Executive Speeches

Testimony of Eugene W. Zeltmann, president & chief operating officer of the New York Power Authority, to the State Energy Planning Board Public Hearing on the Draft State Energy Plan Albany, New York

March 5, 2002

Mr. Chairman, members and staff of the Energy Planning Board, my name is Eugene W. Zeltmann. I am the President and Chief Operating Officer of the New York Power Authority. The Power Authority owns and operates 21 generating facilities at 17 locations across New York State, with a total capacity of over 5.6 million kilowatts. It also owns and operates over 1,400 circuit miles of transmission lines and works to advance energy efficiency and the development of clean energy technologies. NYPA supplies electricity to government agencies, community-owned electric systems and rural electric cooperatives, job-producing companies and private utilities.

On behalf of the New York Power Authority, I want to express our appreciation to the Planning Board and its staff for the extraordinary amount of work that has gone into producing the Draft State Energy Plan. You should be very proud of this important policy document… and the unprecedented lengths to which you have gone to solicit a diverse selection of public opinion on the Empire State’s energy issues.

To be sure, the job of preparing the Energy Plan and producing forecasts for the next two decades is a huge challenge. The rapid dynamics of energy events make it an especially daunting task. Even the most casual observers of energy issues have undoubtedly been struck by how quickly things seem to be changing. The California blackouts and power price spikes of less than a year ago appear all but forgotten. Here in New York, it has even been suggested that we no longer need to worry about electricity supplies… despite every indication that this summer’s peak demand is expected to equal last year’s all-time record.

Major, changing, forces affect energy supply and demand. On one hand, a national economic downturn and the tragic events of September 11th have combined to slow the growth of electricity use. On the other hand, Enron’s financial problems have shaken investor confidence and dampened the financial community’s enthusiasm for power-plant construction projects.

As the economy recovers, the ongoing growth in the demand for electricity will certainly accelerate. We must take advantage of this brief respite and view it as an opportunity to prepare for the future.

Forward-looking energy policy can be a casualty of the complacency that accompanies seemingly sufficient power supplies and lower prices. Fortunately, the efforts of Governor George Pataki—including the work of the Energy Planning Board—demonstrate that New York State is working to avoid that pitfall. The Draft State Energy Plan recognizes the sustained growth of energy demand, as well as the crucial role of energy efficiency and renewable energy sources in improving air quality and cutting our dependence on foreign oil.

The blueprint for New York’s energy future should resemble a three-legged stool… one balanced on generation, transmission and energy efficiency. All three of these elements are needed to provide our state a solid foundation for economic growth and environmental protection. We will need to build new, cleaner power plants… improve and enhance our transmission system…make more efficient use of energy… and explore new—renewable—sources of power.

Last year, we all saw very clear evidence of the need for secure, reliable electricity supplies; in particular, the electricity provided by the Power Authority’s PowerNow!TM In-City Generation project.

Within moments of the September 11th attack on the World Trade Center, the New York Independent System Operator had initiated efforts to protect New York’s power supply. In that effort, the gas-turbine generators installed by the Power Authority in various parts of New York City played a vital role in preventing a widespread power failure. In response to the attacks, the ISO ordered cutbacks in the flow of electricity on transmission lines into the city and in the output of large power plants as a security precaution. NYPA's gas turbines helped make up the difference in meeting the city's needs, showing the value of smaller, dispersed generation.

The expedited installation of 10 turbines in New York City and an 11th on Long Island was intended to address imminent supply shortages in the New York metropolitan area during the summer of 2001. And they met that challenge.

During the period of extremely hot weather in August, temperatures reached 103 degrees in Central Park on August 9th—the hottest day in 24 years. Electricity use in the Con Edison system peaked at a record 12,207 mw. The state's peak energy demand reached record levels three days in a row (30,509 megawatts on Aug. 7, 30,665on Aug.8 and 30,983 mw on Aug. 9). The previous record was 30,311 mw.

As demand for electricity soared, the megawatts available from the PowerNow! generators—in conjunction with actions taken by Governor Pataki to cut state energy consumption and the state’s peak load reduction programs—helped to prevent California-style rolling blackouts in New York City and on Long Island.

