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NEW YORK POWER AUTHORITY: ECONOMIST SAYS SITHE PACT WOULD CAUSE HUGE JOB LOSS

 NEW YORK POWER AUTHORITY: ECONOMIST SAYS SITHE PACT
 WOULD CAUSE HUGE JOB LOSS
 NEW YORK, Oct. 5 /PRNewswire/ -- A specialist in utility economics says overpriced electricity from a proposed upstate power plant would have a devastating economic impact on New York City and Westchester County, with the loss of thousands of jobs and millions of dollars of tax revenues.
 Dr. Donald W. Walls, senior vice president and managing director of DRI/McGraw Hill in San Francisco, estimated that overcharges included in a contract between Sithe and Consolidated Edison, which are projected to be almost $1 billion, would result in the loss of as many as 12,800 jobs in the Con Ed service territory. He also projected the region would lose a total of $5.3 billion in personal income and at least $1.1 billion in state and local tax revenues through the year 2005.
 Walls' findings were presented in testimony he prepared for New York State Public Service Commission hearings on a proposed 28-mile transmission line to link the Sithe plant to New York's power grid. The economist, who holds a doctorate from Harvard University and taught there for eight years, was retained by the New York Power Authority to analyze the economic impacts of the Sithe plant at the hearings, scheduled to begin Oct. 27 in Scriba Town Hall, near Oswego.
 Sithe plans to build a 1 million-kilowatt natural-gas-fired power plant in Scriba. It has a contract, drawn up on the basis of outmoded federal and state regulations, to sell most of its electricity to Con Edison at rates far above current electricity cost projections.
 "While the magnitude of the losses may arguably be slightly higher or lower than presented here, the Con Edison service territory simply pays the price of lost jobs, competitiveness, income and wealth as a result of higher electricity prices," Walls said.
 He based his conclusions on the estimate of the overcharge provided in separate testimony submitted by William P. Palazzo, manager of generation planning for the Power Authority.
 Palazzo said detailed computer simulations, using the latest New York Power Pool data, showed that over the first five years of the contract, from 1995 through 1999, New York State ratepayers would incur about $1.1 billion in additional costs "compared with a scenario where the Sithe facilities and contract are not in existence."
 While Con Edison ratepayers would absorb most of the penalty, Palazzo said other New Yorkers would also pay higher rates because the Sithe contract would displace their utilities' sales to Con Ed.
 Palazzo testified that the proposed transmission line, to be built by Niagara Mohawk Power Corp., is not needed to maintain reliability or provide economic benefits to consumers and "by permitting unneeded and uneconomic energy to flow to Southeastern New York, leads to economic damage of considerable magnitude to the ratepayers."
 "Since there is no need from a supply or economy perspective for the energy from the Sithe plant, there is no need for the transmission project," said Palazzo, who noted that all forecasts indicate New York State will not require new electric generating capacity until the next century.
 Walls said even modest increases in electric rates have "substantial impacts on the economy of the Con Edison service territory because of its sheer size and sensitivity to energy costs."
 Con Edison provides electricity to residents and businesses in New York City and most of Westchester County.
 "After some moderate job increases elsewhere in the state during the construction phase (of the Sithe plant), job losses in the Con Edison service territory peak at approximately 12,800 jobs in the second half of the year 2000," said Walls. "By then, the annual real personal income loss resulting from the higher rates will have reached $670 million (in 1992 dollars)." He added that lost state and local taxes will exceed $140 million (1992 dollars) per year.
 -0- 10/5/92
 /CONTACT: Jack Murphy of the New York Power Authority, 212-468-6319/ CO: New York Power Authority ST: New York IN: UTI SU:


TS -- NY065 -- 6585 10/05/92 12:25 EDT
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Date:Oct 5, 1992
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