Shift in the wind
st1\:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; mso-ascii- mso-ascii-theme- mso-fareast- mso-fareast-theme- mso-hansi- mso-hansi-theme- mso-bidi- mso-bidi-theme-} It could be that a change in New York state”™s electrical supply is blowing in the wind, though Hudson Valley breezes appear to be too anemic to attract big turbines.
On Sept. 3, the state Public Service Commission approved Iberdrola’s $4.6 billion acquisition of Energy East, a power company headquartered in Maine with almost 2 million customers in New York.
The decision allows a wind energy company based in Spain to become a major player in New York State”™s energy market and could contribute to energy independence for the state. It may also allow the state”™s current utilities back into the market as generators of renewable power in addition to their current role as distributors of energy.
If the conditions on the sale imposed by the PSC are accepted by the company, as expected, the Spanish renewable energy company will own NYSEG and Rochester Gas and Electric in New York state supplying gas or electricity to 1.7 million customers in the state. Energy East companies also provide electricity in Massachusetts and Connecticut.
Robert Bellafiore of Iberdrola North America in Albany did not return a call seeking comment on the decision by the state PSC. After the PSC decision was announced, Iberdrola released a statement saying it was reviewing the conditions of the decision.
But if the deal is accepted, Iberdrola will invest at least the $200 million in wind energy required by the PSC. In June, company officials pledged the company could invest some $2 billion in wind generation equipment to serve the New York energy market, primarily from wind farms in the northern and western parts of the state, where wind volume is most reliable and the cost of acquiring land is lower than in more populated regions.
New York is expected to have about 1,000 megawatts of existing capacity by the end of this year, and the plans would add about 1,000 megawatts of wind capacity to the state within a few years.
Iberdrola would serve as both a power provider and a power transmitter. That dual status has been denied to state utilities since the deregulation of the state”™s energy system in the 1990s. The PSC decision would force Iberdrola to divest of oil-powered generating equipment currently owned by Energy East, but would allow it to retain hydroelectric equipment as well as invest in wind equipment.
“Developing renewable energy sources is critically important for New York,” said Garry A. Brown, the PSC chairman. “Our decision allows Iberdrola to fulfill its commitment to invest in renewable energy projects in New York state.”Â
Both Gov. David Paterson and U.S. Sen. Charles Schumer issued statements in support of the PSC decision. Schumer played a key role in lobbying the PSC to reduce preconditions the commission staff had recommended for approving the deal.
Renewable energy is key component for a wise state energy policy going forward, according to Assembly Energy Committee Chairman Kevin Cahill of Kingston. The PSC willingness to allow Iberdrola to both generate wind energy and own transmission equipment could serve as a model for the state”™s current utilities, which are currently denied the right to produce power within their service territories.
“I think it does send a signal from the PSC to utilities there may be some interest in having them participate in (generating) renewable energy,” Cahill said. “And that is something I am interested in pursuing, also.”
Allowing utilities to invest in renewable resources within their service territories would help push renewable energy into an economically competitive position, according to Cahill, by ensuring investors would receive a return, in the form of ratepayers”™ monthly bills. “Renewables are still too costly to do without some form of assistance,” said Cahill. “But rate assistance could be just the form of assistance that would make it work.”
He said he would not favor allowing utilities to reacquire fossil fuel generation facilities, noting that under deregulation in the late 1990s, the companies had sold off those power plants and distributed the proceeds to shareholders. Thus, he said, it would be uneconomical to re-invest in old-fashioned plants.
And in any case, he said coal and oil-burning power plants should be deemphasized in upcoming years to foster energy independence in New York, based on renewable energy, natural gas from sources within the state and conservation initiatives.  Â
He said that Con Ed, Orange & Rockland Utilities Inc. and LIPA on Long Island are particularly attractive options for renewable energy facilities because those transmission companies have few long-term power supply contracts. He said Long Island might be a viable location for off-shore wind farms, located perhaps as far as twelve miles from land because he said the cost of infrastructure to move such power to consumers on shore would not be onerous when compared to current transmission problems providing power to the crowded confines of the island.
But for Con Ed, which serves Westchester and New York City and which owns Orange & Rockland, Cahill said solar power might make more sense, since wind resources in the HudsonValley are problematic for practical economic and social reasons, Cahill said. The wind in the Hudson Valley does not blow consistently enough to generate sufficient power to guarantee returns on investment, especially given the high cost of land in the region, compared with upstate areas that are windier and less populated.
He cited the governor”™s energy planning commission and other groups outlining strategies toward improving the state”™s energy profiles and said he believed they should conclude that energy independence is possible.
The Iberdrola deal will have little immediate effect on electricity for Westchester and New York City said Joseph Oates, Con Ed”™s vice president for energy management. Rather than reenter the supply market, Oates said that Con Ed would like to upgrade existing supply facilities it already uses, such as perhaps upgrading a current steam boiler in Brooklyn to allow it to serve as a supplier of both steam and electricity. He said the company is also monitoring studies about possible wind turbines off Long Island and New Jersey. He said solar energy is currently still a “niche market” but said improvements and increased interest could soon create economies of scale in production that bring down costs enough to compete with traditional supply sources.Â
“You need a balance, you need a little bit of a lot of things,” said Oates, citing sources ranging from traditional power plants to new natural gas supply, as well as increased energy efficiency. “You need a kind of portfolio approach and what you get is a reliable system with environmental benefits.”