Home

News

Contact:
Zack Hutchins
Director of Communications
518.465.7511

For Release — Wednesday, October 17, 2001

RESEARCH: NEW YORK RISKS ECONOMIC DAMAGE IF IT FAILS TO ADD POWER—
AND CAN REAP POWERFUL ECONOMIC BENEFITS BY INCREASING CAPACITY

ALBANY—New York urgently needs to site a proposed electricity generating facility in Albany County - and at least a dozen other new power plants - to avoid the risk of serious damage to the state's economic health, a new white paper by The Public Policy Institute of New York State argues.

The paper, The Power to Grow, added that increasing capacity would give New Yorkers and New York's business community many powerful economic benefits.

"New generating capacity is needed in New York to avert serious dangers - significant electricity price increases, power interruptions, and damage to the state's ability to attract new businesses and jobs," The Institute's white paper said.

 

The paper will be part of oral testimony to be delivered at 7 p.m. Wednesday, Oct. 17, at a public hearing. The focus of the hearing is a proposed 750-megawatt Bethlehem Energy Center (BEC) on the Hudson River about 10 miles south of Albany. The hearing will take place at Bethlehem Town Hall auditorium at 445 Delaware Avenue in Delmar. David F. Shaffer, The Council's corporate secretary, will deliver the testimony.

The Council's intervenor status in this proposal: The Public Policy Institute, The Business Council's research affiliate, published The Power to Grow to outline broad economic arguments for increasing generating capacity.

The Council sought "intervenor" status in this proposal, and in a second proposed power plant in Long Island, to argue that New York needs new power plants to sustain reliability, create economic growth, and engender cost-cutting competition in electricity markets.

Growth in demand: By all key measures, electricity demand in New York has been growing steadily, the paper noted. In the last 20 years, peak demand has grown 5.2 times as fast as the state's population and 2.1 times as fast as employment. And annual per-capita consumption of electricity has grown 5.3 percent since 1990.

This demand-growth pattern holds whether the state is growing or in recession, and it has occurred even though most electrical devices for offices, homes, and factories have become significantly more energy-efficient, the paper said.

This growth is likely to continue, the paper added, citing New York's increasing preference for electricity and increasing dependence on information industries that need power for data processing and communications equipment. The paper cited several factors behind this ongoing growth in demand:

The looming shortfall in capacity: New York lacks the generating capacity to sustain this growth in demand, The Power to Grow concluded.

Last May, New York's generating capacity was 35,847 megawatts — 338 megawatts below the "minimum" (36,185 megawatts) considered necessary to meet the summer's peak demand (30,665 megawatts). The minimum needed reflects an 18 percent reserve margin recommended by the New York State Reliability Council to ensure system reliability in cases of planned plant-shutdowns or unexpected failures of plants or transmission systems.

What's more, this gap between need and capacity is likely to grow. Taking into account projected growth, the cushion needed to sustain reliability, and an added margin required to foster price-reducing competition, The Institute estimated that New York must add 9,600 megawatts of additional capacity within five years, The Power to Grow says.

The economic benefits of adding capacity: The Power to Grow described a range of benefits that would flow from increased electricity-generating capacity:

The economic risks of inadequate capacity: Without additional capacity to ensure reliability and price-reducing competition, New York's economy will face a number of serious long-term risks, the paper said.

The limited value of conservation: New York businesses have saved billions of dollars through energy efficiencies in the last decade alone, the paper noted, and business commitment to cost-cutting conservation will continue, the paper said. But during this same period, the paper added, "energy consumption has grown and will continue to do so. Energy efficiency will not eliminate the need for BEC."

Growth in demand in New York has continued despite advances in energy-efficiency, the paper added. "In the last half-century, the overall energy efficiency of the U.S. economy has improved by 47 percent, yet our per capita energy consumption has increased 65 percent."

"This is a reflection of a basic tenet of economics, which holds that greater efficiency in inputs tends to be converted into greater outputs, rather than fewer inputs," the paper noted. Further increases in efficiency are there likely to produce further growth in energy demand.

"Because electricity is so ubiquitous, so integral a part of modern life, we tend to take it for granted," the paper said. "Our dependence upon electricity is a given, but it must not become an afterthought."

For a copy of the full report in PDF format, visit www.ppinys/reports/2001/sitingboard.pdf.

-30-