Commenting on the contribution made by the NYPA turbines, William J. Museler, president and chief executive officer of the ISO, said: "From where I sat last week in the control center for the statewide power grid near Albany, those megawatts made a huge difference."

State Public Service Commission Chairman Maureen O. Helmer, in a letter to the Power Authority, stated: "NYPA's installation of gas turbines in the downstate area turned out to be crucial in meeting peak demand."

The generators installed as part of the PowerNow! Project are the world’s most fuel-efficient simple-cycle gas turbines. They are also the cleanest power plants in New York City… with more than $5 million in advanced pollution and noise controls installed on each unit—as well as on the Long Island generator.

Even though the emissions from the generators are minimal, the Power Authority volunteered to undertake an ambitious $23 million program that will more than offset emissions from the New York City units by reducing emissions from other sources in the city. We are working closely with the New York State Energy Research and Development Authority (NYSERDA) and the state Department of Environmental Conservation (DEC) on measures that will produce emission reductions totaling 227 tons per year.

The program includes a groundbreaking initiative to install pollution control systems on about 1,000 city school buses. Diesel particulate filters on the buses will exceed any legal requirements and mark New York as the first state in the nation to use such technology for a large fleet of school buses.

The Power Authority will also install eight fuel cells at four wastewater treatment plants operated by the New York City Department of Environmental Protection (DEP). The fuel cells will produce power for—and reduce emissions from—the wastewater treatment plants. The offset program will also help to deploy other emission-free electric vehicles, such as school buses and postal service delivery trucks, in the communities.

The offset program builds on the Power Authority's previous investment of $350 million in more than 600 energy-efficiency improvements at public facilities in New York City. Those projects provide annual reductions of more than 306,000 tons of greenhouse gas emissions. NYPA has also launched a major effort to counter emissions from its gas turbine in Brentwood on Long Island through energy-efficiency projects in the Brentwood School District.

To ensure a continued supply of low-cost power to its governmental customers in Southeastern New York and help to address the longer term electricity supply needs of the region, the Power Authority has applied to build a 500-mw combined-cycle plant adjacent to its Charles Poletti Power Project in Astoria, Queens. The new plant will allow NYPA to operate the Poletti Project less often, thereby reducing emissions.

Combined-cycle technology will permit the new facility to provide up to 50 percent more electricity from its fuel than a simple cycle power system could. Two turbine-generators will produce electricity by burning clean natural gas, with low-sulfur oil as a backup fuel. The waste heat from those units will be captured by two steam generators to produce additional electricity. A state-of-the-art air-cooled condenser will limit the use of water from the East River for cooling, and the latest in antipollution technology will ensure that federal Lowest Achievable Emission Rate requirements are met.

Building new power plants is not the only approach NYPA has taken in helping to improve the electricity supply picture in New York City. For the past decade, the Power Authority has been installing energy efficiency projects throughout the city. These energy-saving initiatives have cut 73.7 megawatts off peak demand. In addition to those projects, the Power Authority began—in the summer of 2000—a Peak Load Management Incentive Program for our large government and business customers in New York City.

In 2000, 17 megawatts of load reduction was committed by participating customers who cut their energy consumption when called upon to do so during peak demand periods. Last summer, our program total reached 50 MW. This summer, we are aiming to double last year’s total.

Although the projects and programs in metropolitan New York may be among the Power Authority’s most recent endeavors, it is important to remember that the core of our responsibility is New York’s major hydroelectric facilities.

The 800,000-kilowatt (kw) St. Lawrence-FDR Power Project in Massena and the 2,400,000-kw Niagara Power Project in Lewiston give New York an advantage few other states enjoy. The projects harness the energy of the Great Lakes’ water, a domestic, renewable resource, to produce some of the nation's lowest-cost electricity, providing a powerful stimulus for creating and protecting jobs while avoiding greenhouse gas emissions associated with fossil-fueled power plants.

Together, the two facilities have served as cornerstones of the North Country and Niagara Frontier economies for more than four decades, delivering impressive benefits to the people who live, work and play nearby. The St. Lawrence-FDR project serves Northern New York’s largest employers—Alcoa and GM Powertrain—while the Niagara facility powers some 100 companies in Western New York. Both projects help meet the needs of upstate consumers, and Niagara electricity is provided to municipal electric systems and rural cooperatives throughout the state for use by residents and businesses in their territories.

