Thursday February 8 1:04 PM ET

N.Y. Groups Working to Keep NYC Lights on This Summer

By Scott DiSavino

NEW YORK (Reuters) - New York State and its electric utilities are working feverishly to prevent a California-like energy crisis from hitting New York City this summer, when heavy air conditioning use will push demand to an annual peak.

Like California, New York's thirst for electricity grew more than expected over the past decade with the robust economy driven by power hungry computers and other technical advances.

During those 10 years, however, little new generation was built in New York City to keep up with the growing demand.

Despite similarities, New York is in much better shape than California, where short supplies are a daily occurrence.

New York is fighting to maintain an energy reserve, or safety net, to keep the amount of electricity available comfortably ahead of the amount of power actually being consumed, while California has depleted its reserve and is struggling just to keep the lights on.

The four groups most responsible for keeping the lights on in New York City this summer are Consolidated Edison Co. of New York Inc. (Con Ed), the New York Independent System Operator (NYISO), the New York Public Service Commission (PSC) and the New York Power Authority (NYPA).

If the lights do go out this summer, or power prices skyrocket, New Yorkers will blame these four whether they deserve it or not.

Con Ed On The Front Line

Con Ed delivers electricity to more than three million customers in New York City and some suburbs. It is a unit of a New York City-based diversified energy company with a similar name -- Consolidated Edison Inc.

Con Ed owns little generation capacity in the city after selling most of its power plants to Orion Power Holdings Inc., NRG Energy Inc. and KeySpan Corp. as part of the state's restructuring of its electric industry.

This means Con Ed must buy most of the power it sells and is allowed to pass on the cost of purchasing power in the market to its customers.

California's two largest utilities -- Pacific Gas and Electric and Southern California Edison (news - web sites) -- were pushed to the brink of bankruptcy because they were not allowed to pass along the high cost of wholesale power to their customers.

In a key step toward keeping power prices from spiraling out of control, Con Ed has already bought about half of the energy it needs for this summer and is seeking to buy the rest though power purchase agreements with neighboring utilities.

Moreover, Con Ed is also pushing hard for a ``circuit breaker'' in the wholesale marketplace, new power plant construction, distributed generation, and energy conservation programs.

A circuit breaker would briefly halt trade whenever prices rise too far too fast, giving the market a chance to cool down.

Distributed generation includes fuel cells, microturbines and other alternative power sources installed at customer sites.

Backing From Psc, Nyiso

The PSC and the NYISO are pushing essentially the same preventive package as Con Ed.``For a long time, we've been saying New York needs more new generation to ensure reliability. To ensure a competitive marketplace ... we need adequate power supplies,'' NYISO spokesman Ken Klapp told Reuters.

The NYISO is a not-for-profit corporation that manages New York State's wholesale power market and ensures the reliable operation of the state's electric system.

It recently adopted a program along with its member utilities to pay customers to generate their own electricity or shut off their lights whenever power supplies are tight.

The PSC is a nonvoting member of the NYISO that regulates the state's utilities.

The PSC has been under fire from energy analysts for a long time for being too slow to approve construction of new power plants. It was, however, not necessarily the PSC's fault that some power plants took years to get approved.

``We're working day-in and day-out to get more power plant proposals approved,'' PSC spokesman Dave Flanagan said.

In the economically depressed Upstate region, where local opposition was nearly nonexistent, the PSC has approved a new plant in as little as nine months.

In New York City, however, despite efforts by the PSC, it can still take years to get a new plant built because of the opposition of environmental, business and residential groups.

Nypa Pushing Ahead

The only organization able to build new plants in New York City before this summer is the State Power Authority.

The Power Authority, which provides energy for the city's subways, street lights and public buildings, is currently preparing six sites for 10 small natural gas-fired turbines.

The completion of those turbines, however, has been threatened by lawsuits filed over the past few weeks by local environmental and business groups.

In addition, the Power Authority has installed fuel cells and other alternative forms of distributed generation at customer sites to reduce the amount of power it must deliver.

``The important thing is keeping the lights on. We all need to work together to achieve that goal,'' NYPA spokesman Joe Leary said about Con Ed, the NYISO, the PSC and NYPA.

-- Swissrose (cellier@azstarnet.com), February 09, 2001

Answers

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-- David Williams (DAVIDWILL@prodigy.net), February 09, 2001.