NYPA Refutes State Comptroller's Audit: Generation Projects Critical to New York City's Clean Energy Supply

May 12, 2004

Contact
Peter Barden
518-433-6734
peter.barden@nypa.gov

FOR IMMEDIATE RELEASE

ALBANY—New York Power Authority (NYPA) refuted the findings of an audit released today by the Office of the State Comptroller (OSC) regarding the Authority’s planning process for the construction of two critical energy projects in New York City.

“Energy experts agree that new, clean generation is critical to meeting the growing needs of New York City residents,” said NYPA President and CEO Eugene W. Zeltmann.  “The Power Authority is playing an important role in addressing those needs at a cost that’s reasonable to its public customers and positively regarded by the financial community.  In fact, investment analysts have recognized the Authority’s decision-making with one of the best bond ratings in the state.”

In responding to the report, NYPA stated:

• While the Comptroller’s report questions NYPA’s financial decision-making process, the investment community has consistently recognized NYPA’s solid financial and operational performance with bond ratings that are among the highest ratings in New York State. 

• No new, large-scale, base load power generation had been built in New York City for 25 years.  Consequently, no current, comparable project could be reviewed for cost estimating comparisons.  Cost increases in the 500MW power plant now under construction by NYPA reflect real market conditions which make the estimate of any large construction project imprecise until actual construction bids are received. 

• NYPA’s plan to build the 500MW plant was shown, by multiple internal analyses, external consultants’ reports and the results of a previous request for proposals, to be the best, lowest cost option to bring new clean generation on line in 2005 for NYPA’s public customers.

•  In 2001, NYPA constructed small clean power plants at six locations in New York City and one on Long Island to address forecasts of serious power shortages in the metropolitan New York region.  The plants were completed by summer 2001 and were critical in preventing brownouts and blackouts during that summer and in 2002.  They enhance the reliability of the system and contribute to air quality by often displacing older, less efficient, higher-polluting generation plants.  The project was not undertaken to produce revenue for the Authority, but to meet an urgent and compelling public need for generation before the summer of 2001.

• The Comptroller’s report supports NYPA’s construction of the small clean power plants writing that NYPA provided a crucial public service by providing “the generators and prevented blackouts” in 2001. Yet, the report’s assessment of the project’s economics failed to include the significant costs of power outages that the plants helped to avoid.

• Contrary to the assertion of the Comptroller’s report that NYPA has no operational plan for the plants, NYPA has consistently stated that the small clean power plants would operate when selected by the NYISO to meet the energy needs of New York City residents and strengthen the reliability of the City’s transmission system.

• The Comptroller’s report ignores the considerable environmental benefits of these small clean power plants and the new 500MW plant to the New York City area. The small power plants are the cleanest power sources in the city, according to a recent independent study by the nationally recognized environmental consulting firm M.J. Bradley & Associates.  Both projects are equipped with the best available environmental control technology with some of the strictest air permits in the nation.

• NYPA has maintained a willingness to review serious offers to purchase the small clean power plants, which recognize NYPA’s significant investment in the facilities. NYPA has privatized assets in the past.  In 2000, NYPA sold two nuclear plants in the largest sale of a public asset to a private company in state history.