Executive Speeches

Remarks of Eugene W. Zeltmann, President and Chief Executive Officer of the New York Power Authority, at the Energy in Schools Conference, Albany, New York

November 18, 2004

Thank you and good afternoon, everyone.  And thanks to Peter Smith and NYSERDA for serving as the lead sponsor for this important and timely conference.

It’s great to see all of you here.  Your presence underscores just how important a reliable, affordable and clean energy supply is for our schools.

When you turn to energy efficiency and clean, renewable power sources to meet your needs, you’re contributing to vital state and national goals such as improving the quality of our air and cutting our dependence on foreign oil.

And for schools, the benefits of sound energy management go a lot further than that.  As you well know, every dollar your districts don’t have to spend on energy is a dollar that can be spent on textbooks, teaching, testing or other quality programs and on extracurricular activities.

I know it’s sometimes difficult for an individual school district to achieve the goals we all seek.  But fortunately—under Governor Pataki’s leadership—New York State is acting aggressively to help the schools—as well as business and residential consumers throughout the state—pursue solid options for a secure, economical and clean power supply.

I’d therefore like to begin by discussing a couple of the statewide initiatives that are moving forward.  I’ll then talk about some ways in which my organization, the New York Power Authority, is working to help schools throughout the state meet their energy objectives.

Less than two months ago, the state Public Service Commission approved an order requiring that, by 2013, at least 25 percent of the electricity used by retail consumers in the state come from clean, renewable sources. These could include hydroelectric, biomass and biogas, wind, fuel cells and solar projects.  The order envisions that the last three could be used at individual customer sites—such as schools.

Governor Pataki proposed the renewable power standard in his State of the State address last year.  The PSC acted after extensive public hearings and discussion and is looking to implement the program just a little over a year from now—at the beginning of 2006.

The state already has a good head start toward meeting the standard—more than 19 percent of its retail power now comes from renewable sources.

I’m happy to note that the Power Authority’s two large hydroelectric projects on the Niagara and St. Lawrence rivers account for most of that total.  Thanks largely to these facilities, more than 80 percent of the electricity the Authority now generates is in the form of renewable power.  And we supply more than half of the renewable energy sold at retail in the state.

We’re working hard to make sure our two great hydro projects operate at top efficiency for many years to come. We received a new 50-year federal license for the St. Lawrence-FDR project last year and we’re now heavily involved in a relicensing effort at Niagara—where the current license expires in 2007. We’re also investing a total of more than half a billion dollars in modernization programs at the two projects.

The fact is, though, that the state has no undeveloped hydro resources on even close to the scale of Niagara or St. Lawrence.  And to meet the 25 percent standard by 2013 will require the addition of about 3,700 megawatts of renewable energy capacity.

While new small hydro facilities can help us get there, it’s clear that those of us in the power business will have to focus on other forms of green power and that power marketers and customers like yourselves will have to express your strong preference for renewable energy.

True, there’s generally a cost beyond what you’d otherwise pay for electricity.  But that will be absorbed through a modest system benefits charge on investor-owned utility bills—the same mechanism used now to fund the utilities’ energy-efficiency programs.

With prices for natural gas, oil and coal at high levels and subject to extreme volatility, the increased use of renewable resources could well result in overall bill savings.  And that’s not even accounting for the vital benefits in terms of cleaner air, reduced use of oil and other fossil fuels and an incentive for renewable energy companies to locate in the state and provide jobs for New York workers.

The renewable portfolio standard is one of a series of measures the state has taken to encourage the use of clean power sources, some of them right at a customer’s location.

Just a little over two weeks ago, the PSC gave a big boost to on-site power—known as distributed generation—when it approved expanded, uniform standards to connect such sources to the investor-owned utilities’ delivery networks.  The size of generators coming under the new rules will increase from 300 kilowatts to 2,000—or 2 megawatts.

As it happens, 300 kilowatts is probably enough to meet the needs of many schools.  But the hefty jump in the minimum level—and in the type of utility distribution lines that can be connected to the DG sources—will enable more large customers to take advantage of such options in New York.  This, in turn, should bring down costs of the various DG technologies and encourage increased use.

The Power Authority is a national leader in promoting distributed generation. In 1997—at the Westchester County sewage treatment plant—we installed the first commercial fuel cell in the world to run on anaerobic digester gas produced in the treatment process.  We’ve since gone on to put in eight similar units at sewage treatment plants in New York City.

We also own and operate several fuel cells that run on natural gas—including one at the Central Park police station that kept right on operating during last year’s blackout because it’s not connected to the power grid.  We have a number of other natural gas fuel cells in the works, along with an expansion of our microturbine fleet and development of various projects that will run on landfill gas.

Meanwhile, we’ve installed solar photovoltaic projects at 18 sites throughout the state—a third of which are public schools.  And we’re looking at additional solar projects.

