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Power shortfall threatens New York City economy--study Thursday January 25, 12:58 PM EST NEW YORK, Jan 25 (Reuters) - New York City faces a critical deficiency of 2,000 to 3,000 megawatts (MW) of electricity over the next five years that threatens to hurt the city's economy, according to a recent study.

One megawatt of electricity provides enough power to light about 1,000 average homes.

Unless immediate action is taken to provide additional supply, New Yorkers could suffer electricity price spikes, brownouts and blackouts that are now plaguing California, according to a report from the New York Building Congress, written with the assistance of business advocacy groups.

Consolidated Edison Inc. (ED), which helped write the report, has forecast there would be enough energy supplies to keep the lights on for its three million New York City electric customers this summer if the weather is normal.

Con Ed officials, however, were not able to say for sure what would happen if the unexpected -- above-normal temperatures or a breakdown of transmission or generating facilities -- occurs this summer.

"I can't say definitively what would happen. It would certainly be a stress on the system. Right now, we think we'll be okay. But, we'll have to gauge each day as it comes," Con Ed spokesman Mike Clendenin told Reuters.

CALIFORNIA CRISIS RAISES CONCERNS IN NEW YORK

The high prices and power outages in California have focused public attention on the need for new power plants and power lines and conservation programs in New York City.

In California, price spikes and blackouts are becoming routine as officials deal with electricity supply shortages caused by that state's booming economy and rapid population growth in recent years which was not matched by an increase in generating capacity.

New York City also experienced an economic boom and population growth over the past 10 years.

That growth increased the demand for electricity by about 1,400 MW over the last decade, again without any significant increase in generating capacity.

The increased demand and flat supplies, when combined with the newly deregulated, competitive wholesale market, has, according to the study, resulted in higher electricity prices, especially during times of high demand like the summer air conditioning season when New York City electric bills rose more than 40 percent.

The Congress said it prepared the report to alert the political leaders and New York residents of the urgency of the state's electric supplies.

2001 AND 2002 ARE CRITICAL YEARS

The Congress said the years 2001 and 2002 were the most critical for New York City.

The new supply of electricity needed to ensure market stability and reliability, and to meet the projected increase in demand, was estimated in the study to be 1,000 MW in 2001, growing to almost 1,500 MW by 2002.

The only immediate potential for additional supply before the summer of 2001 as from the New York Power Authority's (NYPA) plan to install 11 small gas turbines in and around the city. If built, these units would produce about 440 MW of new generation in the city.

"The NYPA units will provide a cushion for the city this summer, but they are only a short-term solution," Con Ed's Clendenin said. "We need to build additional generating facilities and we need to get started building them now."

The Congress urged the state and city leaders to accelerate the process of permanent, new electric generating capacity in the City, and to encourage conservation and increased use of alternative energy technologies.

At this time, however, there are no new generating facilities under construction.

To date, 5,500 MW of capacity were proposed by a number of energy generators for the New York City area, but only one of those projects has reached the approved application stage.

The formal siting process in New York State, called Article 10, takes about 12 months once a project reaches the application stage, before construction can begin.

The Congress also stressed the need for new technologies and energy conservation solutions, which could save an estimated 500 MW of projected generation need.

In criticizing a trend that must be reversed, the Congress said the federal and state governments must increase expenditures for conservation and new technology programs that have been reduced in recent years.

Public officials and business leaders must act strongly to convey the message now to all new Yorkers that, without new electricity generation, the city could face higher electricity prices and threatened brownouts and blackouts in the very near future, Congress concluded.

--Scott DiSavino, New York Power Desk, +212-859-1622, fax +212-859-1758, e-mail scott.disavino@reuters.com

http://money.iwon.com/jsp/nw/nwdt_rt.jsp?section=news&news_id=reu-n25114149&feed=reu&date=20010125&cat=INDUSTRY

-- Martin Thompson (mthom1927@aol.com), January 26, 2001