Message-ID: <28748470.1075861195032.JavaMail.evans@thyme> Date: Mon, 26 Nov 2001 09:40:32 -0800 (PST) From: jaime.gualy@enron.com To: benjamin.rogers@enron.com Subject: FW: New Power Plant Planned for New York City Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Gualy, Jaime X-To: Rogers, Benjamin X-cc: X-bcc: X-Folder: \BROGERS (Non-Privileged)\Rogers, Benjamin\Deleted Items X-Origin: Rogers-B X-FileName: BROGERS (Non-Privileged).pst Didn't know if you received this e-mail service. -----Original Message----- From: =09Energy Industry Issues Newsletter @ENRON On Behalf Of IssueAlert@SCIENTECH.COM Sent:=09Monday, November 26, 2001 11:02 AM To:=09ISSUEALERTHTML@LISTSERV.SCIENTECH.COM Subject:=09New Power Plant Planned for New York City =09=09[IMAGE]=09 [IMAGE]=09 [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] =09=09 [IMAGE]=09[IMAGE] =09 [IMAGE]=09[IMAGE]=09 =09[IMAGE] [IMAGE] [IMAGE] [IMAGE][IMAGE] [IMAGE][IMAGE] [IMAGE][IMAGE] = [IMAGE] [IMAGE] [IMAGE] November 26, 2001 New Power Plant Planned fo= r New York City By Will McNamara Director, Electric Industry Analysis [N= ews item from Energy Info Source] New York state's siting board approved As= toria Energy's plans to build a 1,000-megawatt power plant in New York City= , clearing the way for construction to begin as early as January. Astoria E= nergy hopes to have the natural-gas-fired, combined-cycle plant that will b= e at an existing oil terminal in the Astoria section of Queens in service b= y 2004. The company must do a certain amount of demolition and site prepara= tion before it can begin construction, and still must receive some local pe= rmits from New York City. Astoria Energy is a unit of SCS Energy LLC, a pri= vately owned energy development company based in Concord, Mass. Analysis= : The announcement of a new power plant scheduled for the New York City are= a should be evaluated within the context of severe power supply problems th= at have been identified within this region. Like California, New York also = suffers from a supply / demand imbalance. However, even if or when power su= pply can be increased in New York, the core load center of New York City st= ill suffers from inherent transmission deficiencies that continue to take t= heir own toll on the stability of the market. In other words, transmission = capacity in the region has been determined to be deficient to the extent th= at power outside of the city cannot be reliably imported. The fact that Ast= oria Energy has received approval from New York state's siting board to pro= ceed with this New York City-based plant is significant, but it should not = be forgotten that the company also must receive local permits from city gov= ernment. This could be easier said than done, as other planned power plants= in the area have been blocked or significantly altered over the last year = by community groups in New York City and surrounding boroughs who ardently = voice concerns about environmental and other ramifications of new plant con= struction. The problems within the New York power market have been well d= ocumented. The state of New York reportedly has not brought a new plant onl= ine since 1996, when a 200-MW plant opened in Brooklyn. It has been almost = seven years since 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 ability to meet increasing demand for power have gained momentum. = Pressure has been placed on New York regulators to expedite the approval st= eps for siting new plants in the state. However, at the same time, environm= ental and community groups closely guard the proposals for new plants and o= ften lobby for limitations on how and where the new plant will produce powe= r. While the entire state of New York is subject to shortages, the probl= em appears to be particularly acute in New York City. A November 2000 repor= t issued by the Federal Energy Regulatory Commission (FERC) entitled "Inves= tigation of Bulk Power Markets, Northeast Region," highlighted specific cap= acity problems in the New York City/Long Island community of 11 million peo= ple. These areas are particularly vulnerable because they are isolated from= most of the state's grid, the study said. Like Northern California, which = suffered rolling blackouts due to transmission constraints, New York City a= nd Long Island can only import limited quantities of power on constrained t= ransmission lines. Hydro and fossil resources are plentiful in upstate New = York, but cannot reach the city. Being both densely populated and heavily r= esidential, it is difficult to site new power plants in the area. Consequen= tly, 80 percent of the power that the city consumes is generated by the cit= y. New plants such as the one by Astoria Energy are being proposed because = New York City reportedly will be short of its generating capacity needs at = times during the course of 2002. The projected shortfall is expected to inc= rease by another 200 MW by summer 2002. Increased demand is causing addi= tional problems for the energy markets of New York City and New York State.