We believe that the continuing evolution of competition and customer choice in the New York State power markets provides an extraordinary opportunity for increased reliance on clean new sources of generation.  And we’re convinced that the state’s schools are uniquely placed to capitalize on that opportunity.

In a word, we’re very excited about these prospects.  In addition, we hope to build on the ambitious energy-efficiency efforts we’ve carried out at schools throughout the state.

All of this—by the way—is a logical extension of one of Governor Pataki’s earlier initiatives—Executive Order 111, which he issued in 2001.  The order established ambitious targets for state agencies with respect to energy efficiency and renewable resources—and clean transportation as well.

Having said that, I should explain that we don’t see energy efficiency and clean new technologies as the only responses to our power supply needs. But we do view them—taken together—as one of three main options for meeting future requirements.

The other parts of this “three-legged stool” are conventional generation and transmission —both of which are very important in their own right.

The Power Authority is a major power generator in New York—with 17 plants—and also owns and operates more than one-third of the state’s high-voltage transmission.  We’re now building a clean combined-cycle 500-megawatt power plant in New York City that will be used in part to serve public schools in the City.

However, we announced earlier this year that we do not foresee the need for the Power Authority to build any more new power plants or transmission lines.  We think this should be the job of the private sector and we will seek to construct new facilities only in response to a compelling public need that isn’t being met.

That means a lot of our efforts and resources can focus on energy efficiency and new technologies—and we hope New York’s schools will be our partners. Already, we have quite a track record to build on.

As of the end of last month, we’d completed energy-efficiency projects at more than 1,100 public school facilities across the state.  These projects—representing a Power Authority investment of nearly $330 million—have allowed participating schools to cut their peak demand for electricity by more than 67 megawatts and to save a total of more than $30 million a year.  As an important added bonus, the completed projects reduce statewide greenhouse gas emissions by more than 182,000 tons annually by permitting fossil-fueled power plants to operate less frequently.

We also have another $32 million worth of projects under way at some 77 school buildings. So the numbers I’ve given you will keep getting better.

Since Governor Pataki took office, the Power Authority has more than doubled its annual investment in energy efficiency—now as much as $100 million a year for schools and other public facilities.

Typically, the Authority finances and supervises all aspects of the work.

After that, the participant keeps all the savings. So we think we’re providing two commodities that are often in short supply when it comes to energy efficiency—up-front money and professional expertise.

Our work in the schools has ranged from lighting upgrades and boiler and window replacements to installation of computerized energy management systems and premium efficient motors.

We’ve also replaced polluting coal-burning furnaces with clean oil or natural-gas-fueled boilers in 86 public school buildings in New York City and Buffalo and on Long Island.  And we’re planning solar photovoltaic projects for a couple of school districts.

Our programs for schools and other public entities reflect our firm belief that government must lead by example when it comes to energy efficiency, renewable sources—and clean electric and hybrid-electric vehicles.

That’s why we’re particularly proud of a major energy-efficiency project that we completed two years ago in the Rappleyea Building—our administrative office facility in White Plains.

Highlights of the project included the replacement of close to 6,000 lighting fixtures throughout the building with efficient T-8 lamps and electronic ballasts. We’ve also installed variable frequency drives on our main heating, ventilation and air-conditioning equipment.

The most challenging part of the effort—and the one that’s had the greatest impact—was our installation of a new chilled water cooling plant to air-condition the building.  The previous system had been in service since the facility opened back in 1981 and had reached the end of its expected lifespan.

The cooling plant—I should note—is located one flight up from the building’s top full floor.  The replacement project entailed bringing in two new 460-ton chillers and two 500-ton cooling towers by helicopter and taking out—also by helicopter—the old equipment.

Another key element of the project is our new computerized energy-management system.

The contrast in size with the cooling plant couldn’t be greater—the visible part of the management system consists essentially of one relatively modest-looking computer keyboard and screen.  But through more than 200 connection points, the system permits real-time monitoring and control of our heating, ventilation and air-conditioning equipment.

Other features include premium-efficiency motors  on all pumps and fans for  the HVAC system, new valves and controls for that system and energy-saving reflective film for the building’s more than 2,000 windows. We also put in occupancy sensors throughout the facility—as well as efficient light-emitting diode exit signs and new sunlight-sensitive fixtures in our parking garage.

Beyond this, we’ve made the building a showcase for distributed generation by installing a 30-kilowatt microturbine and a 5.5-kilowatt rooftop solar project.

Overall, the program is saving us about $400,000 a year on our energy bills and cutting our peak demand for electricity by about 35 percent, or 700 kilowatts.  We’ve also cut our annual energy use by more than 50 percent. And we’re reducing greenhouse gas emissions by about 4,100 tons a year.

As I’ve said, we’re very proud of the fact that we’ve made the Rappleyea Building a solid example of clean, green public buildings. I’m sure that all of the educators here today know and understand the instructional value of a good example.  So I hope we all will continue to work together to make our schools shining examples of efficient, economical and environmentally sound energy management.

Again, I appreciate the opportunity to be part of this important event.