Electricity Outlook 2002: A Call To Action

Recommended Actions

Recommended Actions

Create New Generating Facilities
To assure that between 2,000-3,000 MW of additional electric capacity is available by 2006, it is necessary that:

• New York State officials immediately act to help expedite the approval process for at least some of the proposed new plants. Considering the present concerns over securing financing for new plants, approval of additional plants may be prudent.
• New York State officials must reauthorize the Article X legislation, which guides the approval process, prior to its sunset date of December 31, 2002, to ensure adequate and timely approval of sufficient new capacity.

These actions must be taken primarily at the State level, but local officials and business leaders can urge State lawmakers to take action. In addition, local officials can help ease the burdens on City businesses and residents by ensuring improved communications and coordination between electric, telecommunications and other infrastructure providers to smooth the construction process during the Downtown rebuilding phase.

Emphasize and Encourage Ongoing Energy Efficiency Measures
The need for additional generating capacity notwithstanding, additional energy efficiency efforts and the use of clean distributed technologies on the part of consumers and businesses could, over the next five years, yield the equivalent of 500 MW capacity and contribute to alleviating the pressure on additional in-city electric capacity needs. These efforts would include: residential installation of more efficient air conditioners, refrigerators, or windows, and commercial use of more efficient lighting and improved HVAC equipment; adoption of new distributed generation technologies; and construction of highly efficient ‘green buildings’.

However, while demand side efforts have increased with additional New York State programs and through voluntary commitments to reduce demand during peak load emergencies, additional opportunities will remain untapped until business and residential customers are able to access ‘real-time pricing’ information, and until the introduction of such technologies as ‘interval meters’ enables customers to respond to real-time changes in electricity prices.

Create Additional Natural Gas Pipeline Capacity
Additional natural gas pipeline capacity into New York City and Long Island will be required to assure adequate long term supply for new generating facilities and growth in customer demand, as well as to assure future reliability of supply and price stability of natural gas. Substantial progress was made during 2001 in advancing several new proposed pipeline projects, which, if successful, could increase the capacity of natural gas delivery into downstate New York by over 50 percent. But the risk remains of delays in the review and approval process, which could jeopardize planned completion schedules or even realization of all of the proposed systems. Furthermore, since financing of pipeline expansions and development relies on financial commitments from large users, uncertainties in generation project financing could represent a large risk for pipeline investors.

Create New Transmission Capacity
While New York City is required to provide 80 percent of peak load capacity at in-city generating facilities, transmission capacity into the City and downstate area is essential to assure the remaining volume.

With projected growth in demand, and with the necessity of providing adequate accessibility to external supply in the case of peak load or other emergencies, we recommend that serious proposals to increase capacity be readily encouraged and supported through the necessary approval process.

We endorse the recognition given in New York State’s new draft energy plan of the need for “some local transmission reinforcement” in the New York City and Long Island areas. In addition, the Federal Energy Regulatory Commission (FERC) is encouraging the full integration of regional transmission systems in the Northeast and eastern Canada into a new Regional Transmission Organization (RTO), to enhance market efficiency, as well as full distribution of available electricity supplies. Such interconnections between major systems will require adequate and reliable transmission.

Several potential projects are being proposed, but at present there is no construction underway for any new transmission capacity. And recent experience such as the proposed transmission tie between Connecticut and Long Island has shown that siting new transmission can be as difficult, if not more so, than siting new electric generation.

Accelerate Introduction of Clean Distributed Technologies
Business and residential consumers in New York City are expected to benefit from use of clean distributed technologies, particularly co-generation, natural gas chillers, solar, fuel cells, or gas-powered reciprocating engines. For the most part, the high cost for these technologies poses a barrier to widespread application, but it is also recognized that new guidance from State regulators is necessary to assure full access to the local power grid distribution networks.

Conclusion
The overall health of New York City’s economy is dependent on immediate action to increase the supply of electric generating capacity, encourage conservation, and begin pursuing increased capacity of transmission systems and natural gas pipelines.

As New York City rebuilds and recovers, growing electricity demand must be met. As was the case in last year’s Electricity Outlook, the City needs between 2,000-3,000 MW of additional electric capacity over the next five years, but securing that supply has been made more difficult by the failure of Enron and the lingering recession. Additional conservation, transmission and use of clean distributed technologies will certainly help but without new generating facilities the City will not be able to meet its power needs, improve the environment, and ensure stable electricity prices.