Building Congress: city's long-term electricity needs unmet.

The New York Building Congress warned that New York City's urgent long-term electricity needs are not being met, despite clear and persistent signs that growing overall electric demand is outstripping electricity supply.

"We approach this summer with the slimmest of margins. In fact, traditional New York City electricity supply is currently 67 megawatts (MW) below mandated requirements. Only capacity saved through demand response programs and other conservation measures will allow us to meet supply requirements," said William A. Harkins, an energy consultant who co-chairs the Building Congress Energy Committee. "We expect that the city will make it through this summer, but that is provided we do not experience a combination of extended heat and temporary disruptions in our generation and transmission systems."

The New York State Independent System Operator (ISO) reported in late February that while New York City is expected to meet its supply requirement this summer, the forecasted demand of 11,020 MW is well above the record-setting 10,650 MW during the very hot summer of 2001. According to the New York State ISO report:

* Forecast Demand in New York City - 11,020 MW

* In-City Requirements (80%) - 8,816 MW

* Available Traditional Supply - 8,749 MW

* Demand Response Programs - 78 MW

* Difference - 11 MW

Rudin Management COO John J. Gilbert III, who co-chairs the Energy Committee with Harkins, added, "The ISO's forecast should set off alarm bells because demand for electricity continues to grow despite a steep recession and significant job losses. At present, however, the supply of new generating capacity is not increasing to meet the current pace of rising demand, much less the future electricity needs of a more robust economy."

Gilbert noted that although many of New York's largest businesses have enrolled in demand management programs, which will help reduce electricity demand when usage is highest and possibly prevent power outage in the summer of 2003, such programs cannot bridge the city's long-term electric supply gap. "Without expedited construction of new electricity generating plants, in the next several years New York City residents and businesses will face large price spikes and the increasing potential for widespread power outages."

The Building Congress, in cooperation with the Association for a Better New York, the Building and Construction Trades Council of Greater New York, the New York City Partnership, the Real Estate Board of New York and the National Resources Defense Council, released two consecutive Electricity Outlook reports on the state of the City's electricity supply in 2001 and 2002. Both cited a need for 2,000 to 3,000 MW of new electric generating capacity over the next five years to meet growth in demand, to replace aging power plants, and to provide enough capacity to assure market and price stability. But despite continually increasing demand, no additional generating capacity has been constructed or will be available for the summer of 2003.

At present, just three New York City generating projects are in construction: Keyspan's Ravenswood co-generation plant, which will provide 250 MW, is expected to be completed in December 2003; and, two projects slated for the fall of 2004, the New York Power Authority's 500 MW Poletti plant, and Con Edison's East River Repowering Project, which will provide a net additional 125 MW in summer periods.

Conditions for financing and constructing new electric generating facilities have only deteriorated since the first Electricity Outlook report. According to Harkins, "Due to financial uncertainties exacerbated by the collapse of the Enron Corporation and the 2002 expiration of New York State's Article X legislation, which guided the plant approval process, proposals for new power plants now lack both the mechanisms for timely regulatory approval and access to critical private sector capital."

The Building Congress and the members of its Energy Committee (roster attached) are calling on city, state and federal officials, as well as power plant builders and investors, to immediately come together in an effort to find solutions to the city's urgent power needs. Actions must include state passage of legislation to replace Article X, expediting the plant siting and approval process, and the introduction of incentives designed to spur capital investment in power generation projects.

"New York City's 21st Century economy and its eight million residents are vitally dependent on reliable electricity supply," concluded Marilyn Jordan Taylor, Building Congress chairman and chairman of Skidmore Owings & Merrill LLP. "As we begin the reconstruction of Lower Manhattan and prepare for a strong economic recovery, we must also be ready to meet the electricity demands of new jobs. businesses, residents and tourists."

The previous Building Congress reports on New York City's electricity supply, Electricity Outlook: A Matter of Urgency and Electricity Outlook: A Call to Action, are available at http://www.buildingcongress.com.