Executive Speeches

Remarks of Eugene W. Zeltmann, President and Chief Executive Officer of the New York Power Authority, at the annual conference of the Municipal Electric Utilities Association of New York State, Fairport, New York

September 15, 2004

Thanks very much—it’s a pleasure to be here with you. 

Let me begin by passing on the best wishes of Governor George Pataki for a successful 74th Annual Conference.

I also want to commend you for your choice of this beautiful conference site—served with Power Authority electricity supplied by the Fairport municipal electric system.  If the lights here seem a little brighter, it’s because they’ve been turned on by public power.

Fairport is one of the Power Authority’s oldest and largest municipal system customers and is, of course, a longtime leader in your Association and in the public power movement.  It’s fitting that the Power Authority’s newest Trustee is a Fairport resident—Michael Townsend, who joined the Board last February after his nomination by Governor Pataki and confirmation by the State Senate.

Fairport’s public power tradition is also being carried on by Mayor Clark King and System Administrator Ken Moore. Ken’s tenure as MEUA President this past year has been a time of ongoing progress in the relationship between our organizations, and we greatly appreciate his vital and constructive role—along with those of Bob Mullane and the other members of your Executive Committee.

Their work has certainly been in line with the theme of this conference—“Building Bridges for Future Opportunities.”  Let me tell you, building bridges is a lot better than burning them.  And the MEUA and NYPA are in the building mode.

The fact is, we have a great deal in common.  We both believe in public power.  We both believe that reliable, low-cost electricity is a vital force in strengthening a community and a huge incentive in creating and retaining jobs.  We’re both committed to a clean environment.  And we’re both determined to create a better future for the people we serve.

Our Global Settlement will go a long way toward creating that future.  With the contract extensions that were at the heart of the settlement, your Niagara power is now secured through 2025 at cost-based rates.

It’s hard to believe, but the deadline for filing our application for a new federal license for the Niagara project is August of 2005—less than a year from now.  We hope to have a conceptual agreement with the stakeholders in the relicensing process by January and to circulate a draft application for review in February.  So this is a busy—and important—time.

Meanwhile, we’re moving ahead in our $300 million Niagara modernization program. Work is just about complete on the overhaul of the 11th of the 13 turbine-generator units at the project’s main generating plant and we’re on schedule to complete the program in 2006.

Our goal, then, is not only to obtain a new license for Niagara—but also to make sure that the project operates at maximum efficiency for many years to come.

While the continued supply of low-cost Niagara power is central to our relationship, the Global Settlement also calls for us to work together in three other critical areas—economic development, clean transportation and energy efficiency.  We’re making progress in each.

Of the 54 megawatts of hydropower originally available under our economic development program for municipal systems and rural cooperatives, only about 16 megawatts have been allocated thus far.  The power has gone to 17 systems and has led to the creation of more than 2,000 jobs.

A committee of municipal system, cooperative and NYPA representatives has been working to modify the allocation guidelines—chiefly to encourage greater participation by small systems and small businesses—and to identify ways to better promote the program.

Here’s what will happen if the committee’s recommendations are approved by your Executive Committee, our Trustees and the other parties:

• We’ll use hydropower to meet the first 100 kilowatts of a system’s economic development program load and half its program needs beyond that.  This would be a big change from the current system—in which hydropower accounts for 50 percent of the entire allocation.

• We’ll also set the minimum hydro allocation under the program at 100 kilowatts—rather than the current 200.

• And we’ll expand the program to permit allocations not only for industrial loads—as at present—but for various other customers ranging from research and development facilities to agricultural and tourism businesses, headquarters operations and non-profit organizations.

This new approach also envisions aggressive national and international marketing of the program—involving Empire State Development, the American Public Power Association and other organizations.

The changes should enable us to take maximum advantage of an unparalled asset—Niagara hydropower—to bring new businesses and new jobs to your service territories.  My thanks to your representatives on the committee—Jim Hamilton, Bob Greene, Mayor George Rivers and Bruce Stevens—for a great job as part of this effort.

We’re also moving ahead on the clean transportation front as we work to improve air quality and cut our dependence on foreign oil.

You’ll recall that the Power Authority has earmarked $1.2 million in loans to help the state’s municipal electric systems and rural cooperatives purchase electric or hybrid-electric vehicles.

Bob Mullane got things started by obtaining a Toyota Prius hybrid for use by the MEUA.

The Villages of Boonville and Fairport have since acquired their own Priuses—and we received word last week that the Village of Springville has decided to purchase one.  The Village of Rouses Point has an order in for the new Ford Escape—a hybrid SUV.  And the Village of Spencerport is awaiting delivery—possibly this week—of a John Deere E-Gator—an electric all-purpose utility vehicle.

As promised, we’ve recently broadened the program to include DaimlerChrysler’s GEM neighborhood electric vehicle and the Chevrolet Silverado—a mild hybrid pickup truck that comes equipped with 120-volt outlets that can be used to power outdoor equipment such as electric lawnmowers, hedge trimmers and chain saws.

That feature of the Silverado could become particularly appealing in light of our new “Green Care Clean Air” program that I’m pleased to announce this afternoon.

