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Government Affairs Albany Update

June 1, 2001

Athens Power Plant Gains Army Corp Approval

The Athens Generating Company, a subsidiary of PG & E National Energy Group, was awarded its final permits by the U.S. Army Corp of Engineers on Friday, May 18th. The permits allow them to begin construction on the $500 million, 1080 Megawatt electricity generating facility. The plant, which will be natural gas-fired, will be built in Athens, Greene County near the Hudson River.

The company has been seeking approval for the plant for about four years. It will take approximately 30 months to build the plant, however the company is still hoping to have it operating by the summer of 2003.

In an effort to comply with environmental concerns the project was altered last year to reduce the amount of water to be taken from the Hudson River from about 4.2 million gallons per day to 180,000 million per day. The owners have also agreed to several stipulations to lessen the visual impact of the plant. These stipulations include painting the sides of the plant "terra brown" and the roof "hunter green". Opponents of the plant have protested the visual impact of the plant on the Hudson River and surrounding areas.

Earlier this year Sithe Energies, Inc. sited a new plant in Scriba, Oswego County making it the second project through the Article X process. Athens was awarded certification by the Siting Board in June 2000 but had been waiting for Army Corp approval until May 18th. The final permits issued by the Army Corp allow construction to begin on the Athens plant immediately.

ISO Releases Updated Summer Outlook

The New York State Independent System Operator (ISO) stated on May 31st that New York State, and in particular, New York City, should be able to make it through even the hottest weather this summer with enough electricity. ISO President William Museler attributes the state's reliability to a number of factors including the addition of 400 Megawatts of power from small generators that the New York Power Authority installed in New York City earlier this year. Also a factor in maintaining reliability are the upgrades made at several existing generating units and transmission facilities and the addition of Emergency Demand Response Programs by the ISO which help shed peak load at critical times. The ISO is quick to point out that, although New York will maintain its reliability this summer, additional power plants are needed immediately due to the razor thin margins.

The ISO's outlook incorporates a long-range weather forecast which predicts that the summer of 2001 will be hotter than the 10-, 20-, and 30-year norms. However, the forecast does not anticipate a summer as hot as 1999.

The ISO states that for the months of May through October 2001, New York will need an installed capacity of 36,132 MW per month. Installed capacity refers to the total amount of electrical power that power suppliers commit to bidding into the New York state market. The installed capacity should be 18% above peak load and is a requirement established at by the New York State Reliability Council. For June of this year 35,955 MW of installed capacity has been secured leaving a deficit of 177 MW. By July the deficit will be eradicated when installed capacity reaches 36,240 MW.

A similar situation is evident in New York City where installed capacity is currently 8,236 MW - short 192 MW of the required 8,428 MW. By July the deficit will be overcome when installed capacity reaches 8,734 MW.

The ISO predicts that New York could be almost 2,000 MW short of supply within the next three years. ISO President Museler stated that because of the 24-to-36 month lead time to build large baseload plants, New York needs to start to get plants approved and built as soon as possible or the state will run into severe shortages for years to come.

President Issues Executive Orders on Energy

President George Bush has released two Executive Order dealing with his National Energy Policy released in mid-May. The orders entitled; "Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use" and "Actions to Expedite Energy-Related Projects" were released on May 18th. The orders serve a dual purpose; 1) to attempt to streamline and expedite the process of federally licensing energy projects and 2) to encourage federal agencies to take into account the significance of agency actions on energy policy and supply.

The orders establish an interagency task force that will "monitor and assist the agencies in their efforts to expedite their review of permits or similar actions." It will be charged with assisting agencies with setting up mechanisms to coordinate federal, state and local permitting. The task force, which will be chaired by the Chairman of the Council on Environmental Quality, will be housed at the Department of Energy.

The orders also direct the various federal agencies to examine the impact of federal regulations on energy supply and use. Agencies are directed to prepare a "Statement of Energy Effects" that will detail the effects of "certain regulatory actions on energy supply, distribution, or use." The President is requiring federal departments to submit this information to the Office of Information and Regulatory Affairs and the Office of Management and Budget. The plans will allow these agencies to review possible actions that may have an adverse effect on energy supply, distribution, or use.

Trio of Bills Introduced - Electric Generation Units

The state Assembly has introduced a trio of bills dealing with electric generation units.

The first, A.8952 (Gianaris) is part of the Assembly's energy package released last week. This bill would impose a six month limit on the state siting board's review of repowering projects, if such projects provide at least a 75 percent reduction in emissions of nitrogen oxide, sulfur dioxide and particulate matter (on a pounds per megawatt hour basis.) The six month deadline can be extended by three months for facilities over 200 MW capacity, or if waived by the applicant. The Business Council has not yet taken a position on this bill.

The other two address the use of diesel-fired "distributive generation" units downstate during peak demand periods.

The Business Council opposes both A.8911 and A.8915. They would impose unrealistic emission limits on small diesel generators, and would largely preclude the use of these units under the current ISO emergency demand response plan.