= Demand in the state rose by 2,700 MW from 1995 to 2000, or 2.5 times as fa= st as new generation capacity was added. Demand over the course of 2001 was= expected to reach 31,100 MW, or about 3.7 percent above regulators' earlie= r forecasts. It is within this market context that Astoria Energy will p= roceed with its plans for the new power plant in New York City. Astoria Ene= rgy is a private company seeking to generate electric power with energy-eff= icient and environmentally sound technologies in the New York City area. Th= e company is a subsidiary of SCS Energy, a privately owned energy developme= nt company formed in 1998 for the purpose of developing and owning new elec= tric generating facilities. Information obtained from Astoria Energy sheds = some additional light on the proposed plant. As noted, the 1,000-MW unit wi= ll be a natural gas-fired facility, which will obtain natural gas supplied = from the ConEd/New York facility pipeline. The capital cost for the plant r= eportedly will be $600 million. Commercial operation, pending the necessary= approvals on the 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 because it will be using a technology that is specifically ge= ared toward the reduction of air emissions. However, despite this optimi= sm, the community opposition factor should not be discounted, and there are= several examples that may foreshadow the opposition that Astoria Energy co= uld face. Take Sithe Energies, for example, which hit a roadblock with its = construction plans in the New York area earlier this year. Sithe Energies o= riginally planned a 827-MW combined-cycle facility fueled by natural gas in= Ramapo, N.Y. Chief among the concerns of local residents is that the Ramap= o plant was originally planned to run all the time to meet demand, and as a= result would use local water resources for cooling purposes. Community res= istance thus became an issue for the company, which altered its plans and b= egan to consider a 510-MW peaking unit (also powered by natural gas) that w= ould only be operated in times of increased demand. As another example,= environmental and community groups won a victory in court just last week t= hat essentially will block construction of small power plants in the South = Bronx, Brooklyn, Queens, and Long Island areas. Each is a 44-MW plant, thou= gh 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, claiming (among other th= ings) that the state had failed to perform adequate environmental-review st= udies. The groups claim that the state should test the plants for their out= put of fine particulate matter. A lower court had ruled in favor of the sta= te, but a judgment last week in the New York Court of Appeals was clearly a= win for the environmental and community groups. The new ruling, which repo= rtedly cannot be appealed further, says that the state must do unprecedente= d air tests at the 10 plants or shut them down by Jan. 31. 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 enough megawatt= s to support a truly competitive wholesale electric market until 2008. NYSE= G, in a report issued late Wednesday, warned there are "serious problems wi= th (New York's) generation supply and a lack of transmission and pipeline i= nfrastructure." According to data included in a separate report by the New = York ISO, which manages the state's transmission grid, between 1995 and 200= 0, while statewide demand in New York rose by 2,700 MW, generating capacity= under contract in the state reportedly increased only by 1,060 MW. Cons= equently, given all of these factors, power supplies in New York remained s= trained and the area certainly could benefit from the construction of new g= eneration capacity. However, Astoria Energy, which seeks to bring new gener= ation online in New York that will be based on clean technologies, may stil= l face an uphill battle from various groups that seemingly oppose the const= ruction of any new plants in the region (with the exception of peaker units= , whose output would be closely regimented). If plans for this plant are bl= ocked or significantly altered, following the experience of Sithe Energies,= the options to resolve New York City's supply / demand imbalance will once= again become focused on a combination of other approaches, including conse= rvation efforts and reliance on distributed generation alternatives. An = archive list of previous IssueAlert articles is available at www.scientech.= com We encourage our readers to contact us with their comments. We look= forward to hearing from you. Nancy Spring Reach thousands of utility an= alysts and decision makers every day. Your company can schedule a sponsorsh= ip of IssueAlert by contacting Jane Pelz at 505.244.7650. Advertising opp= ortunities are also available on our Website. Our staff is comprised of = leading energy experts with diverse backgrounds in utility generation, tran= smission and distribution, retail markets, new technologies, I/T, renewable= energy, regulatory affairs, community relations and international issues. = Contact consulting@scientech.com or call Nancy Spring at 505.244.7613. = SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let = us know if we can help you with in-depth analyses or any other SCIENTECH in= formation products. If you would like to refer colleagues to receive our fr= ee, daily IssueAlert articles, please register directly on our site at sec= ure.scientech.com/issuealert . If you no longer wish to receive this dail= y e-mail, and you are currently a registered subscriber to IssueAlert via S= CIENTECH's website, please visit http://secure.scientech.com/account/ to = unsubscribe. Otherwise, please send an e-mail to IssueAlert , with "Delet= e IA Subscription" in the subject line. SCIENTECH's IssueAlert(SM) artic= les are compiled based on the independent analysis of SCIENTECH consultants= . The opinions expressed in SCIENTECH's IssueAlerts are not intended to pre= dict financial performance of companies discussed, or to be the basis for = investment decisions of any kind. SCIENTECH's sole purpose in publishing it= s IssueAlert articles is to offer an independent perspective regarding the = key events occurring in the energy industry, based on its long-standing re= putation as an expert on energy issues. Copyright 2001. SCIENTECH, Inc.= All rights reserved.=09 [IMAGE]