Executive Speeches

Testimony of Thomas J. Kelly, Executive Vice President and General Counsel, New York Power Authority, to the New York State Assembly Standing Committee on Energy public hearing, Utica, New York.

August 23, 2006

Good evening, Chairman Tonko and distinguished Members of the Assembly.  My name is Thomas J. Kelly, Executive Vice President and General Counsel of the New York Power Authority (NYPA).

As you know, the New York Power Authority is the nation’s largest state-owned electric utility, with 18 generating facilities in various parts of the state and more than 1,400 circuit-miles of transmission lines. The Authority operates without the use of tax dollars or state credit, financing its operations with revenues earned from sales of electricity and through the sale of bonds and notes for capital projects.  The Authority supplies electricity to government agencies, community-owned electric systems and rural electric cooperatives, private utilities and to private sector businesses and non-profit institutions in return for commitments to protect jobs. NYPA is also a leader in promoting energy-efficiency, new energy technologies and electric-drive transportation initiatives. Our Mission is to provide clean, economical and reliable energy consistent with our commitment to safety, while promoting energy efficiency and innovation for the benefit of our customers and all New Yorkers.

The topic of today’s hearing, New York Regional Interconnect, Inc. (NYRI) announced the filing of an Article VII application to the New York State Public Service Commission (PSC) on May 31, 2006. NYRI is seeking regulatory approval to build a 190-mile high voltage direct current transmission line from Oneida County to Orange County. NYRI’s application for the construction of such a power line is regulated and governed by the PSC under Article VII of the New York State Public Service Law.

I should note, for the record, that NYPA has no regulatory powers with regard to the proposed transmission line.  Unlike the Departments of Environmental Conservation, Economic Development, State, Transportation, Agriculture and Markets, and the Office of Parks, Recreation and Historic Preservation, NYPA is not a statutory party in the Article VII process.

Based upon information made available to date, it is clear that NYRI proposes to interconnect with substations that also interconnect with NYPA transmission facilities. Consequently, since the Authority has a direct interest in the impact of any new interconnections on those substations, we filed on August 9th to intervene in the Article VII proceedings as an interested party that will be affected by the proposed project.

On July 26, the PSC issued a deficiency letter and a procedural ruling in the NYRI proceeding (Case 06-T-0650). Given the fact that NYRI’s filings, to date, have been determined to be deficient, we must await more detailed information from NYRI and other parties in the proceeding before we can, with confidence, offer detailed comment on the proposal.

To assist the Committee’s deliberations on the matter, however, we can offer information on the transmission facilities owned and operated by NYPA.

As I previously mentioned, the Authority owns, operates and maintains more than 1,400 circuit miles of high voltage (115-kV to 765-kV) transmission lines in New York State. These lines include:

• a 765-kV line south from the Canadian border to Marcy, New York;

• two 345-kV lines from the Niagara Project east to Niagara Mohawk’s Edic Substation in central New York;

• two 345-kV lines from Marcy, New York, connecting to other utility substations in southeastern New York;

• three 345-kV lines from the Blenheim Gilboa Project;

• two 230-kV lines extending east from the St. Lawrence Project to Plattsburgh, New York, and to the Vermont border;

• two 230-kV lines extending south from the St. Lawrence Project to Belfort, New York;

• a single circuit, underground and underwater 345-kV line extending across Long Island Sound between Con Edison’s substation in Westchester County and LIPA’s substation in Nassau County, New York; and

• several 115-kV lines connected directly to large industrial customers and other shorter lines connecting the Authority’s generating facilities to the transmission grid.

NYPA has not been engaged in building major new high-voltage transmission projects since it completed the Long Island Sound Cable in May 1991. Although it should be noted, for the record, that we are presently engaged in a transmission reinforcement project for the Tri-Lakes region of the Adirondacks. Pursuant to an agreement among the Authority, National Grid, and the Villages of Tupper Lake and Lake Placid, we have contracted with National Grid for the construction of substation equipment and a new overhead line to alleviate serious transmission capacity deficiencies in the Lake Placid, Tupper Lake and Saranac Lake, New York, area of the Adirondacks. The upgrades will consist of one 46-kV Static Var Compensator (SVC) at Tupper Lake, with a projected in-service date of 2006, and one 115-kV SVC at Lake Colby with a projected in-service date of 2006, and a new overhead 46-kV line from Stark Reservoir in Parishville to Piercefield with a projected in-service date of 2008.

Addressing the issue of transmission congestion is not simply a matter of building new transmission. As the National Electric Transmission Congestion Study[1], recently released by the U.S. Department of Energy states:  “…congestion solutions will be based on a thorough review of generation, transmission, distribution and demand-side options…”

For its part, the New York Power Authority has been engaged in a range of transmission enhancements, demand-side reduction and new generation.

