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Energy Newsletter
October 24, 2001

 

COUNCIL SUBMITS TESTIMONY AND STUDY IN SUPPORT OF ADDITIONAL POWER

On October 17th The Business Council submitted public testimony and a formal study, The Power To Grow, which details the need for more electrical generation in New York State and the need for the Bethlehem Energy Center (BEC), before representatives of the New York State Board on Electrical Generation and the Environment (the Article X Siting Board) at a public hearing held in Bethlehem, a suburb of Albany. The BEC will be a state-of-the-art, 750 MW, natural gas fired combined-cycle power plant.

The Council stated that the PSEG-sponsored Bethlehem Energy Center will add 350 new MW to the state's electricity grid. The proposal calls for increasing the plant from 400 MW to 750 MW. The project will bolster the electricity market, add to competition, increase jobs, and help both the state and local economies. The developers hope to have the natural gas fueled plant in operation by 2004.

Earlier this year, The Business Council filed comments with the State Energy Planning Board advocating for almost 10,000 MW of new generation in order to insure reliability and competition in New York's wholesale electricity market. Increased generation and competition will lead to lower prices and market reliability.

This summer The Council also filed for status as a party in two power plant projects seeking approval before the Siting Board. The Council requested party status in these cases in order to represent business and industry and emphasize the economic need and development that are tied to electricity and the plants.

The public statement and the Public Policy Institute report submitted on October 17th

The web site for the Bethlehem Energy Center can be accessed here: www.bethlehemenergycenter.com/

More can be found on Article X projects on the Public Service Commission's web site: http://www.dps.state.ny.us/articlex.htm

LEGISLATURE ADOPTS CHANGE TO ARTICLE X
Earlier this year the Legislature passed, and the Governor signed, legislation to alter the siting law in order to expedite the re-powering of certain power plant projects, provided they result in reduced emissions (75%). The bill was signed into law on August 31st as Chapter 222.

On October 22nd both Houses of the Legislature passed A.9425/S.5778. This bill is an amendment to Chapter 222. The bill requires the consideration of the effect of facility water cooling systems during expedited applications under Chapter 222.

STATE ENERGY PLAN (SEP)
The New York State Energy Research Development Authority (NYSERDA), the agency charged with compiling the State Energy Plan on behalf of the State Energy Planning Board is currently developing a draft of the plan. It is anticipated that the plan will be drafted by December with public hearings starting in early 2002. NYSERDA is considering holding at least eight (8) public hearings around the state.

The Business Council, in its filing with the State Planning Board, has advocated for an increase in electricity generation by 10,000 megawatts at a minimum. The Council also emphasized significant upgrades in the state's electrical transmission infrastructure and natural gas pipeline as key elements of the plan. Key to satisfying the state's increasing energy needs is the ability to transport natural gas into the state as well as a transmission infrastructure able to ship electricity from generators to end users around the state. Currently, there are significant bottlenecks where transmission upgrades are needed in order to allow the transmission of additional electricity into load pockets (areas that do not produce all of the electricity needed to satisfy demand).

The Council has also suggested a careful study of a number of issues including; fuel diversity (in regards to the fuels used to generate electricity), the role of distributive generation, the problems associated with the Article X process, the issues that need to be tracked in the 2002 plan such as energy taxes and the projections of future energy needs, and the role of the plan itself.

After public hearings are held, the State Energy Planning Board's staff will develop a final draft for adoption early in 2002.

Copies of The Business Council's comments to the State Energy Planning Board were mailed to members of the Energy Committee.

LIPA TO ADD NEW ELECTRICAL GENERATING CAPACITY

The Long Island Power Authority (LIPA) has announced its intention to add a total of ten new turbine generation units that will be put in service by next summer under LIPA's Powering Long Island Program. Five turbine generators will be placed in service by PPL Corporation and Calpine which will collectively supply Long Island with 203.8 megawatts (MW) of electric power by next summer, 159 MW will be generated by PPL alone.

The three turbine projects, which will be developed, owned and operated by FPL Energy in Far Rockaway and KeySpan in Port Jefferson and Glenwood Landing will add an additional 203.8 MW of electricity to Long Island's supply by next summer. Combined, the ten new turbine units will be capable of generating a total of 407.6 MW of electricity. During early August of this year Long Island came within less than 100 megawatts of running out of supply. LIPA claims that if it does not add new on-island generation, it's almost a certainty they will have rolling blackouts next year if they experience the same conditions they did this summer.

Public Service Commission Chairman Maureen O. Helmer confirmed LIPA's need for new on-island generation. In a recent letter she stated that an analysis of the electric system conditions on Long Island on August 8-9, 2001 leads her to conclude that there is a serious and immediate need for an additional 400-500 MW of generating capacity to be constructed on Long Island by May 1, 2002. Without additional generation on Long Island, a repeat of the August 8-9 weather conditions could very well cause the need for load shedding/rotating blackouts on Long Island.

The following developers will locate the units at these Long Island locations:

Combined, all ten new turbines, which are being advanced under LIPA's Powering Long Island Project, will be capable of generating a total of 407.6 MW. Construction of all of LIPA's Powering Long Island projects is anticipated to begin in January 2002 with the facilities projected to be on line next summer. LIPA will purchase 100% of the power generated by the units for its customers.

For more information on the project access the LIPA web page: http://www.lipower.org/newscenter/pr/2001/oct18_01.htm

REGULATORS DISCUSS ENERGY ISSUES AT ANNUAL MEETING

On September 20th, five industry leaders and regulators discussed the future of the energy markets in New York State. Much of the conversation also revolved around the tragic events in New York City on September 11th.

