N.Y.C. may face power crisis, too -- It races to quench thirst for electricity

By David Whitney Bee Washington Bureau (Published Feb. 26, 2001)

NEW YORK -- Along the East River in Queens, just south of one of the mammoth footings for the Queensboro Bridge towering above, a crane is lifting into place one of the pieces of a small power plant that plainly demonstrates that electricity is not just a California problem.

With soaring rates, cash-strapped utilities and threats of rolling blackouts as part of its deregulation legacy, California is getting most of the publicity. Here, against the backdrop of Manhattan, work is progressing at breakneck speed in a desperate race to keep the same issues from spinning out of control this summer.

Work started in January, just a few months after the New York Power Authority determined that if New York City was going to make it through the long, hot summer without power interruptions, a source for about 300 megawatts of new generation was imperative.

This is one of six sites where the power authority is installing turbines, on acre-and-a-half lots, that will be fired up with natural gas this summer to crank out that last bit of power to, as the popular California saying goes, "keep the lights on."

The units basically are jet engines -- like those that power Boeing 747s -- bolted to a generator capable of spinning out 44 megawatts of electricity. Of the 10 General Electric LM6000 units being installed in the power authority's $500 million race against the summer heat, two are here.

Work proceeds 10 hours a day, six days a week, even though a state judge has preliminarily sided with the adjacent Silvercup Studios, where the cable television shows "The Sopranos" and "Sex in the City" are filmed, in a lawsuit to stop construction.

When the weather warms a bit and there is more daylight, a second shift will be added to the construction team in an effort to meet the June 1 operational target.

If this and its sister plants aren't running by June 1, when the weather typically starts turning oppressive, the New York Independent System Operator -- the entity that runs the state's newly deregulated wholesale electricity market -- predicts shortages.

"These facilities are considered essential to bridge the gap between current capacity and projected demand this summer," said power authority spokesman Mike Saltzman. "Without these, there is palpable concern that there is going to be insufficient power in New York City to ensure reliable supply."

To speed the plants into operation, the power authority is toying with the rules. The two turbines here are capable of producing 88 megawatts together at full crank, but the authority promises they will not be run above 79.9 megawatts to avoid what Saltzman described as "more extensive regulatory procedures."

Plants generating 80 megawatts or more are required to go through an extensive environmental impact statement, which generally involves a detailed -- and time-consuming -- examination of alternatives.

And that's the problem, said Silvercup spokesman David VonSpreckelsen. The power authority never considered alternatives, including a different site that would not have further industrialized the Queens waterfront or jeopardized the studio's plans for expansion into adjoining lots where sound stages, apartments and a restaurant were planned, he said.

While the turbines are state of the art and will be hooked to scrubbers and baffles and stacks, VonSpreckelsen said "no one wants to live, recreate or eat next to a power plant."

Electricity deregulation arrived in New York differently than in California, where the 1996 law by the state Legislature is widely condemned as a failure. In New York, deregulation has been the result of administrative changes to the way electricity is produced and sold. But the results have been remarkably similar.

After the New York State Public Service Commission lowered consumer power rates in 1997, demand started to surge with a roaring economy. But there were no new plants coming on line.

Wholesale power rates soared 30 percent last summer, even though it turned out to be cooler than normal along the East Coast. And while new plants are being planned, it will be two years or more -- just like in California -- before they are operating with sufficient capacity to ease concerns about shortages.

"New York City, like other areas of the Northeast, the Midwest and California, is in a very serious situation," commission Chairwoman Maureen O. Helmer warned the New York Assembly's energy committee in August.

New York City's power problems are worsened by long-standing transmission bottlenecks. Even if there were sufficient power elsewhere, getting it wired into the New York City grid would be virtually impossible because there is not enough transmission capacity.

To deal with the transmission bottleneck, 80 percent of the power the city consumes is generated in the city. The new plants are being rushed into service because the city will be 300 megawatts short of its required 8,428-megawatt generating capacity this summer. The shortfall is expected to grow by another 200 megawatts by next summer.

The worsening situation has made New York utilities believers in the idea espoused strongly by California and most other Western states that federal regulators need to take steps to curb price gouging in the wholesale markets.

Last month, Consolidated Edison, New York's largest electric utility and one that has sold most of its generating capacity because of deregulation, appealed to the Federal Energy Regulatory Commission for the same wholesale price caps that the agency has refused to grant in the West.

"Until new plants get on line, customers need additional protection from uncompetitive, inflated prices," Con Ed President Kevin Burke told the commission.

Like in California, said Con Ed spokesman Michael Clendenin, the worst is still ahead for New York, until there's enough power being generated to make deregulation and the free market work.

"We foresee challenges next year and the year after that," Clendenin said. "We need new power plants built not just to keep up with demand, but to create a competitive marketplace so we can stabilize prices."

http://www.capitolalert.com/news/capalert01_20010226.html

-- Martin Thompson (mthom1927@aol.com), February 26, 2001