The Authority’s major recent focus with regard to transmission has been the development of new technologies to enhance existing transmission facilities. We are proud of the pioneering work done with the Convertible Static Compensator (CSC), installation of which was completed in the summer of 2004. The CSC is the first device in the world with the capability of instantaneously shifting power in the same substation from a heavily loaded transmission line to one with spare capacity. It is the latest in a series of transmission control technologies known as FACTS (Flexible Alternating Current Transmission Systems) that have been developed by EPRI in cooperation with the Power Authority and several other utilities.

By permitting more electricity to be carried on existing transmission lines (it can permit total increases of close to 200 megawatts); the CSC serves the reliability and efficiency of the power system. It has strengthened voltage support on the transmission system, permitting increased power flows during periods of greatest electricity use.

The CSC is located at NYPA’s Marcy Substation, right here in Oneida County, which is the hub of NYPA’s transmission system. It is adjacent to NYPA’s Frederick R. Clark Energy Center, where the operations of our generating facilities and transmission lines are monitored and information exchanged with the New York Independent System Operator.

NYPA invested $41 million in the CSC, with additional funding for the $54 million project from EPRI, the electricity industry's science and technology development organization; Siemens Transmission and Distribution and more than 30 electric utilities and independent system operators in the United States, Canada and New Zealand.

While this individual project serves to address just a portion of the congestion on the east-west interface, we believe it also serves as a solid demonstration of the way new technologies can be developed and applied to enhance transmission.

In addition to innovative transmission technologies, NYPA has been actively working to reduce demand with energy efficiency and other demand reduction efforts.

As of June 30, 2006, the Authority has invested $984 million in energy-efficiency upgrades for 2,388 elementary and secondary schools, colleges and universities and government buildings across the state. In total, these energy-saving projects have reduced demand by 198 MW statewide, with 62% of the load-reduction taking place in the heavily congested New York City/Long Island region.

In addition to these energy-efficiency savings, NYPA operates a Peak Load Reduction Program that enlists our largest New York City customers to cut demand on peak load days.  In total, the contributions of NYPA and its customers to New York State’s Combined Demand Reduction Initiative totals more than 333 MW of reduced load.

While transmission innovation and demand reduction can play valuable roles, the development of a robust, reliable marketplace for electricity in New York State will require continued development of new generation. Market economics suggest that new generation should be built close to the load, the areas with the greatest demand for electricity.

Over the past dozen years, NYPA has been working to increase the generating capacity of the downstate region, adding more than 1,000 MW in generation on Long Island and in New York City.

NYPA’s Flynn Power Plant in Holtville, Suffolk County, is a 135 MW combined-cycle electric plant which began commercial operation in May 1994.  Annually this plant produces about 1.1 million megawatt-hours (MWh) of electricity and since its inception has produced over 11 million MWh of electricity.

The PowerNow! Program increased NYPA’s generating capacity in the metropolitan New York City region by about 450 MW during summer 2001. These small, clean power plants were all installed downstate -- at two sites in the Bronx, two in Brooklyn, one in Queens, one on Staten Island and one in Brentwood, in the Town of Islip, Long Island.

NYPA launched that program in late August 2000 to install these small, clean power plants in response to warnings from officials in the public and private sectors that the New York City metropolitan area could face power shortages in the summer of 2001.

The small plants proved invaluable during an August 2001 heat wave, when temperatures—and electricity use—soared to new highs, and in the summer of 2002, when Con Edison and the Long Island Power Authority each set records for three-month electricity use.  The units again proved their worth in the wake of the September 11 terrorist attacks; when they were called on to generate power because their diverse locations were a security asset. During the northeast blackout of August 2003, the plant's helped return power to New York City while stabilizing the downstate transmission system.

NYPA’s newest power plant, the 500 MW Combined Cycle Power Project in Astoria, Queens began commercial operation in December 2005. The location for the new plant is a seven-acre parcel that is part of a 47-acre site the Power Authority owns in Astoria, Queens. The new facility is adjacent to the Poletti project, an 885-megawatt generating facility that also runs on natural gas, with low sulfur oil as a backup fuel. As a condition of the permit for the new plant, the Poletti project is scheduled to be retired no later than 2010.

Building generation where it is most needed is the most appropriate approach to addressing the Empire State’s electric power concerns.

Toward that end, it is essential that New York State re-establish a regulatory structure that effectively administers the power plant siting process. Unfortunately, New York’s Article X power plant siting law expired in 2002 and agreement to extend the law has yet to be reached.

New York needs new power plants to be built and our citizens need a law that protects environment and preserves the public interest in siting process. We certainly encourage the Assembly to continue to work to achieve this essential step on the path to a secure energy future for the Empire State.

Thank you for the opportunity to testify. I will do my best to answer any questions you may have.