To ensure continued supplies of reliable, economical electricity for future generations, the Power Authority has committed more than half a billion dollars to modernize and upgrade the projects. We are also working to secure new federal licenses to continue operating them.

The original license for the St. Lawrence-FDR project, which began operation in 1958 as NYPA’s first generating facility, expires in 2003. We achieved a significant milestone on October 31st, with the filing of an application for a new 50-year license with the Federal Energy Regulatory Commission (FERC). Gov. Pataki hailed the "unprecedented level of community support" for NYPA’s application, which was the result of a cooperative approach initiated by the Power Authority more than five years earlier.

Working together, the coalition hammered out an agreement that reflects a variety of topics related to St. Lawrence-FDR project operations. In return for local support for a new license, the Power Authority has agreed to provide a series of benefits, subject to FERC approval, including a community enhancement fund totaling $115 million for localities and school districts, approximately $66 million for environmental enhancements and research, almost $20 million in recreational improvements to existing parks and new facilities, the transfer of some 600 acres currently within the project’s boundaries to local ownership—in addition to about 895 acres previously designated for return. In a separate agreement, NYPA also pledged to establish a $20 million fund to help construct a proposed aquarium and ecological research center along the St. Lawrence River in Massena.

In providing new and improved recreational opportunities for local residents and visitors to the area, the Power Authority is continuing a tradition it began when it built the St. Lawrence-FDR project. The two state parks and numerous other outdoor recreational facilities created on project lands by the Authority during construction of the hydroelectric facility established a precedent for hydroelectric developments nationwide.

To keep the power flowing in Massena, the Authority is in the midst of a 15-year life extension and modernization program at the St. Lawrence-FDR project. NYPA is replacing or renovating most of the project’s original equipment, installed more than 40 years ago, at a cost of some $254 million. Workers installed the first of 16 new turbines in the fall of 2001, just as NYPA’s relicensing application was being finalized. The improvement project, scheduled for completion in 2013, will enhance the project's operational and maintenance efficiency.

At Niagara, where NYPA’s original operating license is due to expire in 2007, a comparable upgrade, costing approximately $293 million, is scheduled for completion in 2006. All 13 turbine-generators at the project’s Robert Moses Niagara Power Plant, its main generating facility, are being replaced to assure that we have low-cost hydropower available for decades to come. The upgraded units will produce additional energy at times of greatest demand but will not increase the project’s overall output.

In the coming years, the relicensing process will intensify at Niagara, which began commercial operation in 1961. Early outreach to the local community has begun, in addition to various studies relating to project operations.

The Power Authority is also planning to invest in the modernization and upgrade of its pumped storage hydropower facility at Blenheim-Gilboa.

As steward of New York’s major hydroelectric assets, the Power Authority seeks to balance its financial and other responsibilities to the communities where its projects operate with the continuing need to provide low-cost power to the businesses and individual consumers who depend on it. NYPA is dedicated to stimulating economic development while protecting the environment. The Authority has endeavored to fulfill those commitments during more than four decades of hydroelectric operations. With new project licenses, we will continue to do so well into the 21st century.

Among the most significant results of the electricity supplied by the New York Power Authority are jobs for people of the Empire State. By the end of 2001, nearly 420,000 jobs were directly tied to NYPA power allocations, with recipients ranging from manufacturing and financial firms to universities and hospitals.

The Power Authority provides the electricity under several economic-development programs. Among the most successful is Gov. Pataki’s Power for Jobs program, which is linked to some 300,000 jobs at 700 businesses and not-for-profit institutions across the state.

When Governor Pataki signed Power for Jobs into law in 1997, it was estimated that approximately 40,000 jobs would be created or retained over three years. Power for Jobs has gone on to secure nearly eight times the number of jobs that had been initially estimated.

The overwhelming response led to modifications to the original legislation, which had made 400 megawatts of power available during the program’s first three years. The allocations were accelerated and the total amount of power was increased to 450 mw. With the original, three-year allocations set to begin expiring, another change, enacted in 2000, provided for an additional 300 megawatts to extend allocations for those expiring in 2000 and allow new allocations as well. All that power was fully allocated by mid-2001. Governor Pataki has proposed an extension of the Power for Jobs program, allowing those employers with expiring contracts to receive extended benefits from the program.

