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Date: Mon, 26 Nov 2001 09:01:48 -0800 (PST)
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Subject:      New Power Plant Planned for New York City
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November 26, 2001=20



New Power Plant Planned
for New York City



By Will McNamara
Director, Electric Industry Analysis



[News item from Energy Info Source] New York state's siting board approved =
Astoria Energy's plans to build a 1,000-megawatt power plant in New York Ci=
ty, clearing the way for construction to begin as early as January. Astoria=
 Energy hopes to have the natural-gas-fired, combined-cycle plant that will=
 be at an existing oil terminal in the Astoria section of Queens in service=
 by 2004. The company must do a certain amount of demolition and site prepa=
ration before it can begin construction, and still must receive some local =
permits from New York City. Astoria Energy is a unit of SCS Energy LLC, a p=
rivately owned energy development company based in Concord, Mass.=20

Analysis: The announcement of a new power plant scheduled for the New York =
City area should be evaluated within the context of severe power supply pro=
blems that have been identified within this region. Like California, New Yo=
rk also suffers from a supply / demand imbalance. However, even if or when =
power supply can be increased in New York, the core load center of New York=
 City still suffers from inherent transmission deficiencies that continue t=
o take their own toll on the stability of the market. In other words, trans=
mission capacity in the region has been determined to be deficient to the e=
xtent that power outside of the city cannot be reliably imported. The fact =
that Astoria Energy has received approval from New York state's siting boar=
d to proceed with this New York City-based plant is significant, but it sho=
uld not be forgotten that the company also must receive local permits from =
city government. This could be easier said than done, as other planned powe=
r plants in the area have been blocked or significantly altered over the la=
st year by community groups in New York City and surrounding boroughs who a=
rdently voice concerns about environmental and other ramifications of new p=
lant construction.=20

The problems within the New York power market have been well documented. Th=
e state of New York reportedly has not brought a new plant online since 199=
6, when a 200-MW plant opened in Brooklyn. It has been almost seven years s=
ince a 1,000-MW unit in Oswego, N.Y., marked the last plant to open upstate=
. Further, New York expects only a 3.5-percent increase in new capacity in =
the next three to four years. Consequently, concerns about the state's abil=
ity to meet increasing demand for power have gained momentum. Pressure has =
been placed on New York regulators to expedite the approval steps for sitin=
g new plants in the state. However, at the same time, environmental and com=
munity groups closely guard the proposals for new plants and often lobby fo=
r limitations on how and where the new plant will produce power.=20

While the entire state of New York is subject to shortages, the problem app=
ears to be particularly acute in New York City. A November 2000 report issu=
ed by the Federal Energy Regulatory Commission (FERC) entitled "Investigati=
on of Bulk Power Markets, Northeast Region," highlighted specific capacity =
problems in the New York City/Long Island community of 11 million people. T=
hese areas are particularly vulnerable because they are isolated from most =
of the state's grid, the study said. Like Northern California, which suffer=
ed rolling blackouts due to transmission constraints, New York City and Lon=
g Island can only import limited quantities of power on constrained transmi=
ssion lines. Hydro and fossil resources are plentiful in upstate New York, =
but cannot reach the city. Being both densely populated and heavily residen=
tial, it is difficult to site new power plants in the area. Consequently, 8=
0 percent of the power that the city consumes is generated by the city. New=
 plants such as the one by Astoria Energy are being proposed because New Yo=
rk City reportedly will be short of its generating capacity needs at times =
during the course of 2002. The projected shortfall is expected to increase =
by another 200 MW by summer 2002.=20

Increased demand is causing additional problems for the energy markets of N=
ew York City and New York State. Demand in the state rose by 2,700 MW from =
1995 to 2000, or 2.5 times as fast as new generation capacity was added. De=
mand over the course of 2001 was expected to reach 31,100 MW, or about 3.7 =
percent above regulators' earlier forecasts.=20

