Cityview: Power Splurge

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In the never ending controversy of power plant politics, Mayor Giuliani was trying to inject a note of reason. “A lot of the fears, not all,” he told a Wall Street audience last March, “have been exaggerated.”

He meant fears of increased rates of asthma, emphysema and other respiratory illnesses from 11 turbine generators planned, without environmental review, for already overpolluted neighborhoods–generators the state says it needs in order to stave off an imminent power emergency.

But he might just as easily have been talking about the fears he and the governor have so carefully exploited: that if we don’t let the New York Power Authority (NYPA) build its turbines, we’ll be facing California-style outages and price spikes, even rolling blackouts, come summer.

It’s simply not true. Not only do we have enough energy to meet this summer’s projected demand, we have generously overestimated that demand–a demand that could have been easily reduced in the first place. NYPA’s rush to build “emergency” generators is a last-ditch effort by the state to deflect criticism of a failed energy policy that is likely to result in higher energy prices over the next few summers, regardless of what is done to increase supply.

Although electric usage has been growing in New York City, existing power plants in the city have also been expanded, by nearly 400 megawatts. With that increase, and nearly 300 megawatts worth of energy savings planned for this summer, the city will have more than enough power to meet its stringent reliability requirement–and nearly 3,000 megawatts more than the forecasted summer peak demand.

New York City is an electric “load pocket,” meaning that, due to limits on the amount of electricity that transmission lines can bring in, the city can import only about half of the electricity it needs at peak periods. As a result, the New York Independent System Operator (NYISO) has a rule that requires that 80 percent of New York City’s peak load be located in New York City. This rule quite sensibly guarantees that peak electric demand can be met in the city even if a power plant or a major transmission line–or even both at once–fails.

The forecasted peak demand for this summer is 10,535 megawatts. In total, New York City will have over 13,000 megawatts at its disposal. The 80 percent requirement means that for this summer, the city needs 8,428 megawatts of generation in the city. The amount of power available in-city during the summer of 2001 is 8,306 megawatts, or 122 megawatts less than the 80 percent rule requires.

But Con Ed, state agencies and even NYPA itself have pledged over $200 million this year in energy efficiency programs, which they estimate will save the city 271 megawatts. Because energy savings from these programs can’t be predicted down to the megawatt, the state has decided not take them into account when calculating projected demand, but the fact is that the city can easily meet the 80 percent requirement this summer, with 149 megawatts left over.

And the savings could have been even greater. The state cut energy efficiency programs from $286 million in 1992 to $73 million in 1996. And the 1996 deregulation gave distribution utilities like Con Edison a huge incentive to increase sales, rather than promote energy efficiency or clean on-site generation. Even with recent funding increases, New York falls far short of where it was in 1992–and makes one-half the energy-efficiency investments per capita that New Jersey, Connecticut and Massachusetts do. If these programs had not been cut, the city’s peak demand would be at least 500 megawatts less today.

Even new power plants could have been part of the solution. By bringing overall prices down, they can help reduce costs to consumers. That’s because modern, efficient and relatively clean power plants reduce the amount of fuel required to produce the same amount of electricity. Now that wholesale electric prices are no longer regulated, NYISO’s rules determine prices based on the most expensive generator needed to meet the next day’s demand. In such a market, lowering demand by a few hundred megawatts would knock out that last, most expensive generator–and significantly reduce energy costs for everyone.

But instead of promoting “clean” energy, the state is doing just the opposite. In addition to constructing the new turbines, the state is asking large customers to run diesel backup generators. The pollution diesels emit–nitrogen oxides and very small carcinogenic particulates–are particularly toxic to humans. Emitting hundreds of times more pollution per kilowatt-hour than new clean power plants, and tens of times more pollution than average power plants in New York, diesel generators have previously been allowed to run only during emergencies like blackouts.

If New York State followed a balanced strategy of energy efficiency, we could have it all: lower demand, lower energy prices–and even new power plants. Instead, we are making decisions in a climate of panic and fear. People will support newer, cleaner power plants, but only if they are part of an overall comprehensive energy policy–not a stopgap solution to a crisis that doesn’t exist.

Ashok Gupta is a Senior Energy Economist with the National Resources Defense Council.

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