As I indicated before, one of New York State's most valuable economic-development tools is the low-cost electricity produced by the Power Authority’s Niagara Power Project. About 50,000 jobs at some 100 companies in Western New York are directly tied to the project’s hydropower, which along with NYPA’s St. Lawrence-Franklin D. Roosevelt Power Project in Northern New York provides some of the least-expensive power in the nation for businesses.

For example, Niagara hydropower is making a vital contribution toward securing the future of the General Motors engine plant in Tonawanda, which employs nearly 3,600 workers. As the largest private employer in Erie County, the Tonawanda plant is a bulwark of Western New York’s economy, generating millions of dollars annually in business and tax revenues. GM corporate headquarters in Detroit has designated the plant for a $500 million expansion for the manufacture of a new high-tech six-cylinder engine, starting in early 2003. A package of state government-sponsored incentives, including additional Niagara hydropower, helped convince GM leadership to produce the new engine in Tonawanda.

On January 28th, Governor Pataki announced a major new marketing campaign to use low-cost hydropower from the Power Authority to attract industries from all over North America to relocate and create jobs in Western New York. The available electricity—17 megawatts—is part of the "Replacement Power" block of power generated at the Niagara hydropower project. The federal Niagara Redevelopment Act established the Replacement Power program, which makes the low-cost hydropower available to industries in the Niagara Mohawk service territory that are located within 30 miles of the project. The power currently available has been relinquished by businesses no longer using the electricity or recaptured from companies unable to keep job commitments in their contracts for the hydropower. The Governor’s plan initiated a national promotional campaign conducted by an alliance of the Power Authority, the Empire State Development Corporation, Niagara Mohawk Power Corporation and the Buffalo Niagara Enterprise.

The Power Authority also supplied electricity to the Port Authority of New York and New Jersey for use at the World Trade Center. In response to the September 11th terrorist attacks, Governor Pataki signed legislation directing NYPA to provide the electricity, totaling 80 mw, to businesses dislocated by the destruction of the trade center. Employers returning to downtown Manhattan locations are eligible. The economical power is expected to save businesses more than $6 million a year. In announcing plans to make the power available, the Governor said it "will play a key role in helping these businesses get back on their feet while also keeping these important jobs right here in New York."

In addition to power generation, the Power Authority is actively engaged in the development of innovative technologies that are transforming the ways electricity is transmitted and used, with major benefits for New Yorkers.

With electricity demand steadily rising and construction of new transmission capacity lagging, the Power Authority is making a bold move in Central New York to strengthen the state’s power delivery system without building new transmission lines. The improvements will permit enough additional electricity to flow on the state’s existing transmission network to power the equivalent of 200,000 homes.

The $52 million NYPA-led effort, with the support of EPRI (Electric Power Research Institute), Siemens Transmission and Distribution and 31 electric utilities and transmission system operators, relies on state-of-the-art electronic controls to bring more power from generating plants to where it's most needed.

At NYPA’s Marcy Substation, in a building the size of a gymnasium, an array of transformers and capacitors known as a convertible static compensator (CSC) will use high-speed solid-state electronics to control both voltage, the force sending electricity through transmission lines, and power flow, permitting immediate transfers from heavily loaded lines to those with spare capacity. The CSC’s uniqueness lies in its ability to control power flows on two lines simultaneously.

The device will aid the development of the state’s deregulated electricity market by relieving mid-state transmission bottlenecks, increasing access to the grid for a growing number of power suppliers.

The key technological components—hockey puck-sized silicon discs called thyristors—control transmission on-off signals at speeds less than one cycle (1/60th of a second) of alternating current, allowing operators to respond more rapidly to changing system demand.

Completion of the project’s first phase in 2001 boosted statewide transmission capacity by 114 megawatts. When the second phase is completed, the CSC will move even more power—a total of at least 200 megawatts. NYPA and other transmission owners will be able to significantly increase their line capacity with greater control. The threat of power blackouts, with their potentially devastating impact on both public safety and the economy, will diminish. And the need for new transmission facilities will be delayed.

