Power to the People: Electric Transmission in NYS Kent Gardner President & Chief Economist...

Power to the People:Electric Transmission in NYS

Kent Gardner

President & Chief Economist

Center for Governmental Research

Annual Policy Conference 2009

Key IssuesGoal: Reliable power at the lowest possible price

Proximity to & relative abundance of fuel source Cost of plant construction & operation Competitive climate Policy variations in tax & regulation Spatial mismatch between supply & demand

(“generation” and “load”)Core conflict: Better electric transmission creates

winners & losers Within franchise territories of utilities (“load serving

entities”) Across regions/states within the same regulatory

jurisdiction (“independent system operator” or “regional transmission operator”)

Across regulatory jurisdictions

Annual Policy Conference 2009

Prices vary dramatically

WAUTALCONCLAIL

WIMIPA

US-TOTALTXNJMANYCT

0 2 4 6 8 10 12 14 16 186.46.4

7.67.87.8

8.48.58.58.5

9.19.1

10.113.0

15.215.2

16.5Total Price of Electric Power

Cents per kwh

Annual Policy Conference 2009

Why do prices vary?Fuel source

Washington: 74% from hydro Pennsylvania: 54% from coal Connecticut: 49% from nuclear, 30% from natural

gas New York: 31% from natural gas, 29% from nuclear

Cost of new generation: construction & siting Land & labor Local empowerment

Transmission from (or to!) cheaper locales

Annual Policy Conference 2009

Coal is cheap

Coal

Petroleum

Natural Gas

0 100 200 300 400 500 600 700 800

Cost of fuel

Cents per million BTU

And nuclear?

Annual Policy Conference 2009

NYC: World’s largest & most complex

“load pocket”

Annual Policy Conference 2009

New generationis difficult to site

near NYC

Annual Policy Conference 2009

Transmission brings power to the people

765 kv fromHydro Quebec

Neptune cable from NJ

Cross-Sound cable from CT

Annual Policy Conference 2009

Spatial mismatch creates price variation

Annual Policy Conference 2009

Solution? Add new

transmission

Annual Policy Conference 2009

But not in my backyard

Annual Policy Conference 2009

Yet generation is also difficult to site

Annual Policy Conference 2009

Indian Point licenses expire by 2015

Opposition is vigorousRiverkeeper leads the charge with help

from sloop Clearwater & founder Pete Seeger, Bobby Kennedy, AG Andrew Cuomo

Annual Policy Conference 2009

Tradeoff: Risk v. power reliability

Annual Policy Conference 2009

Solution (again) is transmission

LI Power Authority contracts for 500kv Neptune transmission line, 660 mw capacity, from New Jersey: Began operation in 2007

NY Power Authority contracts for 345kv line under Hudson from New Jersey: 500 mw dedicated from NG plant with capacity for add’l 160 mw, to be completed in 2010

Reliability improved by addressing “seams” between ISOs & RTOs

Annual Policy Conference 2009

Fixing “seams” raises conflicts b/n states

Cross-Sound cable between Shoreham, Long Island & New Haven, Connecticut: Environmental conflict over cable placement a proxy for “don’t send our power to New York”? Turned on after 2003 blackout by federal

orderFERC has the unenviable task of playing

umpire among states & ISOs/RTOs

Mason Emnett Senior Legal Advisor, Office of Energy

Policy and Innovation Federal Energy Regulatory Commission

Sue Gander Director, Environment, Energy & Natural

Resources Division National Governors Association ‐ Center for

Best Practices