Executive Speeches

Remarks of Timothy S. Carey, president and chief executive officer of the New York Power Authority, to the Independent Power Producers of New York, Albany, New York

May 10, 2006

Thank you and good morning.

When Gavin invited me to speak, he mentioned how eager you all were to hear from the new President of the Power Authority.

I know that our two organizations have come a long way from the days when Carol Murphy referred to Power Authority Chairman Dick Flynn as the “Darth Vader of the utility industry.”

Chairman Flynn had incurred the ire of the IPPs for his opposition to the building of the Sithe plant.

I was amused by the fact that in the Star Wars Saga, Darth Vader is also known as the  Dark Lord of the Sith. Sith being the band of warriors who cultivated dark side of the force.

These days, I’m pleased to report that the Power Authority and the IPPs have a more cordial working relationship and are more united in our aims.

We are “cultivating the force” in our own ways.  And I believe we are complementing each others’ strengths in the bargain.

Nowhere is that more evident than in our efforts to meet the enormity and complexity of the electrical load of the City of New York.  We depend on your manifold strength to do that.  And we are now evaluating bids for 500 megawatts of the ICAP.

It is important for you, as potential suppliers, to understand the new, unique, partnership we have developed with our Southeastern New York (SENY) governmental customers.

We have entered into long-term agreements under which the SENY customers will purchase their electricity from the Authority through December 31, 2017.  A significant component of that agreement is that supply will be secured for them through a collaborative effort that directly involves the customers in the evaluation of power supply options.

As our customers choose from among various payment options and different levels of risk, we respond with RFPs that are tailored to their choices. Now, that may make our RFP process appear cumbersome to those looking at it from the outside, but it’s what our customers want.

Our customers also want the most competitively priced power available… so if you’re interested in serving our SENY customers, sharpen your pencils.

While I’m on the topic of supplying power to the metropolitan NYC region, I should note―if you are not already aware―that the New York Independent System Operator has determined that closure of the 880-MW Poletti Power Project in February 2008 would cause in-City electrical generating capacity to be less than 80 percent of the total in-City projected peak demand for the summer 2008.

As a result, that facility will continue to operate for an additional year.  Of course, the settlement order does require that the Power Authority cease operation of the Poletti Project permanently by January 31, 2010.

A few years ago, my predecessor told you that the Power Authority did not foresee the need to build more transmission lines or power plants… unless it is clear that we must do so in response to a compelling public need.

Development of a robust, sustaining, competitive marketplace for electricity needs the private sector to perform the task of building new generation and transmission.

I think that all of us here today are firm believers that, in the long-run, free markets work best. But as economist John Maynard Keynes once observed, “In the long run, we’re dead.” 

So, from time to time, the New York Power Authority is called upon to address pressing  public needs that simply can’t wait.

The Authority’s 75-year history offers numerous examples of the responding to immediate needs, whether it’s building the Niagara Project in the wake of the Schoellkopf Power Plant’s collapse into the Niagara Gorge, acquiring Indian Point 3 during the fiscal crisis of the 1970’s, building Marcy-South, or installing in-City turbines to meet the challenge of the summer 2001 heat wave.

Most recently, the Power Authority is serving as an enabler and catalyst for change in bringing about Governor Pataki’s vision of cleaner, environmentally beneficial energy for the Empire State.

Renewable energy is at a critical tipping point, with new energy sources ready to begin replacing conventional power plants and the fossil fuels that they rely on.

Production of biofuels, wind power, and solar energy are all growing at rates of 20-30 percent per year, compared with growth rates of two percent for oil and gas.

New energy sources are attracting roughly $30 billion in investment annually.

Recently, we began working with the Electric Power Research Institute to explore use of hydropower to produce hydrogen.  The initial use will be to power hydrogen-fueled vehicles operated by the State Parks in Niagara Falls.

But longer term, the aim is to spur energy research.  The idea would be to use renewable energy, such as hydropower, to produce hydrogen to displace foreign oil imports.

As part of Governor Pataki’s Clean Coal Initiative, we are working closely with a team of state agencies and authorities to make deployment of coal gasification technology a reality in New York State.

Under the Advanced Clean Coal Power Plant Initiative, the state will identify "shovel ready" sites, such as brown field sites, that can host coal gasification technologies.

The project envisions prototype plants that also sequester carbon emissions.

NYPA is committed to provide a $50 million Clean Coal Investment Fund to assist carbon sequestration. Our role might also include a power purchase agreement with the project’s developer… and perhaps a minority partnership in the project.

The next few years will be critical to the development of coal gasification technologies and carbon sequestration. The prospects for “decarbonizing” fossil fuels are certainly exciting and may be among our best hopes for reducing petroleum dependence and addressing global warming.

The difficulty of handling large quantities of carbon dioxide gas safely is a significant challenge, as is the cost of sequestration.  Yet, these are challenges that deserve our vigorous attention.

In addition to our work on new technologies involving hydrogen and clean coal, NYPA is committed to sustaining its role as the Empire State’s most prominent provider of renewable hydropower.

NYPA is making major investments in the life extension and modernization of the Niagara and St. Lawrence-FDR projects… as well as the Blenheim-Gilboa Pumped Storage Project.  These expenditures will assure that New York State can continue to rely on a significant, dependable base of emissions-free, renewable power for decades to come.

In the years ahead, the members of IPPNY and NYPA will all need to work together to assure that New York State not only has a reliable supply of electricity, but also has a supply from a sound and sensible mix of generation resources.

That doesn’t exactly beg for a miracle. It asks only that the force be with us.

Thank you very much for your attention.