NYC Facing Tight Summer Power Supplies January 10, 2001

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By Scott DiSavino

NEW YORK (Reuters) - New York energy officials warn that this summer New York City could face the kind of energy shortage now plaguing California if electricity demand continues to grow at its current brisk pace.

The New York Independent System Operator (ISO), which operates the state's power grid and administers its wholesale marketplace, said the city's appetite for electricity, which has grown nearly 8 percent over the past five years, is simply growing faster than the power supply.

While New York has some spare power, the city is only a serious heat wave away from experiencing a crisis like California's, where customers frequently face power shortages as demand often nears the available supply.

``Things could be tight in the city if we hit the forecast loads. It all depends on what generation is available in the city at any one time,'' New York ISO spokesman Ken Klapp said.

Klapp said New York City, built mostly on islands, is geographically isolated from neighboring power grids, making it necessary to build new power plants inside the city.

As things stand, without serious power conservation efforts in the city and the construction of emergency generation by this summer, a heat wave lasting just a few days could leave the 7.5 million New Yorkers in the dark without their air conditioners.

``We are currently at the border of being able to provide the installed (generation) capacity,'' Klapp said.

Statewide, the installed capacity is 18 percent above the energy each utility requires at times of peak demand. But part of that 18 percent comes from utilities outside of New York. In other words, in a worse case scenario, some of that out-of-state power could become unavailable if those areas -- including surrounding states and even Canada -- had power crises of their own.

There are almost 35,000 megawatts (MW) of generation in New York State, more than enough to meet the state's 2001 peak summer load forecast of 30,460 MW. One megawatt is enough power to light up 1,000 homes.

But in New York City there is only about 8,000 MW of generation available, not enough to meet its forecast 2001 summer peak load of 10,085 MW. The city, however, has relied on imported power from facilities located outside of its borders for more than 10 years.

``Unless new generation is built and this is taken seriously, we could fall short of being able to maintain that installed capacity within the next year or two,'' Klapp said.

The looming shortage is a result of several factors, including deregulation of the state's power industry and New York's robust economy, which has pushed up electricity demand in the city by close to two percent a year -- faster than anywhere else in the state.

``No one has built any generation or transmission for a number of years even though the incentives to build generation were in place,'' Klapp said.

TOUGH APPROVAL PROCESS

A key problem, said Klapp, is the state's onerous siting rules, widely considered some of the toughest in the U.S.

``The dilemma is getting the siting approval. It can take years to get all the necessary approvals before a shovel even hits the ground,'' Klapp said.

A generator considering a power plant bigger than 80 MW would need site approval from the New York Public Service Commission and environmental approval from the state Department of Environmental Conservation, not to mention a slew of local permits.

Power lines are even harder to build because they require approvals from every county and township along their proposed route, a process that can take years.

Moreover, most New Yorkers, while acknowledging the need for more electricity, oppose placing plants or lines near their homes, a problem often called the ``NIMBY'' (Not-In-My-Back-Yard) syndrome.

Before deregulation, the local electric utility ensured there was enough power to serve customers in its service territory.

Deregulation changed all that.

DEREGULATION DISINCENTIVE

New York approved its own deregulation legislation in 1999 on the theory that competition among energy suppliers would drive down electricity prices for everyone.

To create such competition, most of the state's traditional utilities were required to sell their power plants and open their transmission lines to anyone who wanted to use them, much like public roads convey traffic.

But because the traditional utilities were required to sell their generation, they had no incentive to take on the time-consuming financial risk of building new generation in the years before deregulation took effect.

Hence, no new generation of substance was built in the state since 1995's 300 or so MW, which were spread over several plants, before deregulation in 1999.

In addition, the utilities' long-range forecasts did not accurately predict the load growth that subsequently stemmed from the robust economy of the 1990s, especially around New York City.

This combination of factors ``led us to where we are now,'' Klapp explained.

To fix the power shortage before it becomes a crisis, the ISO is urging energy conservation and the construction of new power plants.

The only plants likely to come online before the summer air conditioning crunch are 11 small units proposed by the New York Power Authority (NYPA) for use when demand starts threatening to exceed available supply.

Despite the threat of power shortages this summer, some residential communities, which have spread into New York City's traditionally industrial zones, were fighting the construction of NYPA's planned turbines.

``If those NYPA units come online, they will help the city. Other than that there is nothing substantial. The next big project is the 1,000-MW Athens plant near Albany, but that's years away. They haven't even broken ground yet,'' Klapp said.

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-- Martin Thompson (mthom1927@aol.com), January 11, 2001