New York’s Power Woes and Deregulation’s Impact
Energy demands are on the rise in the tri-state region, and funding is more important than ever for the necessary infrastructure upgrades.
Published July 1, 2001
By Allison L. C. de Cerreño, Ph.D., Mahmud Farooque, and Veronica Hendrickson
Academy Contributors
In-State Generation
TREND: Increasing Demand, Dwindling Reserves
A generation reserve margin of 18% of peak load is recommended to ensure reliable and continuous power supply for NY. Peak demand has been rising at a rate between 1.2 to 1.4 percent per year while generation capacity has remained fixed at its 1999 levels.
IMPACT: More Dependence, More Problems
In-state reserve margins will shrink from a current 14.9% above peak to a dangerously low 8.4% by 2005 without any new generation. Electricity from out-of-state sources, currently at 3%, will have to make up the deficit, making NY’s power system vulnerable to meteorological, technological, financial and political uncertainties of neighboring regions. Out of commission dirtier in-state units and backup diesel generators will need to be brought back on-line, worsening the current levels of CO2, SO2 and NOx emissions.
Power Grid
TREND: Alone and Caught in the Red
Bureaucratic and political opposition has stalled construction as well as replacement of power lines in NY, leading to a near 10% reduction in circuit miles between 1993 and 1998. Unlike NJ and CT, which belong to regional transmission organizations, NY stands alone, and therefore, plans alone to mitigate its overloaded conditions.
IMPACT: At Capacity and Skating on Overload
Wholesale buying and selling of power requires complex, crisscrossing flows of electricity over long distances. Imported power from Canada is sent via one 300 kilometer 345kV line running from Marcy to New York City. It is at capacity 25% of the time and skating within 100 megawatts of overload for much of the rest. The blackout of 1965 resulted from the loss of a single 345kV line that routed power from Niagara to New York City.
New York City and Long Island
TREND: Demand Grows, Capacity Stays Constant
NYC and LI have become “load pockets”: areas where the import capability of the transmission system, together with the local generation capacity, is insufficient to meet electricity demand at all times. Local generation is required to be at a minimum 80% and 98% of the projected peak in NYC and LI respectively.
IMPACT: Need “In-city” and “On-island” Generation
Between 2001 and 2005 the peak demand will likely increase close to 6%. NYC and LI are running a current deficit of 397 and 131 MW respectively in local generation capacity, which would rise in the coming years unless new plants are built.
What Deregulation Promised: Industry Begins to Get Price Relief while Residents Wait
Deregulation of the airline industry in 1978 brought dramatic reductions in airfare. Between 1980 and 1990, average passenger fares fell by 28%. Unbundling of the local telephone service from long-distance in 1982 also triggered increased competition in the telecommunications industry and drastic reduction in price.
Deregulation of the electric utility industry, initiated through the 1992 Energy Policy Act, is beginning to bring significant rate reductions for industrial customers, though not so much so for residential customers, particularly in the Tri-State region. Between 1993 and 1999, average price for electricity in the region in current dollars dropped by 13.7% for industrial customers but increased by 0.6% for residential customers.
Also read: The Economics of the Region’s Energy Consumption
Sources
- Edison Electric Institute, Statistical Year Book, 1993-2000; New York Independent System Operator, Power Alert: New York’s Energy Crossroads, March 2001
- Bureau of Transportation Statistics, National Transportation Statistics, 2000; Energy Information Administration, Electric Power Annuals, 1993-1999
- Federal Communications Commission, Trends in Telephone Service, 2000
