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| ANNOUNCING... |
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| Con Edison Steam Study Continues
The State Public Service Commission (PSC), acting in part at the urging of the City and other interested parties, directed Con Edison to undertake an investment-grade study of the long-term steam production alternatives available to the company to meet its customers’ needs. This Production Study, which was required to be done by an independent engineer, was intended to complement a parallel Con Edison Steam Business Development Study. To the extent that the company steam load grows, additional internal or external sources of production will be needed to meet that growth. This is important to all the City’s energy consumers, even those who do not take steam service, as the steam system sharply reduces the peak summer load on the electric grid, thus increasing its reliability.
Worley Parsons, an energy engineering firm completed the initial phase of the Production Study in October of 2006. Phase Two of the Study is now ongoing, and Con Edison has retained an outside firm to examine the feasibility of the most promising steam production options. Ultimately, a Steam Resource Plan to meet future system needs will be filed with the PSC by Con Edison, along with a schedule for implementation. This should ensure that both the steam and electric systems benefit from a comprehensive planning process.
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| NYPA Selects Proposal for Serving Electricity Requirements of NYC Government Customers
On November 28, the Trustees of the New York Power Authority approved the selection of a joint proposal for a new transmission line linking northern New Jersey to midtown Manhattan, with generation capacity to be supplied by an existing power plant. The proposal was submitted by Hudson Transmission Partners, LLC, and FPL Energy, LLC, in response to a formal Request for Proposals to meet the power needs of the Authority’s public customers, which include schools, hospitals, municipal buildings, the subways and commuter trains, and other essential facilities and services.
Hudson Transmission Partners will build an eight-mile above-ground and underwater high voltage transmission line, with a total capacity of 660 megawatts, from Ridgefield, NJ to Con Edison’s West 49th Street substation, with a target completion date of 2010. FPL Energy will provide 500 megawatts of generation capacity from the Red Oak natural gas-fueled power plant in Sayreville, NJ. The deal will allow NYPA to meet its installed capacity requirements under the reliability rules of the New York Independent System Operator. In addition, NYPA will have the right to buy energy in the wholesale power market operated by the PJM Interconnection, which covers all or parts of 13 states and the District of Columbia.
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| Brooklyn Energy Infrastructure Master Plan Completed
As part of Con Edison’s last electric rate case, the PSC required Con Edison to prepare Energy Infrastructure Master Plans (EIMP) for large-scale redevelopment areas in its territory, in coordination with the New York City Economic Development Corporation and other agencies as well as with input from KeySpan Energy Delivery of New York. The first EIMP was prepared in 2005 for Hudson Yards and Lower Manhattan. In December 2006, Con Edison completed its second EIMP for Downtown Brooklyn, Atlantic Yards and Greenpoint/Williamsburg. The EIMP outlines the electric and gas infrastructure that would have to be constructed to accommodate the full build out of the three Brooklyn areas, taking into consideration how Demand Side Management (DSM) measures would impact long-term needs. |
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| IN THE NEWS... |
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| A New Governor
On November 7, New Yorkers elected Eliot Spitzer as their new governor by a wide margin. After running on a platform of reform in Albany, his first 100 days in office will be watched carefully.
Spitzer has elected Steve Mitnick, formerly of McKinsey & Company, as Assistant Secretary of Energy and Telecommunications. He has also created transition teams in thirteen different policy areas, including an “Energy and Environment” group. The chairs of that group are Ashok Gupta of National Resources Defense Council, Cara Lee of the Nature Conservancy, and Angela Sparks-Beddoe of Energy East Management Corporation.
In campaign speeches, Mr. Spitzer has mentioned several energy-related issues that he would like to address during his tenure: demand-side management, additional generation capacity, long-term contracts, a more diverse fuel supply, and an upgrade of transmission technologies. Spitzer has also covered telecommunications policy priorities, including developing statewide affordable broadband access between high and low-income neighborhoods.
In addition to directing policy, Mr. Spitzer will also appoint the new Chair of the PSC. The PSC is responsible for regulating all utilities in New York State. Its former Chair, William Flynn, resigned in November. |
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| EDC Energy Group at City Council Hearings
Two EDC Energy Department members testified at City Council hearings this fall.
On October 31, Vice President Gil Quiniones testified on behalf of New York City in a hearing on reducing energy demand, enhancing energy efficiency and promoting the use of clean, distributed energy. The testimony was given to the Committee on Environmental Protection and the Committee on Consumer Affairs. Quiniones’ testimony covered city advocacy and actions on several fronts: funding for several demand-side management programs, the continued work of the Energy Policy Task Force, efforts on efficiency in City properties, and peak load management.
