New York City power play flattens electricity demand

Terrorist destruction, prospect of energy glut cut demand pressures

`80 megawatts walking around'

Conservation plans hurt, but cleaner air is in sight

February 15, 2002|By Kirk Johnson | Kirk Johnson,NEW YORK TIMES NEWS SERVICE

NEW YORK - New York City, which faced an electricity crisis last summer as more computers and air conditioners bought in a booming economy bumped up against the limits of the local power supply, now has all the energy it needs through at least the middle of next year and perhaps beyond, electricity experts say.

The sharp turn of events is partly a result of the Sept. 11 terrorist attack, which removed in one horrific day about 100 megawatts of power demand - enough to supply nearly 100,000 homes - as buildings in Lower Manhattan fell and companies and residents were dispersed.

The recession, which has stripped tens of thousands of jobs since then - meaning fewer office cubicles to be lighted or heated and less money in the economy being spent on electronic toys and gadgetry - has further reduced pressure on the system.

Consolidated Edison, which delivers electricity to the city and its northern suburbs, is projecting no growth in demand this summer - the first flat-line forecast in more than a decade.

Frightened investors

But the supply side of the electricity equation has also fundamentally changed. The collapse of Enron, the energy trading company - and the prospect of an energy glut in many parts of the country - has frightened investors who were once eager to pour money into power plant projects.

Of the 22,000 new megawatts proposed for New York state, almost two-thirds, according to some economists' estimates, are now considered unlikely to be brought online.

From politics, where energy is off the table as a likely issue in New York's election for governor, to environmentalism, where hot topics like energy efficiency have cooled, the transformation has been sudden.

"I think the crisis, as it were, if it hasn't already passed, is well on its way to being behind us," said Fred Zalcman, executive director of the Pace Law School Energy Project, an energy research and advocacy organization based in White Plains.

Zalcman and other experts caution that one year - especially one of tumultuous change and upheaval like the last half of 2001 - does not in itself a new trend make. The forecasting department at Con Ed expects growth in electricity use to resume in 2003, as downtown Manhattan rebuilds and the city's economy improves.

Natural gas, which is used to make much of the region's electricity supply, is also subject - as always - to fluctuations in price because of global politics and war. The winter has also been unusually warm, reducing energy use and thus keeping prices perhaps artificially low.

But there is general agreement among industry officials, environmentalists and big energy users that the urgent momentum that was pushing the system last year - lots of money from Wall Street for power plant construction, and lots of anxiety that growth in demand would outstrip supply, crimping New York's economy - has been shattered.

One of the clearest examples of the new rhythm might be called "The Tale of the 80 Megawatts." That is how much power the World Trade Center was allocated for use at peak times, like midsummer.

After the attack on Sept. 11, the state of New York said that the now-surplus 80 megawatt pool, provided at low cost by the state-run New York Power Authority, would be redistributed to companies that were displaced by the disaster.

Nearly five months later, not a watt has been allocated. A spokesman for the power authority said the complicated task of identifying and finding companies that are eligible for the electricity pool has slowed the effort. Energy industry officials say the bigger problem is that with electricity prices so low right now from Con Ed, there is little incentive for electricity users to switch.

Scare is gone

"You've got 80 megawatts walking around - that's how much things have changed," said David Neiburg, the president of Energy Spectrum Inc., a Brooklyn-based consulting firm that works with large energy users. "They're saying, `We have extra capacity, here we go.' But after 9/11, the capacity issues just aren't as much of a concern. The scare is gone."

Nationwide, the demand for construction of plants also seems to be plummeting.

About 50 percent of the power plants that have been proposed across the country in the last few years will probably not be built, according to Platts/RDI, an energy industry research division of the McGraw-Hill Companies.

In the Midwest, the Southeast, New England and Texas - areas with more capacity than they can use right now - it will not matter as much as it could in New York, said Will Dailey, a senior consultant at Platts/RDI.

Other industry experts say the energy lull could have a major impact all by itself - mostly from the things that will not happen now because the pressure is off. Few people, for example, expect that New York Gov. George E. Pataki will have to confront voters angry about high utility bills or brownouts in running for re-election.

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