Executive Speeches

Remarks of Timothy S. Carey, president and chief executive officer of the New York Power Authority, at the Annual Meeting of the New York State Municipal Electric Utilities Association, Alexandria Bay, New York.

September 12, 2006

Your theme for this Annual Meeting—“Enhancing the Environment Through Energy Efficiency”—highlights what I believe should be our vision of public power and NYPA in the future—a future in which environmental protection and energy efficiency become critical parts of our business strategy.

The development of new clean energy technologies—and a strong commitment to energy efficiency and sustainability—are essential to cut our dependence on foreign oil and to combat global warming and other threats to our environment.

These are obviously national issues.  But I believe that New York State, NYPA and the MEUA are well positioned to play key roles in addressing them.

Governor Pataki has established a strong foundation through his leadership in promoting renewable energy, energy efficiency and clean transportation and in moving aggressively to improve indoor and outdoor air quality.

The benefits of initiatives such as the Renewable Portfolio Standard—requiring that at least 25 percent of the state’s electricity by 2013 come from renewable sources—and the Regional Greenhouse Gas Initiative that now encompasses seven states will be felt long after he leaves office.

With the Power Authority marking its 75th anniversary this year, I think it’s safe to say that no governor has made better use of NYPA’s resources than George Pataki.

I’m therefore confident that we are primed to remain a vital force in meeting the energy challenges of our future. 

Another reason for this confidence is the continuation and growth of our partnership with your Association.

Three years ago, we began a new era in our relationship.  Our Global Settlement resolved major issues concerning power allocations and rates and paved the way for cooperation in the key areas of energy efficiency, economic development and clean transportation.

The centerpiece of the agreement was the extension of your contracts for low-cost Niagara hydropower through 2025.  That carried with it an expectation that we’d receive a new federal license for the project, with terms enabling us to continue allocations of preference power.

I can tell you tonight that we’re very, very close to meeting those objectives.

We passed a major milestone in July when the Federal Energy Regulatory Commission issued a Draft Environmental Impact Statement that generally called for approval of the agreements we’d reached with major parties to the relicensing.

Last month, FERC held public meetings on the draft.  I want to thank Kevin Brocks for his statement and MEUA’s help throughout the relicensing process—a process that has allowed us to achieve the necessary financial balance to avoid major impacts on your rates.

Thanks also to Kevin and to Karl Lux for keeping an eye on the relicensing process and protecting your interests.

Believe it or not, the four-year rate plan set out in our Global Settlement is now well into its final year—which runs through next April 30.  So we’ll be working with you to look at the rates in light of the relicensing requirements and other matters.

Meanwhile, we’re on course to complete our 15-year, $300 million upgrade at the Niagara Project’s main generating facility on schedule this December.  We anticipate that, thanks to the upgrade, about 35 megawatts of additional firm power will be available.  You and our other preference customers are entitled to half of that power under federal law.

The upgrade—along with work we completed last May at the project’s pump-generating plant—will ensure that Niagara operates at maximum efficiency far into the future.

No matter how well the project operates, though, we’re ultimately dependent on the amount of water that’s available for power production.  Low flows are still a concern—and we’re projecting potential shortfalls in firm hydro allocations in some of the months between now and next spring.

This has become an all-too-familiar pattern in recent years and underscores the importance of our cooperative efforts to use this valuable power as efficiently and effectively as we can.

Those efforts received a major boost last May when NYPA’s trustees approved the participation of all of the state’s 51 municipal electric systems and rural cooperatives in the Authority’s statewide energy services program.

This action was a direct result of the study that we completed early this year that identified significant potential for cost-effective energy efficiency measures in your service territories.  It means that your systems are now eligible for financial and technical assistance from us as you carry out projects in your facilities and for the residents and businesses you serve.

Systems participating in the Independent Energy Efficiency Program can use the new initiative to obtain greater financial flexibility and to complement their current activities.

Many of you have heard of our work with the villages of Lake Placid and Tupper Lake to install energy efficient refrigerators in public housing units as part of our overall agreement to help ensure reliable power service for the Tri-Lakes region of the Adirondacks.

I would also like to note that our longstanding Tree Power program continues to prove its worth.  To date, nearly 38,000 energy-saving trees in municipal system and cooperative territories have been planted.

While on this subject, let me congratulate the Bath and Massena municipal utilities for being recognized this year by the National Arbor Day Foundation as “Tree Line Utilities.”  And congratulations to the Villages of Bath, Fairport, Massena, Rockville Centre, Skaneateles and Wellsville for being named by the Foundation as “Tree City USA Communities.”

Conserving your hydropower by all possible means is critical because of the rising costs for the incremental energy needed to meet your needs beyond your hydro allocations.

The price of Niagara power provided to your systems is now less than one cent per kilowatt hour.  In contrast, upstate market prices for incremental energy this year have frequently been in the range of 6 to 7 cents a kilowatt hour and more.

All of this underscores the importance of NYPA’s emphasis on energy efficiency.  To date, we’ve completed projects at some 2,400 public facilities.  And next month, we expect to pass the one billion dollar mark for overall investment in energy efficiency.