On November 21, Assistant VP Jenifer Becker testified on behalf of the City in front of the Committee on Environmental Protection. Her testimony covered EDC’s Green Desk, which was created in September 2005. The mission of the Green Desk is to support and enhance the local green manufacturing sector as the city experiences an increase in the demand for environmental building materials increases.
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| Commission Report on the Future of NYS Power Programs for Economic Development Released
On December 1st, the Temporary Commission on the Future of New York State Power Programs for Economic Development (see previous newsletter for details on the Commission) submitted its final report to the Governor and Legislature. Noteworthy recommendations are as follows:
- All applicants should receive a common application and be judged by one set of criteria with ESDC managing the programs (the Municipal Distribution Agency – MDA – power program will continue to be managed separately)
- A new and more holistic selection criteria should be established with an emphasis on businesses whose ability to remain competitive is largely impacted by energy costs
- Contracts should have a term of no less than seven years
- Earnings for unallocated Replacement/Expansion/Preservation power should be split 50/50 with half going towards economic development in a statewide pool
- NYPA should facilitate expansion of the state’s energy infrastructure to increase the supply of low cost power in and into the state to bring down energy costs for all New Yorkers
- Hydropower currently allocated for “rural and domestic” use should be redeployed to the statewide pool of economic development power programs
The report is advisory in nature and many of the recommendations will require legislation to take effect.
For more information, view the complete report.
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| Update on the PSC Investigation into the NW Queens Blackout
On October 12th, Con Edison released a 600 page report on its findings regarding the July 2006 northwest Queens blackout. Con Edison’s basic conclusions were that 1) the outage was caused by an unprecedented sequence of unique and unrelated events beginning with a service box fire; 2) due to the complex and redundant design of the Long Island City network, Con Edison’s ability to provide timely and accurate outage information was hampered and thus led to the extensive underreporting of customer outages; and 3) maintaining the Long Island City network throughout the event rather than shutting it down minimized the impact on hundreds of thousands of New Yorkers.
The report also includes 16 recommendations that cover both infrastructure investments to reduce the risk of another outage and improved customer assistance and outage reporting.
The Department of Public Service staff’s draft report was filed with the Commission on December 21st. Active parties, including the City of New York, are filing Comments to the draft report now. The final report with recommendations is expected to be filed with the Public Service Commission by January 17, 2007.
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| Con Edison Files Gas Rate Case Proposal
In early November, Con Edison filed a natural gas rate case proposal with the State Public Service Commission (PSC). The company seeks to increase gas rates by a total of nearly $197 million, and outlines a suggested three-year rate plan, which would cover the period October 1, 2007 through September 30, 2010.
Con Edison’s proposal would mean an overall 10.7% rate increase. That percentage increase would be in total customer bills, but as gas commodity costs are passed through, the actual proposed increase in company delivery rates is significantly higher, and will be subject to careful review in the PSC case.
The company is seeking a return on equity of 11.6%, compared to the 10.3% return in current rates. The rate filing also identifies other principal drivers that the company states are the basis for increased expenditures: operation and maintenance costs, carrying costs on new gas plant, property taxes, labor costs, depreciation expenses, environmental remediation costs, and various other expenses.
The City of New York and EDC, as well as numerous other Con Edison gas customers, will be actively involved in the PSC’s rate case proceeding. It is important that the natural gas infrastructure be reinforced as needed to ensure its reliability, and the company is entitled to a reasonable rate of return. However, there will also need to be careful scrutiny of the justifications offered for the considerable rate increases that are sought in the filing. The PSC case will be conducted over the next several months.
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| TECHNOLOGY CORNER... |
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Save money and energy this winter with these conservation tips:
- Lower your thermostat
- Clean your furnace filters monthly
- Use an automatic timer on outside holiday lights
- Close blinds and shades at night to retain heat
- Use only cold water when you do laundry
- Turn thermostats down if away for a few days or more
- Install low-flow showerheads and faucets
- Close chimney flues in fireplaces
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| For more information or to subscribe, please contact akling@nycedc.com or go to www.nycedc.com. If you'd like to receive Energy & Telecom News regularly subscribe now (if you prefer a text-only version, please indicate that in the subject line). If you no longer wish to receive Energy & Telecom News, unsubscribe and indicate so in the subject line. |
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