The September 11th terrorism in New York City strengthens the arguments for increasing and diversifying New York's energy supplies, said participants on the panel.

Participants in the discussion were:

The resulting events in New York City will prompt energy companies and regulators to factor possible future terrorism into their strategic planning. Specific topics discussed include: Power plants, transmission lines, nuclear facilities, and others make visible and vulnerable potential targets for terrorists, Museler said. But New York's energy system includes "reasonable backup" capability in case some facilities are damaged by terrorists, he added.

The possibility of terrorism makes it more important than ever that New York complete the transition to competitive markets, Larchamp of FERC said. In particular, he said, New York needs additional redundancy in its natural gas system to make the state secure from possible terrorist attacks on that system.

For a variety of reasons, including the possibility of future terrorism, New York must have a more diverse range of fuels powering its electricity-generating facilities, the panelists said.

Owens, from the Edison Electric Institute, noted that coal still represents 52 percent of the nation's overall energy supply; he said the nation needs to find more ways to use it. He noted that there is outstanding research in progress on different clean-coal technologies, including the de-sulfurization of goal.

Crotty, the DEC commissioner, said any coal-fired plants in New York would need to meet existing air- and water-emission regulations, and that research on better coal technologies should be encouraged.

Fuel cells are a potentially viable technology, Owens said, but their cost remains an issue. Their market performance over the next three years will help show if they can be competitive in the energy market, he added.

Panelists said that New York can encourage fuel diversity and conservation by continuing to investigate such alternatives as solar and wind energy.

Regional transmission organizations and electricity grids that span the entire northeastern United States are inevitable and must be carefully planned. FERC has required the entities that manage electricity grids to submit plans for such regional systems.

INDEPENDENT SYSTEM OPERATOR NEWS

Real time load data

The New York ISO has updated its web page in order to provide the public with a real-time load figure on its home page. Those wishing to see the real time load (in Megawatts) in New York State are now able to do so by clicking on the ISO's home page and scrolling to the lower left hand corner of the page.

Regional Transmission Organizations (RTOs)

The New State Independent System Operator (ISO) has also announced its support for several aspects of the report issued to the FERC by an Administrative Law Judge on the recently-completed Northeast Regional Transmission Organization (RTO) integration Discussions. The ISO was pleased with the judge's emphasis on the "Best Practices" and the need for thorough assessment and planning at the beginning of the process.

However, the ISO is also stating that the complexity of the systems and the creation of an RTO merits thorough study and "an independent technology assessment at the beginning of the integration process to determine the extent of the software improvements needed to run a super-regional system".

The creation of an RTO for the Northeast would create the largest single electricity market in the world.

On October 23rd the ISO released a study done for them by the economic consultants LECG, LLC. The study was commissioned by the ISO in order to conduct a peer review of another study (of a Northeast Regional RTO). The ISO stated that they may undertake a study of their own in order to provide policymakers with new market figures. This information on the ISO is also on their web site.

The complex RTO issue will continue to unfold over the next several months.

The ISO has an abundance of information on its home page, including the above referenced items. For more information on the RTO issue, the FERC's July 12th Order, the New York Transmission Members' response and other related materials, including how the ISO is keeping track of this issue, access the NYISO at: http://www.nyiso.com/index.html

The FERC web page is also a good source of information on evolving topics of interest to New York, including RTO issues: http://www.ferc.gov/

NYSERDA HOSTS PANEL AT COUNCIL'S INDUSTRY ENVIRONMENT CONFERENCE

Representatives of the New York State Energy and Research Development Authority hosted two panels at the October 16 - 17 Industry and Environment Conference sponsored by The Business Council. The conference is an annual event that highlights current environmental topics and issues facing business and industry in New York.

The panel, "Energy/ Environment Funding Opportunities", featured representatives from NYSERDA and the federal Department of Energy who discussed opportunities for businesses wishing to pursue programs being funded by those entities.

The programs featured included;

The Department of Energy stated that they were dedicating $1.149 billion in research and development initiatives for businesses involved in energy efficiency and related programs.

For more information on NYSERDA programs contact; http://www.nyserda.org

For more information on Department of Energy programs contact: www.oit.doe.gov/clearinghouse

PUBLIC SERVICE COMMISSION

The Public Service Commission canceled its September 25th meeting in Albany. The Commission met in Albany on October 24th at 10am.

The Commission adopted three resolutions at the opening of the October 24th meeting. The first resolution praised the leadership of the Governor and Mayor of New York, the government workers and staff that helped in rescue efforts. The second resolution praised the efforts of the New York utilities and their workers, most notably Consolidated Edison and Verizon. The last resolution was a recognition of the emergency response staff of the Department of Public Service who worked diligently to restore vital services, with the utilities, in the aftermath of the September 11 attack.

In other business, the Commission addressed; Case 00M0505 which is part of the provider of last resort case. The commission was briefed on some of the information needed in the unbundling of rates - "Unbundling track".

Two cases, 00E0005 and 99E1470, dealing with distributive generation and standby service were brought before the Commission for adoption. The Commission decisions establish a process for utilities to award a set number of contracts for distributed generation projects that could take the place of distributive system construction. The purpose is to provide for the objective and timely consideration of DG projects as a resource in the distribution system planning process. The Commission also approved a protocol for special standby rates.

Lastly, cases 01E0011, 01E0349, 01E0611, all dealing with the transfer and sale of the nuclear assets at Nine Mile Point Nuclear Station to Constellation were adopted. The purchase prices for Nine Mile 1 and 82% of Nine Mile 2 are approximately $221 million and $559 million, respectively.