One of the projects of which we’re proudest is at our own office building in White Plains.  Thanks to various efficiency measures completed in 2002, we were able to reduce the building’s annual electricity use by one-half, saving ourselves about $450,000 a year.

Now we’re going further.  We are going to undertake cutting the building’s water consumption, improving our indoor air circulation and, in line with our Governor’s executive order, using environmentally friendly cleaning products.

When I became the president and CEO of this organization, one of the first things I did was switch to environmentally friendly cleaning products. For those of you who don’t think they work, you’re wrong.

At one of the first big events that we had, which I attended as the president, I actually had workers come up to me and thank me because they apparently had some respiratory problems and, working with these environmentally-friendly products, were able to get relief.

This is an important part of what we all do. Public health and safety is the keynote of why we are in public service and I urge you all to follow our lead in using these products going forward.

We are going for a U.S. Green Building Council LEED (Leadership in Energy and Environmental Design)- certified green designation for our building in White Plains.  This is a model I know you are already working with for your potential new headquarters.

As the president and CEO of the Battery Park City Authority, I led the development of the first green high-rise residential building in America. That building is 330,000 square feet. It uses 35 percent less energy at base, 65 percent less energy at peak. It produces five percent of its base load with photovoltaics.

It uses 50 percent less water, has its own water treatment center and has planted roofs that keep the building cooler in the summer, warmer in the winter.  It mitigates runoff by having a cistern system and, most important, it, like so many commercial buildings being built around America, has the best indoor air quality that we can produce with today’s technology.

And what does that mean? That means that children with respiratory ailments, children with developing young lungs, can live in this building and never experience the horror of having to deal with a breathing apparatus.

This is what our destiny is—to build better buildings for people to work in—and live in—and we, as public power, are going to lead that charge.

On another issue of considerable importance, we’re moving forward with respect to economic development—which is also a Global Settlement priority.

After considerable effort, new guidelines have been developed to build on and improve the economic development power program that’s been in effect for your systems and the rural cooperatives since 1991.  The guidelines now await approval by the individual systems and, after that, by the Power Authority’s trustees.

The existing program has led to creation of nearly 2,700 jobs in 17 systems.  But 37 of the 54 megawatts of hydropower earmarked for economic development remain unallocated.

The new guidelines encourage greater participation by small businesses and systems.  They vastly expand the types of eligible businesses and permit allocations for job retention as well as job creation.  They envision aggressive marketing efforts involving the Empire State Development Corporation and the American Public Power Association, as well as extensive use of the Internet.

The guidelines emerged from several years of hard work and intense negotiation by a committee of municipal system, rural cooperative and NYPA representatives. I want to thank Jim Hamilton, the acting chairperson; Mayor George Rivers; Bruce Stevens; Bob Murdock; and the late Bob Greene, former chairman.

I’d also like to bring you up to date on our alternative vehicle partnership.  Thus far we’ve placed 19 vehicles through the program with a total investment of close to $460,000.  We hope to further expand this initiative in light of the urgent need to reduce dependence on foreign oil and clean the air.

These factors have also sparked our involvement in two very promising projects that will make use of abundant domestic power sources—hydroelectric power and coal.

One project calls for using a small amount of Niagara hydropower—some 600 to 700 kilowatts—to produce clean hydrogen that would power vehicles running on fuel cells or modified internal combustion engines.  The hydrogen would be produced through the electrolysis of water—using the hydropower to provide the necessary electric charges.  The hydropower, of course, is emission-free—as is the process itself.  So the environment will benefit on all counts from the “Hydropower to Hydrogen” project.

We plan to ask our trustees at this month’s meeting to approve funding for the installation of hydrogen fueling stations for vehicles at Niagara Falls State Park and possibly at a Niagara Frontier Transportation Authority facility.

We’re also a key participant in Governor Pataki’s Advanced Clean Coal Power Plant Initiative.  The goal is private-sector development of one or more projects that would use coal in a process that would significantly reduce emissions and would include the ability to capture—and sequester—carbon dioxide.

We’re part of a team of state agencies and authorities that’s identified a number of potential “shovel-ready” sites in New York State for clean-coal facilities.  On September 1, the Power Authority—on behalf of the team—issued a Request for Proposals by potential project developers at these sites or elsewhere in the state.  We expect to announce the results in December.

Under the governor’s proposal, NYPA will provide $50 million over five years to support the deployment of carbon sequestration technologies.  We’ll also agree to purchase some of the power from the winning project or projects—at prices that are competitive in New York State.

We’ll be looking at possible uses of this power by our customers and it’s at least conceivable that some of it could be used to help meet your systems’ incremental needs—as long as it’s economical.

Projects such as these demonstrate the special advantages that the Power Authority—and public power—bring to New York State. As we celebrate our 75th anniversary, we take pride in our history of accepting and meeting some of the state’s most difficult energy challenges.  But we know that we’re part of a larger public power family and that our accomplishments—like yours—reflect the principles, the ideals and the commitment that make this family so valuable and so vibrant.

Our Global Settlement of  2003 established a framework for cooperation that promised to make public power in New York State a shining example of innovation and service to the rest of the country.  I think we’ve achieved that.

I know that—together—we have met and will continue to meet the challenges of protecting our environment while providing cost-effective energy for our customers.