Eighty-five developers, utilities and other entities responded to Gov. Andrew Cuomo”™s call for ideas to revitalize the state”™s aging energy infrastructure, with the respondents collectively supplying plans that would power no fewer than 20 million homes.
Energy experts contend the biggest problem facing the state”™s electric grid is not a lack of supply but inefficiencies in transporting the existing supply from upstate New York, which is a net producer of electricity, to the downstate region, a net consumer.
However, that did not stop private developers, power providers, private equity firms and others from submitting 130 ideas that would provide a total of more than 25,000 megawatts and call for billions of dollars in upgrades, new generation facilities and transmission lines.
Those submissions included proposals for four new generation facilities in the Hudson Valley that would provide a total of 2,445 megawatts, a proposal to keep Indian Point Energy Center ”“ which generates 2,069 megawatts ”“ in service, and proposals for eight new or upgraded transmission lines that could generate an additional 3,700 to 5,600 megawatts.
The proposals came in response to an April 11 request for information issued by the governor”™s New York Energy Highway Task Force, which has been charged with issuing an action plan this fall that would map out how public-private partnerships can be utilized to upgrade the state”™s electric grid.
Jackson Morris, director of strategic engagement at the Pace Law School Energy and Climate Center and a New York Independent System Operator (NYISO) committee member representing several energy and environmental advocates, said the state”™s intention to have market deregulation spur the replacement of aging infrastructure hasn”™t been fully realized.
“Part of the reason we went to a wholesale electricity market ”“ a deregulated market ”“ over 10 years ago was to drive market outcomes ”¦ and the market hasn”™t delivered on that,” Morris said. “When we set up the markets, the idea was that you would, through competition, drive out over time the less efficient stuff.”
Morris said the hope was that with a wholesale market, the older, less efficient and more costly sources of electricity generation wouldn”™t be able to compete with newer, cheaper facilities.
“The idea was that (with older facilities) prices would rise somewhat and then that would identify an economic opportunity and then new generation would come online,” he said. “That really hasn”™t happened at the pace that most people, including the participants in the market, would have anticipated.”
Cuomo”™s Energy Highway initiative arose in response to the market”™s slow reaction to the older infrastructure that remains in service.
When the Energy Highway Task Force issued its RFI, task force co-chair and New York Power Authority CEO Gil Quiniones said he expected proposals for projects that would be wholly or partially funded with state dollars.
However, several of the largest proposals submitted to the task force for developments originating in the Hudson Valley did not seek financial assistance but requested assistance navigating the approval process and cutting through the red tape.
Several developers specifically requested state assistance in obtaining power-purchasing agreements that would permit the developers to sell the electricity they would generate to utilities.
Included among the submissions were a proposal by Cricket Valley Energy Center L.L.C. to build a $1 billion, 1,000 megawatt natural gas-fueled plant in Dover; a proposal by Competitive Power Ventures Inc. for a $900 million, 650-megawatt natural gas plant just outside Middletown, and a proposal by GenOn Energy Inc. to build a 775-megawatt natural gas plant in Haverstraw.
All three projects are already well into the permitting process, with the CPV proposal recently obtaining State Environmental Quality Review Act approval from the town of Wawayanda. Each of the proposals would support upwards of 700 construction jobs and between 25 and 100 permanent jobs.
The Cricket Valley and CPV plants are projected to be completed by the fall or winter of 2015, while the GenOn plant is projected to be completed in the summer of 2016, according to NYISO.
Several industry experts said new developments that don”™t replace older generation facilities are not necessarily the answer.
John Maserjian, spokesman for Central Hudson Gas & Electric Corp., echoed Morris, saying the state collectively would have enough electricity to meet even peak demand without additional generation, but that upstate transmission lines are unable to meet downstate demand.
That transmission congestion results in the operation of additional generators during peak demand periods, which Maserjian said cost utilities and consumers $1.1 billion in 2010.
In response to statewide transmission line deficiencies, Central Hudson, Con Edison, the Long Island Power Authority, the New York Power Authority, New York State Electric & Gas, Orange & Rockland Utilities and Rochester Gas & Electric proposed a $2.9 billion plan to upgrade and modernize the state”™s transmission infrastructure.
The joint proposal, which would form the New York Transmission Co. (NY Transco), includes 18 projects, of which three are considered “immediately actionable.” The permit process for the latter three projects, which would all either originate or conclude in the Hudson Valley, are underway.
It is estimated the projects outlined by the joint proposal would generate more than $7 billion in economic activity in New York state, creating 12,000 direct jobs ”“ people employed by the companies that are building the facilities ”“ and nearly 38,000 total jobs.