Under this initiative, NYPA will offer rebates of up to $1,000 to all municipal systems and rural co-ops for the purchase of electric outdoor equipment.  As with our clean vehicle partnership with the MEUA, the outdoor power equipment electrification program is intended to help your systems lead by example.  It will demonstrate your commitment to helping our nation enhance energy security by reducing the use of fossil fuels, to improving environmental quality by reducing emissions and to reminding everyone that electricity offers clean, affordable energy—especially when it’s electricity from municipal electric systems served by NYPA hydropower.

The emissions produced by gasoline-powered lawn care equipment are significant, in large part because such equipment has been an overlooked—and often unregulated—source of pollution. The California Air Resources Board estimates that a single lawnmower emits pollution equivalent to that from 40 new automobiles.  Emissions from gasoline-powered lawnmowers include hydrocarbons (which contribute to smog), particulate matter (which can harm respiratory systems), carbon monoxide (which is poisonous) and carbon dioxide (which is a greenhouse gas).

Personally, I’ve been using an electric lawnmower to cut my grass for many years. In fact, my own electric mower is so old, you can’t even buy that model anymore. But there are a good number of newer corded and cordless mowers available today, along with a great variety of other types of electric lawn care equipment.

As I mentioned earlier, energy efficiency is another area in which we want to build on our partnership—as called for in the Global Settlement.

And so—with the approval of your Executive Committee—I am also pleased to announce a major new initiative to expand the benefits of energy efficiency for your systems.

In partnership with you, we will embark on a full-blown effort to evaluate potential energy efficiency projects in the New York State communities served by public power.  Together, we’ll look at the way your residential, commercial and industrial customers use electricity—with an eye toward helping them use it better.

The plan as of now is to begin with the larger systems in the hope that some of the data can be applied to the smaller ones.  In any case—after we’ve conducted the evaluations—we’ll recommend energy efficiency measures for individual systems and help you implement any or all of the options you choose.

We expect to begin the energy efficiency assessments by the end of the year—working hand-in-hand with participating systems.

Now, I know what some of you must be thinking:  “How does it pay to conserve when we have some of the least-expensive electricity in the world?”

The key is to look at this on a systemwide basis rather than just considering the cost at the retail meter.  This, of course, is related to the fact that each of your systems now purchases incremental power at prices well above those for your hydro.

In 2003—as a group—the 14 municipal and cooperative systems that obtain all of their electricity from the Power Authority met 81 percent of their needs with Niagara hydropower.  Yet that power accounted for only 48 percent of their total demand and energy costs, with the remainder of those costs—more than half—linked to incremental power.

These are pretty dramatic numbers that I assume apply at least generally to the partial-requirements systems.  They clearly show the value of stretching your hydropower through energy efficiency and efforts to manage and reduce peak load.

Also, let’s not forget the potential threat of shortfalls  in your hydro allocations due to low water flows. True, things have been going well lately—and we’re not anticipating any cutbacks over the next six months.  But—as we all know from recent experience—this could change.  Energy efficiency can help you do more with smaller amounts of hydro so that if and when there are shortfalls, they won’t have as big an impact.

Of course, you’re hardly newcomers when it comes to energy conservation.

You can point to past accomplishments in the Button Up and Watt Buster programs and, more recently, in the Keep Cool air-conditioner bounty initiative.

This year, NYPA and 13 of your members joined to purchase nearly 1,100 trees under our Tree Power program.  The total of new trees planted in the state’s municipal and cooperative territories stands at about 30,000 since the program began in 1991.

Some people think of Tree Power only as a beautification project—and that’s an important part of it.  But it’s also a big help in saving energy and money.  In fact, a study by the Lawrence Berkeley National Laboratory a few years ago found summer temperatures to be as much as six degrees cooler in tree-shaded neighborhoods—cutting the use of electricity for air conditioners and fans.

By the way, I was gratified by the favorable media coverage of our program this summer—including articles in some of your local newspapers and even a brief item in USA Today.  I think this reflected very well on our partnership—and showed interest in what we do and in the general subject of energy conservation.

We begin our new program at a time when the benefits of aggressive energy efficiency have never been more evident.

Between 1850—when energy use began to intensify as part of the Industrial Revolution—and 1970, the number of people living on our planet more than tripled while the energy they consumed increased some 13-fold.  By last year, the world’s population had grown another 70 percent, and yet—thanks to efficiency measures—energy use had increased by only 55 percent.

In the United States, if we used as much energy per dollar of gross domestic product in 2003 as we did in 1970, our energy consumption last year would have been nearly double what it was.  Energy efficiency measures implemented since the 1970s saved this country an estimated $400 billion in 2003 alone.

Not only are the savings immense, but energy efficiency also contributes to national security and a cleaner environment.  All things considered, it might be the biggest energy boon since Prometheus stole fire from the gods.

A few years ago USA Today surveyed its readers to find out what people thought was “the greatest invention of all time.”  The overwhelming response was something we rarely think of as an invention: electricity.

But electricity is not just a great invention—it’s a precious resource. And no electricity resource is more precious than your Niagara hydropower.

Our new energy efficiency initiative will help to ensure that this power is used as wisely as possible and to the greatest benefit.  But it will do even more than that.

Along with our growing cooperative efforts to strengthen economic development and promote clean transportation in your communities, it will make our relationship a model for the nation of what public power can accomplish at its very best—of what it can accomplish by “building bridges for future opportunities.”