It is within this market context that Astoria Energy will proceed with its =
plans for the new power plant in New York City. Astoria Energy is a private=
 company seeking to generate electric power with energy-efficient and envir=
onmentally sound technologies in the New York City area. The company is a s=
ubsidiary of SCS Energy, a privately owned energy development company forme=
d in 1998 for the purpose of developing and owning new electric generating =
facilities. Information obtained from Astoria Energy sheds some additional =
light on the proposed plant. As noted, the 1,000-MW unit will be a natural =
gas-fired facility, which will obtain natural gas supplied from the ConEd/N=
ew York facility pipeline. The capital cost for the plant reportedly will b=
e $600 million. Commercial operation, pending the necessary approvals on th=
e local level, is scheduled for the fourth quarter of 2003. Astoria Energy =
is seemingly confident of its chances to gain approval for the new plant be=
cause it will be using a technology that is specifically geared toward the =
reduction of air emissions.=20

However, despite this optimism, the community opposition factor should not =
be discounted, and there are several examples that may foreshadow the oppos=
ition that Astoria Energy could face. Take Sithe Energies, for example, whi=
ch hit a roadblock with its construction plans in the New York area earlier=
 this year. Sithe Energies originally planned a 827-MW combined-cycle facil=
ity fueled by natural gas in Ramapo, N.Y. Chief among the concerns of local=
 residents is that the Ramapo plant was originally planned to run all the t=
ime to meet demand, and as a result would use local water resources for coo=
ling purposes. Community resistance thus became an issue for the company, w=
hich altered its plans and began to consider a 510-MW peaking unit (also po=
wered by natural gas) that would only be operated in times of increased dem=
and.=20

As another example, environmental and community groups won a victory in cou=
rt just last week that essentially will block construction of small power p=
lants in the South Bronx, Brooklyn, Queens, and Long Island areas. Each is =
a 44-MW plant, though at some sites there are twin generators operating at =
less than 80 MW. A coalition of the groups had opposed the construction of =
various plants in these areas and sued the New York Power Authority, claimi=
ng (among other things) that the state had failed to perform adequate envir=
onmental-review studies. The groups claim that the state should test the pl=
ants for their output of fine particulate matter. A lower court had ruled i=
n favor of the state, but a judgment last week in the New York Court of App=
eals was clearly a win for the environmental and community groups. The new =
ruling, which reportedly cannot be appealed further, says that the state mu=
st do unprecedented air tests at the 10 plants or shut them down by Jan. 31=
.=20

In a report issued earlier this year, New York State Electric & Gas Corp. (=
NYSEG), one of New York's seven utilities, said the state will not have eno=
ugh megawatts to support a truly competitive wholesale electric market unti=
l 2008. NYSEG, in a report issued late Wednesday, warned there are "serious=
 problems with (New York's) generation supply and a lack of transmission an=
d pipeline infrastructure." According to data included in a separate report=
 by the New York ISO, which manages the state's transmission grid, between =
1995 and 2000, while statewide demand in New York rose by 2,700 MW, generat=
ing capacity under contract in the state reportedly increased only by 1,060=
 MW.=20

Consequently, given all of these factors, power supplies in New York remain=
ed strained and the area certainly could benefit from the construction of n=
ew generation capacity. However, Astoria Energy, which seeks to bring new g=
eneration online in New York that will be based on clean technologies, may =
still face an uphill battle from various groups that seemingly oppose the c=
onstruction of any new plants in the region (with the exception of peaker u=
nits, whose output would be closely regimented). If plans for this plant ar=
e blocked or significantly altered, following the experience of Sithe Energ=
ies, the options to resolve New York City's supply / demand imbalance will =
once again become focused on a combination of other approaches, including c=
onservation efforts and reliance on distributed generation alternatives.=20


An archive list of previous IssueAlert articles is available at
www.scientech.com <http://secure.scientech.com/issuealert/>=20


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