By Scott DiSavino
NEW YORK (Reuters)
- New York City, facing a critical power shortage, has spared
no expense to ensure the lights shine brightly on Broadway this
summer.
Despite hot,
muggy weather pushing air conditioning demand to its annual peak,
utility experts say the state's aggressive push to save energy
and build new power plants will likely prevent it from suffering
from the kind of blackouts plaguing California.
However, even
experts agree a severe heat wave or the failure of a major plant
or transmission line could leave parts of the Big Apple in the
dark for at least a few hours.
In California,
the demand for power has outstripped the state's ability to generate
or buy enough electricity, forcing the Golden State's grid operator
to trigger rolling blackouts to prevent the entire Western grid
from plunging into darkness. As temperatures rise and overworked
plants shut for badly-needed maintenance or repairs, utility experts
-- including U.S. Energy Secretary Spencer Abraham -- predict
blackouts will roll again through California.
WHY NEW
YORK CITY?
In New York,
like California, energy demand has risen more than expected over
the last decade, with the robust local economy driven by power-hungry
computers and rapid population growth.
New York City's
economy grew 2.6 percent annually between 1995 and 2000, while
its population grew six percent to a record eight million people
in the last decade, according to the latest economic and census
data.
In 1995, when
New York first considered the deregulation of the electricity
market to cut power prices that were among the highest in the
nation, the city had more than enough power plants.
Since 1995,
however, private energy companies have been reluctant to build
new plants in the city because of the economic uncertainties of
the newly restructured energy market and the state's burdensome
environmental laws.
New York City
must generate most of the electricity it consumes within its borders
because due to its geography, it has only a few transmission lines
feeding power to the office towers, subways and street lights
that define this town.
To ensure
the reliability of the grid, the state requires 80 percent of
the power used here must be generated locally. Last year, there
were not enough plants in the city to reach the 80 percent requirement.
To meet the
80 percent threshhold this summer, the state's Power Authority
was adding 10 natural gas turbines to the city's grid at a taxpayer
cost of over $500 million.
Moreover,
the state and private companies spent millions on conservation
programs to reduce the city's power consumption by 4 percent to
6 percent during times of peak demand this summer.
Around
New York City
So far, the
deregulation of the electricity markets in New England, the Mid-Atlantic
states and Upstate New York, which experienced more moderate economic
and population growth over the past decade, was much more successful
than in the city.
Private energy
companies have spent billions of dollars over the past five years
to build plants in New England and the Mid-Atlantic where environmental
laws were not as burdensome and local opposition was not as strong
as in the city.
However, like
New York City, a string of hot, humid days or the unexpected loss
of a major plant or transmission line could force the Mid-Atlantic
and New England grid operators to take steps to temporarily reduce
power usage.
The goal of
deregulation is to encourage economic growth by lowering power
prices through competition, while improving the environment with
cleaner, more efficient power sources.
In region's
with ample power supplies -- New England, the Mid-Atlantic states
and Upstate New York -- truly competitive markets have developed,
prices have begun to fall and some older, inefficient power plants
burning ``dirty'' fuels like oil were being replaced by new efficient
plants burning ``cleaner'' fuels like natural gas.
However, when
restructuring occurs in areas like California and New York City,
which don't have enough plants, the deregulation experiment can
turn into a crisis, requiring more government intervention than
under the old monopoly system to prevent price spikes and economic
collapse.
With no new
large plants expected to go into service until at least 2003,
New York State, which spent hundreds of millions of dollars to
deal with New York City's energy shortage this summer, will likely
have to spend millions more next year to keep Wall Street from
falling into darkness.
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