Technology is also driving advances in energy efficiency, as the Power Authority builds on a decade of experience in saving energy and taxpayers’ dollars through some 1,100 projects for schools, local government and state agencies. The installations range from the latest in automated climate controls and energy management systems to improved heating, ventilation and air-conditioning systems and super-efficient lighting.

Last year, NYPA’s investment in energy-efficiency topped $100 million. Under Governor Pataki’s leadership, the Power Authority has more than doubled its annual investment in energy efficiency and clean energy technologies. The completion of 90 installations in 2001 increased the energy bill savings from such projects to more than $74 million a year. The projects also help clean the air by avoiding the release of more than 500,000 tons of greenhouse gases annually. They also enhance the reliability of New York’s electric system by saving 740,000 megawatt-hours of electricity annually and reducing peak demand by 169 megawatts.

Among those projects, NYPA is providing 180,000 high efficiency refrigerators to public housing in New York City—refrigerators that use half the energy of previous models. That program not only produces environmental benefits by reducing energy consumption, we also recycle the old refrigerator parts to provide valuable waste management benefits.

We are also engaged in coordinated statewide energy efficiency efforts with NYSERDA, LIPA and the PSC, such as the "Keep Cool" program, a statewide energy awareness campaign promoting high-efficiency ENERGY STAR® products.

NYPA is working very closely with NYSERDA and other state agencies to help achieve the goals of Governor Pataki’s Executive Order No. 111, which calls for state agencies to reduce their energy consumption and increase their use of renewable energy.

To facilitate the implementation of the Executive Order, Governor Pataki proposed legislation (A.9254/S.5639) to remove regulatory barriers and enhance the availability of energy efficiency and clean energy technology programs provided by NYPA and NYSERDA. The Senate approved the legislation last year, but the Assembly has not acted. We sincerely hope that the Governor’s Program Bill will become law this year and enable schools, local governments and state agencies to take better advantage of the benefits of these valuable programs.

The Power Authority is also working on an array of innovative clean energy technologies. We have deployed fuel cells, including an installation providing clean energy to the N.Y.P.D. Central Park precinct. A NYPA fuel cell using waste gas from sewage treatment is operating in Yonkers and, as previously mentioned, several fuel cell projects are in the works for NYC wastewater treatment facilities.

NYPA is testing various microturbine applications as well. At the Town of Lewiston’s Sewage Treatment facility near Niagara Falls, the turbines will run on gases produced in the sewage treatment process which would otherwise be released into the air.

Working with the Town of Colonie, NYPA will harness greenhouse gases from the town landfill to produce nearly 3,000 kilowatts of electricity. That project builds on a NYSERDA study. We are also developing landfill gas projects with Madison and Delaware counties.

The Power Authority has also installed photovoltaic solar panels at 18 locations across the state, including the Buffalo Museum of Science and the MTA’s Gun Hill Bus Depot in the Bronx, one of the world’s largest photovoltaic projects.

NYPA’s array of electric-transportation initiatives are helping to reduce air pollution and traffic congestion as well as advance national energy independence by lessening reliance on foreign oil. The Power Authority has actively promoted the use of electricity as a clean, alternative transportation fuel, putting in service more than 250 electric vehicles (EVs). Among those vehicles are hybrid-electric transit buses, all-electric school buses, electric postal delivery trucks and small electric utility vehicles for various urban uses.

Last year, NYPA entered into an agreement with Ford Motor Company to launch an innovative EV leasing program for New York City-bound commuters. Combined with the efficiencies of mass transit, the NYPA/TH!NK Clean Commute, featuring Ford’s new TH!NK City electric cars, could provide emission-free transportation to 100 commuters at seven commuter railroad stations in the metropolitan region. NYPA’s partners in this project include the Metropolitan Transportation Authority, Metro North Railroad, Long Island Rail Road, the New York State Energy Research and Development Authority, the Long Island Power Authority, the New York State Department of Transportation, New York City D.O.T and the U.S. Department of Energy.

In summary, let me simply say that, under the leadership of Governor George Pataki, the New York Power Authority is practicing what it preaches about generation, transmission and energy efficiency. I believe the Draft State Energy Plan shares that essential sense of balance and… as a consequence… it will provide an excellent map to a better energy future for all New Yorkers.

Thank you very much.

TOP