New York State Electric Infrastructure to Get Multibillion-Dollar Upgrade?

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Momentum is building for a potential multibillion-dollar upgrade to New York State's electric system. New York Governor Andrew Cuomo's office received an "overwhelming response" to his call for potential new generation and transmission projects, dubbed the "New York Energy Highway." Non-binding project proposals were due May 30, and the response was so great that the governor's office was unable to release a summary of the submissions by last Friday, as it had planned. The governor's office said it would post a summary of the submissions soon.

Cuomo had been advocating investment in generation and transmission to better balance the state's electric system. Upstate and western New York have surplus generating capacity, but transmission bottlenecks limit the amount of the electricity that can be delivered where it is most needed--downstate New York, including the five boroughs of New York City, as well as Westchester County and Long Island. Those bottlenecks help drive up the cost of electricity in New York City and Long Island. Earlier this year, Cuomo proposed a "New York Energy Highway" as a public-private partnership that would develop generation and transmission projects to improve the state's electric market.

"Building a new energy highway for New York State will not only create thousands of jobs, but lay a new foundation for future economic growth," Governor Cuomo said in unveiling his New York Energy Highway idea. "If we want to truly make New York State open for the businesses of tomorrow, we cannot rely on the power supply of yesterday. ... The energy highway is a prime example of how state government is now partnering with the private sector to create jobs and generate economic growth."

As outlined by Cuomo, the energy highway could include new generation and transmission projects.The governor has said that out-of-state projects that benefit the Empire State will be considered. The state is keen to make renewable resources part of the state's energy highway, along with constructing grassroot natural gas-fired generation and repowering existing generation with natural gas. More than 500 parties attended an April workshop held by members of the state's task energy highway force to learn more about the initiative.

In response to Cuomo's call, the state reportedly received more than 75 non-binding proposals. No agency or utility has issued a public statement on what was submitted. But one proposal was leaked to the media: a $2.5 billion project involving the state's largest public and private electric utilities, according to reports in the Buffalo News and the Albany Times Union. The project is said to involve about $400 million in new generation construction and $2.1 billion in new and upgraded transmission facilities.

This leaked proposal was reportedly put together by a newly created entity called New York Trans Company, which is said to include: • Consolidated Edison Incorporated (NYSE:ED) (New York, New York)

• National Grid plc (NYSE:NGG) (Waltham, Massachusetts), a unit of National Grid (LSE:NG) (London)

• Central Hudson Gas and Electric Corporation (Poughkeepsie, New York), a unit of CH Energy Group Incorporated (NYSE:CHG) (Poughkeepsie, New York)

• New York State Electric and Gas Corporation (Rochester, New York), a unit of Iberdrola S.A. (MCE:IBE) (Bilbao, Spain)

• New York Power Authority (Albany, New York)

• Long Island Power Authority.(Uniondale, New York)

"The (state's) transmission problem did not occur overnight," Kevin Cahill, chairman of the State Assembly Energy Committee, said in a late-May statement supporting New York Trans Co.: "The state has more than enough power to meet our electricity needs. One of the biggest problems of the deregulated energy market has been the failure to take on the transmission bottlenecks that existed for decades, costing New Yorkers billions in unnecessary charges."

The New York Trans Co. proposal "will immediately help create and sustain thousands of jobs across the state and insulate New York from the inevitable rise of natural gas prices and the growing demand for electricity as our economy continues to improve," Cahill continued. The Trans Co. projects, which he did not specify, "will make better use of New York's resources by opening up new markets to struggling upstate generators, which are critical to many communities that rely on them for property taxes and good paying jobs."

Cahill added that the Trans Co. plan "also establishes the framework for a future without Indian Point." Indian Point is a two-unit, 2,069-megawatt (MW) nuclear power plant located about 40 miles north of Manhattan that Gov. Cuomo has vowed to close when its licenses expire in 2013 and 2015. Indian Point is operated by the nuclear unit of Entergy Corporation (NYSE:ETR).

The Trans Co. proposal is said to be based on a study begun in 2008 by the state's power companies. That study, released earlier this year, suggests that more than one-third of the state's high-voltage transmission system will need to be replaced over the next 30 years at an estimated cost of $25 billion.

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