Contact: Cathy DelliCarpini-Kruse (212) 481-9230
Contact: Bud Perrone (212) 843-8068
NEW YORK, January 25, 2001 -- New York City's leading civic, business, labor and industry associations gathered today to urge City and State officials to address the City's growing electricity crisis. Without quick and decisive government action, the group warned, New York City residents and businesses will face large spikes in the price of electricity, brownouts and even blackouts in the next five years.
The group, comprised of the Association for a Better New York (ABNY), the Building and Construction Trades Council of Greater New York (BCTC), the New York Building Congress, the New York City Partnership and the Real Estate Board of New York (REBNY), detailed its concerns and recommendations in a 28-page report, which was released today. The briefing and report, prepared for the group by the Energy Committee of the Building Congress, represents the first time all of these major organization have coalesced around a single issue..
The report warns of a deficiency in electricity of between 2,000 and 3,000 megawatts (MW) over the next five years. This figure is based on projected increases in demand as well as the need to assure market stability and to replace aging plants and equipment. To combat this critical imbalance, the group proposes immediate efforts to increase in-City electric generation capacity as well as the adoption of a host of conservation measures.
"The power shortages and huge price spikes now plaguing California could easily be repeated in New York City as early as this summer," warned ABNY Chairman Lewis Rudin. "Many of the same elements that have adversely impacted California's electricity marketplace -- a rapid increase in consumption, deregulation in the wholesale market, delays in the siting of electricity generating plants, reliance on imported electricity -- are threatening New York City."
New York City's economic boom and population growth since the 1990's, combined with the growth in electricity consumption by individual residents and businesses, has increased demand by 1400 MW over the past decade. Since the early 1990's, however, just two generating facilities, supplying approximately 900 MW to the City, have been constructed.
To date, more than a dozen plants have been proposed for New York City by a number of energy generators which, if taken together, would add 5,500 MW of capacity. At this time, no proposed generating facilities are under construction and just one, to provide 288 MW of capacity, has reached the siting process known as Article X. This process, which is handled at the New York State level, was envisioned to take two years but usually lasts much longer. For example, construction has not started on a plant in Athens, NY, despite reaching the Article X process nearly four years ago.
If an electricity crisis is to be averted, at least some portion of the proposed 5,500 MW of generation capacity must be made available over the next five years. This cannot occur unless New York State's siting process is accelerated considerably.
In addition to efforts to bolster supply, the group recommended a range of measures that government can take to limit growth in demand. By encouraging conservation among business and residential consumers, New York City could save approximately 500 MW of electricity consumption annually. These initiatives include:
- Creation of time-of-day pricing, as is the norm in the telecommunications
industry, and clearer price signals to reflect the true cost of
electricity during times of peak demand. At present, consumers
are given little financial incentive to reduce peak-hour usage.
- Implementation of price-responsive programs that would pay major
electricity users to curtail or shut down operations during periods
of peak demand or high electricity prices.
- Initiation of programs to enable small businesses and apartment
buildings to invest in new distributed generation units, or use
existing standby generation to provide additional power supplies
during similar periods.
- Implementation of public information campaigns or tax credits
to encourage public buildings, consumers and businesses to purchase
energy-efficient appliances.
- Increased funding on the State and Federal levels for conservation
programs as well as for exploration of new technologies. This
would reverse reductions in funding in recent years.
The report notes that the ability to import additional electricity from regions outside the City is a limited option since transmission capacity is fixed at 5,000 MW. During times of peak demand, other regions adjacent to the City also could be under similar constraints, further reducing import potential. In addition, transmission system investments are expensive and subject to difficult siting problems as well as significantly longer construction times, and thus not likely to be available in the next five years.
"The situation in New York City has quickly become a matter of urgency," said Building Congress Chairman Jeffrey M. Levy. "The available supply of in-city generation has in no way kept pace with the explosive rise in demand created by a booming economy. Despite a growing recognition of the problem among government officials, more needs to be done to promote conservation and to curtail the crippling regulatory delays in the siting, approval and construction of new generating facilities."
"We have already seen the effects of tight supply on price volatility," added Rudin Management C.O.O. John Gilbert, who is Co-Chairman of the Building Congress Energy Committee. "Last June, electricity prices soared during a period of high demand. As a result, the average New York City household saw their bills rise by 40 percent. Further problems were averted thanks to a cool summer, but similar and more severe price spikes may become commonplace if sufficient additional generating capacity is not created."
"The momentum that our economy has built over the past five years is seriously threatened by the possibility of an inadequate supply of power. The energy crisis in California has forced investors and entrepreneurs to consider energy capacity as an important criteria in location and expansion decisions, especially for technology companies. New York needs to send the clear message to the investment and business community that we are prepared to meet the power needs of a growing economy, now and for the future," said New York City Partnership President Kathryn S. Wylde.
"Reliable and competitively priced electricity is vital to New Yorkers and in New York City, which is the financial, corporate and communications capital of the United States and a leading world destination for business travelers and tourists. The decisions of businesses to expand or relocate to the City -- and thus the health of the City's economy -- will largely be determined by these issues," added REBNY President Steven Spinola.
"New York State officials have recognized and are addressing the immediate problem by approving a number of small, temporary generators to produce enough electricity to meet expected peak summer demand beginning in 2001. Their efforts now must focus on longer-term solutions," noted BCTC President Edward J. Malloy.
"We urge the leaders of New York State and New York City to take the actions necessary to accelerate the siting of permanent, new electric generating capacity, to encourage conservation and explore the use of alternative energy technologies," concluded Mr. Gilbert.
The New York Building Congress is a membership coalition of business, labor, association and government organizations promoting the design, construction and real estate industry in New York City.
