The AFL-CIO declined to comment on its position in the negotiations.)

But that wasn’t enough to get the bill over the finish line.

Environmental advocates say that the responsibility for NY HEAT’s exclusion from the state budget sits with one person: Carl Heastie.

“From where I sit, it’s the speaker’s fault,” said Beauchamp of Food and Water Watch. “It’s very clear that it’s not the Senate or governor killing this thing. It’s not the [Assembly] rank and file — we had like a million events with legislative champions across the state.”

Heastie’s office did not respond to requests for comment. Earlier this week, the speaker signaled openness to passing the HEAT Act outside of the budget, which now looks like the only way it could become law this year.

Some Assembly backers of the bill said activists were too hasty to blame the speaker alone.

Heastie merely represents Assembly Democrats as a whole, who had “varying opinions” on the bill, said Assemblymember Anna Kelles of Ithaca, a HEAT Act co-sponsor. “It is a complex bill but hopefully we can dig in … when we aren’t negotiating a million other issues all at once under considerable time constraints with a late budget,” she told New York Focus by text message.

If the complexity of the legislation held it up in the Assembly, advocates claim that’s partially a symptom of the chamber’s imperviousness.

“If we are working on a bill, and the Senate majority has members who oppose it or have issues with it … we can have a conversation with leadership in the Senate where they will say, specifically, ‘Look, here are the issues with the bill,’” said McClellan of the League of Conservation Voters.

“We don’t really get that feedback from the Assembly,” he said. “It’s kind of like a black box.”

Correction: April 19, 2024 — A previous version of this article stated that National Fuel’s campaign spending increased in recent years. In fact, the company has been spending consistently in the last decade through different PACs.

Julia Rock is a reporter for New York Focus. She was previously an investigative reporter at The Lever.
Colin Kinniburgh is a reporter at New York Focus, covering the state’s climate and environmental politics. Over a decade in media, he has worked in print, television, audio, and online news, and participated in fellowship programs at CUNY’s Graduate School of Journalism and… more
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